Question 1

The marginal propensity to consume (MPC) equals the change in _____ divided by the change in _____.

Accepted Answer

A)  consumer spending; disposable income 
B)  consumer spending; investment spending 
C)  consumer spending; gross domestic product 
D)  disposable income; consumer spending 
A)  consumer spending; disposable income 
B)  consumer spending; investment spending 
C)  consumer spending; gross domestic product 
D)  disposable income; consumer spending

Question 2

The initial impact of a sudden decrease in the expected growth rate of GDP will MOST likely be a change in _____ investment spending.

Accepted Answer

A)  planned 
B)  unplanned 
C)  both planned and unplanned 
D)  neither planned nor unplanned 
A)  planned 
B)  unplanned 
C)  both planned and unplanned 
D)  neither planned nor unplanned

Question 3

In a simple, closed economy (no government or foreign sector), disposable income increases from $2,000 to $3,000. If consumption increases from $1,500 to $2,100, the marginal propensity to save is:

Accepted Answer

A)  $600. 
B)  $400. 
C)  0.80. 
D)  0.40. 
A)  $600. 
B)  $400. 
C)  0.80. 
D)  0.40.

Question 4

If aggregate expenditures are higher than real GDP:

Accepted Answer

A)  there are unplanned decreases in inventories. 
B)  employment decreases. 
C)  aggregate output decreases. 
D)  actual real output is greater than equilibrium real output. 
A)  there are unplanned decreases in inventories. 
B)  employment decreases. 
C)  aggregate output decreases. 
D)  actual real output is greater than equilibrium real output.

Question 5

Suppose that investment spending increases by $50 billion and as a result the equilibrium income increases by $200 billion. The value of the marginal propensity to consume is:

Accepted Answer

A)  0.8. 
B)  0.4. 
C)  0.75. 
D)  4. 
A)  0.8. 
B)  0.4. 
C)  0.75. 
D)  4.

Question 6

If the marginal propensity to save is small, it will:

Accepted Answer

A)  make the multiplier smaller. 
B)  make the multiplier larger. 
C)  not affect the value of the multiplier. 
D)  increase the interest rate. 
A)  make the multiplier smaller. 
B)  make the multiplier larger. 
C)  not affect the value of the multiplier. 
D)  increase the interest rate.

Question 7

If aggregate expenditures are lower than real GDP:

Accepted Answer

A)  there will be unplanned increases in inventories. 
B)  employment increases. 
C)  aggregate output increases. 
D)  actual real output is less than equilibrium real output. 
A)  there will be unplanned increases in inventories. 
B)  employment increases. 
C)  aggregate output increases. 
D)  actual real output is less than equilibrium real output.

Question 8

Whenever real GDP exceeds planned aggregate expenditure, unplanned investment is _____; whenever real GDP falls short of planned aggregate expenditure, unplanned investment is _____.

Accepted Answer

A)  positive; negative 
B)  negative; positive 
C)  zero; positive 
D)  zero; negative 
A)  positive; negative 
B)  negative; positive 
C)  zero; positive 
D)  zero; negative

Question 9

In a simple, closed economy (no government or foreign sector), if disposable income increases by $1,000 and consumption increases by $600, the marginal propensity to save is:

Accepted Answer

A)  $600. 
B)  $400. 
C)  2.5. 
D)  0.40. 
A)  $600. 
B)  $400. 
C)  2.5. 
D)  0.40.

Question 10

A $50 million increase in investment spending will eventually cause equilibrium real GDP to:

Accepted Answer

A)  decrease by $50 million. 
B)  increase by $50 million. 
C)  increase by more than $50 million. 
D)  increase by less than $50 million. 
A)  decrease by $50 million. 
B)  increase by $50 million. 
C)  increase by more than $50 million. 
D)  increase by less than $50 million.

Question 11

The slope of the planned aggregate spending line is determined by the:

Accepted Answer

A)  marginal propensity to consume. 
B)  level of unplanned investment spending. 
C)  level of planned investment spending. 
D)  level of autonomous consumption. 
A)  marginal propensity to consume. 
B)  level of unplanned investment spending. 
C)  level of planned investment spending. 
D)  level of autonomous consumption.

Question 12

The changes in the economy of Finland in 2016 provide an example of:

Accepted Answer

A)  the risk associated with an agricultural economy. 
B)  illustrating the way booms and busts happen for the economy as a whole. 
C)  how public assistance programs can stimulate the economy. 
D)  the benefits of government budget surpluses. 
A)  the risk associated with an agricultural economy. 
B)  illustrating the way booms and busts happen for the economy as a whole. 
C)  how public assistance programs can stimulate the economy. 
D)  the benefits of government budget surpluses.

Question 13

If aggregate expenditures exceed real GDP, the economy will:

Accepted Answer

A)  expand, increasing employment. 
B)  expand, reducing prices. 
C)  contract, decreasing employment. 
D)  neither expand nor contract, holding employment the same. 
A)  expand, increasing employment. 
B)  expand, reducing prices. 
C)  contract, decreasing employment. 
D)  neither expand nor contract, holding employment the same.

Question 14

If your disposable income increases from $10,000 to $15,000 and your consumption increases from $9,000 to $12,000, your marginal propensity to consume is:

Accepted Answer

A)  0.2. 
B)  0.4. 
C)  0.6. 
D)  0.8. 
A)  0.2. 
B)  0.4. 
C)  0.6. 
D)  0.8.

Question 15

An increase in interest rates on business loans will _____ investment spending.

Accepted Answer

A)  decrease planned 
B)  decrease unplanned 
C)  increase planned 
D)  increase unplanned 
A)  decrease planned 
B)  decrease unplanned 
C)  increase planned 
D)  increase unplanned

Question 16

The Keynesian cross was developed by:

Accepted Answer

A)  John Maynard Keynes. 
B)  Paul Samuelson. 
C)  Adam Smith. 
D)  Robert Heilbroner. 
A)  John Maynard Keynes. 
B)  Paul Samuelson. 
C)  Adam Smith. 
D)  Robert Heilbroner.

Question 17

In a simple, closed economy (no government or foreign sector), disposable income increases from $2,000 to $3,000. If consumption increases from $1,500 to $2,100, the marginal propensity to consume is:

Accepted Answer

A)  $600. 
B)  0.71. 
C)  0.60. 
D)  0.50. 
A)  $600. 
B)  0.71. 
C)  0.60. 
D)  0.50.

Question 18

The marginal propensity to save is:

Accepted Answer

A)  savings divided by aggregate income. 
B)  the fraction of an additional dollar of disposable income that is saved. 
C)  1 + MPC. 
D)  savings divided by aggregate income, or 1 + MPC. 
A)  savings divided by aggregate income. 
B)  the fraction of an additional dollar of disposable income that is saved. 
C)  1 + MPC. 
D)  savings divided by aggregate income, or 1 + MPC.

Question 19

The planned aggregate spending line has a slope:

Accepted Answer

A)  greater than 1. 
B)  less than 1. 
C)  equal to 1. 
D)  less than 0. 
A)  greater than 1. 
B)  less than 1. 
C)  equal to 1. 
D)  less than 0.

Question 20

At the income-expenditure equilibrium, _____ is zero.

Accepted Answer

A)  investment net of depreciation 
B)  planned investment 
C)  unplanned inventory investment 
D)  inventory investment 
A)  investment net of depreciation 
B)  planned investment 
C)  unplanned inventory investment 
D)  inventory investment

The marginal propensity to consume (MPC) equals the change in _ divided by the change in _.

The initial impact of a sudden decrease in the expected growth rate of GDP will MOST likely be a change in _____ investment spending.

In a simple, closed economy (no government or foreign sector), disposable income increases from $2,000 to $3,000. If consumption increases from $1,500 to $2,100, the marginal propensity to save is:

If aggregate expenditures are higher than real GDP:

Suppose that investment spending increases by $50 billion and as a result the equilibrium income increases by $200 billion. The value of the marginal propensity to consume is:

If the marginal propensity to save is small, it will:

If aggregate expenditures are lower than real GDP:

Whenever real GDP exceeds planned aggregate expenditure, unplanned investment is _; whenever real GDP falls short of planned aggregate expenditure, unplanned investment is _.

In a simple, closed economy (no government or foreign sector), if disposable income increases by $1,000 and consumption increases by $600, the marginal propensity to save is:

A $50 million increase in investment spending will eventually cause equilibrium real GDP to:

The slope of the planned aggregate spending line is determined by the:

The changes in the economy of Finland in 2016 provide an example of:

If aggregate expenditures exceed real GDP, the economy will:

If your disposable income increases from $10,000 to $15,000 and your consumption increases from $9,000 to $12,000, your marginal propensity to consume is:

An increase in interest rates on business loans will _____ investment spending.

The Keynesian cross was developed by:

In a simple, closed economy (no government or foreign sector), disposable income increases from $2,000 to $3,000. If consumption increases from $1,500 to $2,100, the marginal propensity to consume is:

The marginal propensity to save is:

The planned aggregate spending line has a slope:

At the income-expenditure equilibrium, _____ is zero.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 11: Income and Expenditure

The marginal propensity to consume (MPC) equals the change in _____ divided by the change in _____.

The initial impact of a sudden decrease in the expected growth rate of GDP will MOST likely be a change in _____ investment spending.

In a simple, closed economy (no government or foreign sector), disposable income increases from $2,000 to $3,000. If consumption increases from $1,500 to $2,100, the marginal propensity to save is:

If aggregate expenditures are higher than real GDP:

Suppose that investment spending increases by $50 billion and as a result the equilibrium income increases by $200 billion. The value of the marginal propensity to consume is:

If the marginal propensity to save is small, it will:

If aggregate expenditures are lower than real GDP:

Whenever real GDP exceeds planned aggregate expenditure, unplanned investment is _____; whenever real GDP falls short of planned aggregate expenditure, unplanned investment is _____.

In a simple, closed economy (no government or foreign sector), if disposable income increases by $1,000 and consumption increases by $600, the marginal propensity to save is:

A $50 million increase in investment spending will eventually cause equilibrium real GDP to:

The slope of the planned aggregate spending line is determined by the:

The changes in the economy of Finland in 2016 provide an example of:

If aggregate expenditures exceed real GDP, the economy will:

If your disposable income increases from $10,000 to $15,000 and your consumption increases from $9,000 to $12,000, your marginal propensity to consume is:

An increase in interest rates on business loans will _____ investment spending.

The Keynesian cross was developed by:

In a simple, closed economy (no government or foreign sector), disposable income increases from $2,000 to $3,000. If consumption increases from $1,500 to $2,100, the marginal propensity to consume is:

The marginal propensity to save is:

The planned aggregate spending line has a slope:

At the income-expenditure equilibrium, _____ is zero.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

The marginal propensity to consume (MPC) equals the change in _ divided by the change in _.

Whenever real GDP exceeds planned aggregate expenditure, unplanned investment is _; whenever real GDP falls short of planned aggregate expenditure, unplanned investment is _.