Question 1

A decrease in the price level in an economy will _____.

Accepted Answer

A) increase the real value of dollar-denominated assets 
B) shift the aggregate expenditure line downward 
C) decrease the equilibrium level of output demanded 
D) cause an upward movement along the aggregate demand curve 
E) shift the aggregate demand curve leftward 
A) increase the real value of dollar-denominated assets 
B) shift the aggregate expenditure line downward 
C) decrease the equilibrium level of output demanded 
D) cause an upward movement along the aggregate demand curve 
E) shift the aggregate demand curve leftward A

Question 2

The table given below shows the disposable income and consumption of a household.In the table below,the level of saving at a disposable income of $1,200 is:
Table 9.1
?
?
$\begin{array}{cc}\text { Disposable }\
\text { Income }(\$) & \text { Consumption }(\$) \
\hline 1,000 & 800 \
1,100 & 880 \
1,200 & 960 \
1,300 & 1,040 \
1,400 & 1,120
\end{array}$

Accepted Answer

A) $80 
B) $240 
C) $950 
D) $1,200 
E) $1,300 
A) $80 
B) $240 
C) $950 
D) $1,200 
E) $1,300 B

Question 3

A decrease in stock prices will _____ the net wealth of households and _____ consumption.

Accepted Answer

A) reduce;increase 
B) reduce;decrease 
C) reduce;not change 
D) increase;increase 
E) increase;decrease 
A) reduce;increase 
B) reduce;decrease 
C) reduce;not change 
D) increase;increase 
E) increase;decrease B

Question 4

Which of the following is an effect of an increase in the price level in an economy?

Accepted Answer

A) The real value of dollar-denominated assets will increase. 
B) The aggregate expenditure line will shift upward. 
C) The equilibrium real gross domestic product will decrease. 
D) There will be downward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift rightward. 
A) The real value of dollar-denominated assets will increase. 
B) The aggregate expenditure line will shift upward. 
C) The equilibrium real gross domestic product will decrease. 
D) There will be downward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift rightward.

Question 5

An increase in autonomous investment in an economy will _____.

Accepted Answer

A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward 
C) result in an upward movement along the aggregate expenditure line 
D) result in a downward movement along the aggregate expenditure line 
E) increase aggregate expenditures only at high levels of income 
A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward 
C) result in an upward movement along the aggregate expenditure line 
D) result in a downward movement along the aggregate expenditure line 
E) increase aggregate expenditures only at high levels of income

Question 6

As disposable income increases,_____.

Accepted Answer

A) consumption and saving both increase 
B) consumption increases and saving decreases 
C) consumption and saving both decrease 
D) consumption decreases but saving increases 
E) saving increases,but we cannot predict what happens to consumption 
A) consumption and saving both increase 
B) consumption increases and saving decreases 
C) consumption and saving both decrease 
D) consumption decreases but saving increases 
E) saving increases,but we cannot predict what happens to consumption

Question 7

Which of the following is least likely to cause a shift of the consumption function?

Accepted Answer

A) A change in the level of saving 
B) A change in consumer expectations about future prices 
C) A change in household wealth 
D) A change in investment spending 
E) A change in the interest rate 
A) A change in the level of saving 
B) A change in consumer expectations about future prices 
C) A change in household wealth 
D) A change in investment spending 
E) A change in the interest rate

Question 8

The consumption function assumes that:

Accepted Answer

A) only disposable income affects consumption. 
B) only the price level affects consumption. 
C) many factors other than disposable income affect consumption,and each is allowed to vary along the consumption function. 
D) factors other than disposable income affect consumption,but those are held constant along the consumption function. 
E) only consumer expectations affect consumption. 
A) only disposable income affects consumption. 
B) only the price level affects consumption. 
C) many factors other than disposable income affect consumption,and each is allowed to vary along the consumption function. 
D) factors other than disposable income affect consumption,but those are held constant along the consumption function. 
E) only consumer expectations affect consumption.

Question 9

Which of the following best describes aggregate expenditure?

Accepted Answer

A) C + I + G + (X − M) 
B) C + S + G + (X − M) 
C) C + I + G + (X + M) 
D) C + I + T + (X − M) 
E) C + I + T + (X + M) 
A) C + I + G + (X − M) 
B) C + S + G + (X − M) 
C) C + I + G + (X + M) 
D) C + I + T + (X − M) 
E) C + I + T + (X + M)

Question 10

Fluctuations in investment:

Accepted Answer

A) account for almost all of the variability in gross domestic product (GDP)only during expansions. 
B) account for little of the variability in gross domestic product (GDP). 
C) account for almost all of the variability in gross domestic product (GDP)only during recessions. 
D) are larger during expansions than during recessions. 
E) account for more of the variability in gross domestic product (GDP)than consumption. 
A) account for almost all of the variability in gross domestic product (GDP)only during expansions. 
B) account for little of the variability in gross domestic product (GDP). 
C) account for almost all of the variability in gross domestic product (GDP)only during recessions. 
D) are larger during expansions than during recessions. 
E) account for more of the variability in gross domestic product (GDP)than consumption.

Question 11

If the marginal propensity to consume (MPC)is 4/5,the value of the simple multiplier is:

Accepted Answer

A) 4. 
B) 1/5. 
C) 4/5. 
D) 5/4. 
E) 5. 
A) 4. 
B) 1/5. 
C) 4/5. 
D) 5/4. 
E) 5.

Question 12

When economists say investment is autonomous,they mean that investment is independent of the level of saving.

Accepted Answer

A) True 
 B)False

Question 13

If the marginal propensity to save (MPS)is 0.25,the simple multiplier is _____.

Accepted Answer

A) 25 
B) 75 
C) 5 
D) 3/4 
E) 4 
A) 25 
B) 75 
C) 5 
D) 3/4 
E) 4

Question 14

An increase in income in other countries,other things equal,would cause U.S._____.

Accepted Answer

A) exports to decrease and imports to increase 
B) exports to increase and imports to increase 
C) imports to decrease and exports to decrease 
D) imports to increase and exports to remain unchanged 
E) imports to remain unchanged and exports to increase 
A) exports to decrease and imports to increase 
B) exports to increase and imports to increase 
C) imports to decrease and exports to decrease 
D) imports to increase and exports to remain unchanged 
E) imports to remain unchanged and exports to increase

Question 15

Government outlays equal:

Accepted Answer

A) the difference between government expenditures and government revenues. 
B) the sum of government expenditures and government revenues. 
C) the sum of government purchases and transfer payments. 
D) the difference between government purchases and transfer payments. 
E) the ratio of government purchases to transfer payments. 
A) the difference between government expenditures and government revenues. 
B) the sum of government expenditures and government revenues. 
C) the sum of government purchases and transfer payments. 
D) the difference between government purchases and transfer payments. 
E) the ratio of government purchases to transfer payments.

Question 16

The marginal propensity to consume:

Accepted Answer

A) is the proportion of disposable income that is consumed. 
B) is the ratio of disposable income to consumption. 
C) is the change in consumption relative to a change in disposable income. 
D) minus the marginal propensity to save must equal 1. 
E) is greater than 1 at all levels of income. 
A) is the proportion of disposable income that is consumed. 
B) is the ratio of disposable income to consumption. 
C) is the change in consumption relative to a change in disposable income. 
D) minus the marginal propensity to save must equal 1. 
E) is greater than 1 at all levels of income.

Question 17

Increases in the marginal propensity to consume (MPC),other things constant,_____.

Accepted Answer

A) increase the value of the multiplier 
B) decrease the value of the multiplier 
C) increase the marginal propensity to save 
D) shift the aggregate expenditure curve downward 
E) cause a downward movement along the aggregate expenditure curve 
A) increase the value of the multiplier 
B) decrease the value of the multiplier 
C) increase the marginal propensity to save 
D) shift the aggregate expenditure curve downward 
E) cause a downward movement along the aggregate expenditure curve

Question 18

An increase in the interest rate,other things constant,decreases the amount of investment spending.

Accepted Answer

A) True 
 B)False

Question 19

An increase in net wealth will:

Accepted Answer

A) increase consumption and saving at each level of income. 
B) increase saving and decrease consumption at each level of income. 
C) decrease consumption and saving at each level of income. 
D) increase consumption and decrease saving at each level of income. 
E) have no effect on consumption because consumption is a function of income. 
A) increase consumption and saving at each level of income. 
B) increase saving and decrease consumption at each level of income. 
C) decrease consumption and saving at each level of income. 
D) increase consumption and decrease saving at each level of income. 
E) have no effect on consumption because consumption is a function of income.

Question 20

Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?

Accepted Answer

A) Real GDP is less than the equilibrium level of real GDP demanded. 
B) Real GDP is greater than the equilibrium level of real GDP demanded. 
C) Real GDP equals the equilibrium level of real GDP demanded. 
D) At equilibrium real GDP,there is no inflation. 
E) At equilibrium real GDP,there is no saving. 
A) Real GDP is less than the equilibrium level of real GDP demanded. 
B) Real GDP is greater than the equilibrium level of real GDP demanded. 
C) Real GDP equals the equilibrium level of real GDP demanded. 
D) At equilibrium real GDP,there is no inflation. 
E) At equilibrium real GDP,there is no saving.

A decrease in the price level in an economy will _____.

A decrease in stock prices will _ the net wealth of households and _ consumption.

Which of the following is an effect of an increase in the price level in an economy?

An increase in autonomous investment in an economy will _____.

As disposable income increases,_____.

Which of the following is least likely to cause a shift of the consumption function?

The consumption function assumes that:

Which of the following best describes aggregate expenditure?

Fluctuations in investment:

If the marginal propensity to consume (MPC)is 4/5,the value of the simple multiplier is:

When economists say investment is autonomous,they mean that investment is independent of the level of saving.

If the marginal propensity to save (MPS)is 0.25,the simple multiplier is _____.

An increase in income in other countries,other things equal,would cause U.S._____.

Government outlays equal:

The marginal propensity to consume:

Increases in the marginal propensity to consume (MPC),other things constant,_____.

An increase in the interest rate,other things constant,decreases the amount of investment spending.

An increase in net wealth will:

Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 9: Aggregate Demand

A decrease in the price level in an economy will _____.

A decrease in stock prices will _____ the net wealth of households and _____ consumption.

Which of the following is an effect of an increase in the price level in an economy?

An increase in autonomous investment in an economy will _____.

As disposable income increases,_____.

Which of the following is least likely to cause a shift of the consumption function?

The consumption function assumes that:

Which of the following best describes aggregate expenditure?

Fluctuations in investment:

If the marginal propensity to consume (MPC)is 4/5,the value of the simple multiplier is:

When economists say investment is autonomous,they mean that investment is independent of the level of saving.

If the marginal propensity to save (MPS)is 0.25,the simple multiplier is _____.

An increase in income in other countries,other things equal,would cause U.S._____.

Government outlays equal:

The marginal propensity to consume:

Increases in the marginal propensity to consume (MPC),other things constant,_____.

An increase in the interest rate,other things constant,decreases the amount of investment spending.

An increase in net wealth will:

Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

A decrease in stock prices will _ the net wealth of households and _ consumption.