Question 1

For an economy, the government spending multiplier is equal to the investment multiplier.

Accepted Answer

A) True 
 B)False

Question 2

The slope of the consumption function is equal to:

Accepted Answer

A)  autonomous consumption. 
B)  the marginal propensity to consume. 
C)  the marginal propensity to save. 
D)  zero. 
A)  autonomous consumption. 
B)  the marginal propensity to consume. 
C)  the marginal propensity to save. 
D)  zero.

Question 3

-In Figure 11.1, a decrease in the marginal propensity to consume is represented by a change in the consumption function from

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 4

An upward shift of the planned expenditure curve resulting from a decrease in the price level corresponds to

Accepted Answer

A)  aggregate demand shifting to the right. 
B)  aggregate demand shifting to the left. 
C)  a movement down along the aggregate demand curve. 
D)  a movement up along the aggregate demand curve. 
A)  aggregate demand shifting to the right. 
B)  aggregate demand shifting to the left. 
C)  a movement down along the aggregate demand curve. 
D)  a movement up along the aggregate demand curve.

Question 5

-Refer to Figure 11.4. Which diagram illustrates the effect of an increase in the marginal propensity to consume?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 6

Table 11.1
  
-Refer to Table 11.1. At the equilibrium level of output, y*, what is the level of imports?

Accepted Answer

A)  266.25 
B)  356.25 
C)  1065.00 
D)  1425.00 
A)  266.25 
B)  356.25 
C)  1065.00 
D)  1425.00

Question 7

How do automatic stabilizers work to mitigate fluctuations in the level of economic activity?

Accepted Answer

When income is high, the government coll

Question 8

In the savings function S = -725 + 0.25y, 0.25 is the

Accepted Answer

A)  MPC. 
B)  MPS. 
C)  slope of the consumption function. 
D)  vertical intercept of the savings function. 
A)  MPC. 
B)  MPS. 
C)  slope of the consumption function. 
D)  vertical intercept of the savings function.

Question 9

Let C = 150 + 0.5y and I = 45. At the equilibrium level of income, y*, the level of saving is

Accepted Answer

A)  45. 
B)  75. 
C)  105. 
D)  150. 
A)  45. 
B)  75. 
C)  105. 
D)  150.

Question 10

The income-expenditure model assumes that the aggregate supply curve is horizontal at a given price level.

Accepted Answer

A) True 
 B)False

Question 11

At a fixed income level, an increase in consumption which is accompanied by a decrease in savings is reflected by

Accepted Answer

A)  an upward rotation of the consumption function. 
B)  a downward rotation of the consumption function. 
C)  an upward shift of the consumption function. 
D)  a movement up along the consumption function. 
A)  an upward rotation of the consumption function. 
B)  a downward rotation of the consumption function. 
C)  an upward shift of the consumption function. 
D)  a movement up along the consumption function.

Question 12

Let S =y - (150 + 0.6y). Assume no government or foreign sectors. What is the consumption function?

Accepted Answer

A)  C = -150 + 0.4y 
B)  C = 150 + 0.4y 
C)  C = 150 + 0.6y 
D)  C = -150 - 0.6y 
A)  C = -150 + 0.4y 
B)  C = 150 + 0.4y 
C)  C = 150 + 0.6y 
D)  C = -150 - 0.6y

Question 13

-Refer to Figure 11.5. A decrease in exports is best illustrated by diagram

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 14

In the simple economy where y = C + I, equilibrium output is determined at the level of income where saving equals investment.

Accepted Answer

A) True 
 B)False

Question 15

Table 11.1
  
-Refer to Table 11.1. If the marginal propensity to import increases to 0.5 (mpi = 0.5), what is the new equilibrium level of output?

Accepted Answer

A)  568.00 
B)  760.00 
C)  946.67 
D)  1,266.67 
A)  568.00 
B)  760.00 
C)  946.67 
D)  1,266.67

Question 16

In the income-expenditure model, equilibrium output is the level of output at which the 45-degree line intersects the planned expenditures line. Explain why this output level is an equilibrium level. Illustrate your answer with a diagram of the income-expenditure model.

Accepted Answer

Equilibrium refers to a position of rest

Question 17

If the consumption function is C = 90 + 0.75y, then the marginal propensity to save is

Accepted Answer

A)  0.25. 
B)  0.75. 
C)  67.5. 
D)  90. 
A)  0.25. 
B)  0.75. 
C)  67.5. 
D)  90.

Question 18

-In Figure 11.1, a decrease in the marginal propensity to save is represented by a change in the consumption function from

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 19

Suppose the overall MPC is 0.75 and the marginal propensity to import is 0.25. A $4 billion increase in U.S. exports will lead to a ________ increase in GDP.

Accepted Answer

A)  $6 billion 
B)  $8 billion 
C)  $12 billion 
D)  $16 billion 
A)  $6 billion 
B)  $8 billion 
C)  $12 billion 
D)  $16 billion

Question 20

If an economy is producing a level of output which is lower than the equilibrium level, planned expenditures ________ total output and ________ goods and services are being produced than are being demanded.

Accepted Answer

A)  exceed; more 
B)  exceed; fewer 
C)  are less than; more 
D)  are less than; fewer 
A)  exceed; more 
B)  exceed; fewer 
C)  are less than; more 
D)  are less than; fewer

For an economy, the government spending multiplier is equal to the investment multiplier.

The slope of the consumption function is equal to:

-In Figure 11.1, a decrease in the marginal propensity to consume is represented by a change in the consumption function from

An upward shift of the planned expenditure curve resulting from a decrease in the price level corresponds to

-Refer to Figure 11.4. Which diagram illustrates the effect of an increase in the marginal propensity to consume?

Table 11.1 -Refer to Table 11.1. At the equilibrium level of output, y*, what is the level of imports?

How do automatic stabilizers work to mitigate fluctuations in the level of economic activity?

In the savings function S = -725 + 0.25y, 0.25 is the

Let C = 150 + 0.5y and I = 45. At the equilibrium level of income, y*, the level of saving is

The income-expenditure model assumes that the aggregate supply curve is horizontal at a given price level.

At a fixed income level, an increase in consumption which is accompanied by a decrease in savings is reflected by

Let S =y - (150 + 0.6y). Assume no government or foreign sectors. What is the consumption function?

-Refer to Figure 11.5. A decrease in exports is best illustrated by diagram

In the simple economy where y = C + I, equilibrium output is determined at the level of income where saving equals investment.

Table 11.1 -Refer to Table 11.1. If the marginal propensity to import increases to 0.5 (mpi = 0.5), what is the new equilibrium level of output?

In the income-expenditure model, equilibrium output is the level of output at which the 45-degree line intersects the planned expenditures line. Explain why this output level is an equilibrium level. Illustrate your answer with a diagram of the income-expenditure model.

If the consumption function is C = 90 + 0.75y, then the marginal propensity to save is

-In Figure 11.1, a decrease in the marginal propensity to save is represented by a change in the consumption function from

Suppose the overall MPC is 0.75 and the marginal propensity to import is 0.25. A $4 billion increase in U.S. exports will lead to a ________ increase in GDP.

If an economy is producing a level of output which is lower than the equilibrium level, planned expenditures total output and goods and services are being produced than are being demanded.

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Aggregate Demand and Aggregate Supply

Fiscal Policy

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

Exam 11: The Income-Expenditure Model

For an economy, the government spending multiplier is equal to the investment multiplier.

The slope of the consumption function is equal to:

-In Figure 11.1, a decrease in the marginal propensity to consume is represented by a change in the consumption function from

An upward shift of the planned expenditure curve resulting from a decrease in the price level corresponds to

-Refer to Figure 11.4. Which diagram illustrates the effect of an increase in the marginal propensity to consume?

Table 11.1 -Refer to Table 11.1. At the equilibrium level of output, y*, what is the level of imports?

How do automatic stabilizers work to mitigate fluctuations in the level of economic activity?

In the savings function S = -725 + 0.25y, 0.25 is the

Let C = 150 + 0.5y and I = 45. At the equilibrium level of income, y*, the level of saving is

The income-expenditure model assumes that the aggregate supply curve is horizontal at a given price level.

At a fixed income level, an increase in consumption which is accompanied by a decrease in savings is reflected by

Let S =y - (150 + 0.6y). Assume no government or foreign sectors. What is the consumption function?

-Refer to Figure 11.5. A decrease in exports is best illustrated by diagram

In the simple economy where y = C + I, equilibrium output is determined at the level of income where saving equals investment.

Table 11.1 -Refer to Table 11.1. If the marginal propensity to import increases to 0.5 (mpi = 0.5), what is the new equilibrium level of output?

In the income-expenditure model, equilibrium output is the level of output at which the 45-degree line intersects the planned expenditures line. Explain why this output level is an equilibrium level. Illustrate your answer with a diagram of the income-expenditure model.

If the consumption function is C = 90 + 0.75y, then the marginal propensity to save is

-In Figure 11.1, a decrease in the marginal propensity to save is represented by a change in the consumption function from

Suppose the overall MPC is 0.75 and the marginal propensity to import is 0.25. A $4 billion increase in U.S. exports will lead to a ________ increase in GDP.

If an economy is producing a level of output which is lower than the equilibrium level, planned expenditures ________ total output and ________ goods and services are being produced than are being demanded.

Introduction: What Is Economics?

The Key Principles of Economics

Exchange and Markets

Demand, Supply, and Market Equilibrium

Measuring a Nation's Production and Income

Unemployment and Inflation

The Economy at Full Employment

Why Do Economies Grow?

Aggregate Demand and Aggregate Supply

Fiscal Policy

Investment and Financial Markets

Money and the Banking System

The Federal Reserve and Monetary Policy

Modern Macroeconomics: From the Short Run to the Long Run

The Dynamics of Inflation and Unemployment

Macroeconomic Policy Debates

International Trade and Public Policy

The World of International Finance

Filters

If an economy is producing a level of output which is lower than the equilibrium level, planned expenditures total output and goods and services are being produced than are being demanded.