Question 1

The income net of taxes is called _____.

Accepted Answer

A)  real income 
B)  disposable income 
C)  nominal income 
D)  taxable income 
E)  personal income 
A)  real income 
B)  disposable income 
C)  nominal income 
D)  taxable income 
E)  personal income

Question 2

The table given below reports the consumption expenditure of a nation at different levels of disposable income.?
  
-Refer to Table 9.1. At an income level of $45,000, the average propensity to save would be equal to:

Accepted Answer

A)  0.15. 
B)  0.75. 
C)  0.25. 
D)  0.20. 
E)  0.80. 
A)  0.15. 
B)  0.75. 
C)  0.25. 
D)  0.20. 
E)  0.80.

Question 3

MPI refers to the percentage of additional domestic income spent on imports.

Accepted Answer

A) True 
 B)False

Question 4

Households in America tend to consume more and more as they grow older.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following will cause the net export function to shift?

Accepted Answer

A)  A change in real GDP 
B)  An increase in government spending 
C)  An increase in investment spending 
D)  A change in the exchange rate 
E)  A change in the domestic interest rate 
A)  A change in real GDP 
B)  An increase in government spending 
C)  An increase in investment spending 
D)  A change in the exchange rate 
E)  A change in the domestic interest rate

Question 6

Planned investment is inversely related to the interest rate because the higher the interest rate, the higher the rate of return on investment projects.

Accepted Answer

A) True 
 B)False

Question 7

The figure given below shows the consumption function of a household.?Figure 9.2
  
-In Figure 9.2, consumption equals disposable income:

Accepted Answer

A)  at point A only. 
B)  at point B only. 
C)  at point C only. 
D)  at points A and C only. 
E)  at all points on the consumption function. 
A)  at point A only. 
B)  at point B only. 
C)  at point C only. 
D)  at points A and C only. 
E)  at all points on the consumption function.

Question 8

Suppose total disposable income in Country X rises by $500 billion while total consumption rises by $50 billion. What would be the slope of the consumption function for this nation?

Accepted Answer

A)  1 
B)  0.1 
C)  0.5 
D)  0.25 
E)  0.4 
A)  1 
B)  0.1 
C)  0.5 
D)  0.25 
E)  0.4

Question 9

An increase in the marginal propensity to consume necessarily reduces the marginal propensity to save.

Accepted Answer

A) True 
 B)False

Question 10

A change in consumption caused by a change in disposable income is shown by:

Accepted Answer

A)  a movement along the consumption function. 
B)  a rightward shift of the consumption function. 
C)  a change in the slope of the consumption function. 
D)  a leftward shift of the consumption function. 
E)  the point where the consumption function touches the 45 degree line. 
A)  a movement along the consumption function. 
B)  a rightward shift of the consumption function. 
C)  a change in the slope of the consumption function. 
D)  a leftward shift of the consumption function. 
E)  the point where the consumption function touches the 45 degree line.

Question 11

The consumption function illustrates that:

Accepted Answer

A)  saving increases as disposable income decreases. 
B)  consumption increases as saving increases. 
C)  consumption increases as disposable income increases. 
D)  consumption increases as disposable income decreases. 
E)  consumption increases as investment increases. 
A)  saving increases as disposable income decreases. 
B)  consumption increases as saving increases. 
C)  consumption increases as disposable income increases. 
D)  consumption increases as disposable income decreases. 
E)  consumption increases as investment increases.

Question 12

The table given below reports the consumption expenditure of a nation at different levels of disposable income.?
  
-Refer to Table 9.1. The income level of $18,000 coincides with:

Accepted Answer

A)  the origin of the graph. 
B)  the point where the consumption function touches the vertical axis. 
C)  the point where the MPC equals 1.00. 
D)  the point where the APC equals 1.00. 
E)  the point where the consumption function crosses the 45-degree line. 
A)  the origin of the graph. 
B)  the point where the consumption function touches the vertical axis. 
C)  the point where the MPC equals 1.00. 
D)  the point where the APC equals 1.00. 
E)  the point where the consumption function crosses the 45-degree line.

Question 13

The figure given below represents the consumption function of a country.?Figure 9.3
  
-Refer to Figure 9.3. The savings function of the country will have a positive intercept at all income levels _____.

Accepted Answer

A)  less than $200 
B)  greater than $200 
C)  less than $600 
D)  greater than $400 
E)  less than $800 
A)  less than $200 
B)  greater than $200 
C)  less than $600 
D)  greater than $400 
E)  less than $800

Question 14

In the table given below Y represents the aggregate expenditure of the economy on C = consumption, I = investment, G = government projects, and X = net exports.?
  
-According to Table 9.3, what is the marginal propensity to import?

Accepted Answer

A)  -0.20 
B)  0.40 
C)  -0.50 
D)  0.75 
E)  -0.80 
A)  -0.20 
B)  0.40 
C)  -0.50 
D)  0.75 
E)  -0.80

Question 15

If a household experiences a $880 increase in consumption with a $1,100 increase in disposable income, what is the slope of that household's saving function?

Accepted Answer

A)  0.20 
B)  2.0 
C)  0.80 
D)  0.08 
E)  0.25 
A)  0.20 
B)  2.0 
C)  0.80 
D)  0.08 
E)  0.25

Question 16

The amount of autonomous consumption in an economy is measured by the:

Accepted Answer

A)  the intercept of the consumption function when disposable income is positive. 
B)  the intercept of the consumption function where actual consumption is above the 45-degree line. 
C)  the intercept of the consumption function when disposable income is zero. 
D)  the intercept of the consumption function where actual consumption is below the 45-degree line. 
E)  the intercept of the consumption function when disposable income is negative. 
A)  the intercept of the consumption function when disposable income is positive. 
B)  the intercept of the consumption function where actual consumption is above the 45-degree line. 
C)  the intercept of the consumption function when disposable income is zero. 
D)  the intercept of the consumption function where actual consumption is below the 45-degree line. 
E)  the intercept of the consumption function when disposable income is negative.

Question 17

Which of the following factors will not affect the profit expectations of business firms and change the level of investment?

Accepted Answer

A)  Entry of new firms into the market 
B)  Introduction of new taxes 
C)  Announcement of new government subsidies 
D)  The current level of GDP 
E)  The marginal propensity to consume 
A)  Entry of new firms into the market 
B)  Introduction of new taxes 
C)  Announcement of new government subsidies 
D)  The current level of GDP 
E)  The marginal propensity to consume

Question 18

Other things equal, a marginal propensity to import of 0.8 implies that a $100 million increase in domestic income will lead to an $80 million decrease in net exports.

Accepted Answer

A) True 
 B)False

Question 19

The table given below reports the consumption expenditure of a nation at different levels of disposable income.?
  
-Refer to Table 9.1. At an income level of $10,000, the APS equals -0.20. Therefore, the APC has to be equal to:

Accepted Answer

A)  0.20. 
B)  0.80. 
C)  -1.20. 
D)  1.20. 
E)  1.80. 
A)  0.20. 
B)  0.80. 
C)  -1.20. 
D)  1.20. 
E)  1.80.

Question 20

The table given below reports the consumption expenditure of a nation at different levels of disposable income.?
  
-Refer to Table 9.1. When disposable income is $20,000, consumption spending equals:

Accepted Answer

A)  $24,500. 
B)  $15,000. 
C)  $18,500. 
D)  $19,500. 
E)  $18,000. 
A)  $24,500. 
B)  $15,000. 
C)  $18,500. 
D)  $19,500. 
E)  $18,000.

Exam 9: Aggregate Expenditures

The income net of taxes is called _____.

The table given below reports the consumption expenditure of a nation at different levels of disposable income.? -Refer to Table 9.1. At an income level of $45,000, the average propensity to save would be equal to:

MPI refers to the percentage of additional domestic income spent on imports.

Households in America tend to consume more and more as they grow older.

Which of the following will cause the net export function to shift?

Planned investment is inversely related to the interest rate because the higher the interest rate, the higher the rate of return on investment projects.

The figure given below shows the consumption function of a household.?Figure 9.2 -In Figure 9.2, consumption equals disposable income:

Suppose total disposable income in Country X rises by $500 billion while total consumption rises by $50 billion. What would be the slope of the consumption function for this nation?

An increase in the marginal propensity to consume necessarily reduces the marginal propensity to save.

A change in consumption caused by a change in disposable income is shown by:

The consumption function illustrates that:

The table given below reports the consumption expenditure of a nation at different levels of disposable income.? -Refer to Table 9.1. The income level of $18,000 coincides with:

The figure given below represents the consumption function of a country.?Figure 9.3 -Refer to Figure 9.3. The savings function of the country will have a positive intercept at all income levels _____.

In the table given below Y represents the aggregate expenditure of the economy on C = consumption, I = investment, G = government projects, and X = net exports.? -According to Table 9.3, what is the marginal propensity to import?

If a household experiences a $880 increase in consumption with a $1,100 increase in disposable income, what is the slope of that household's saving function?

The amount of autonomous consumption in an economy is measured by the:

Which of the following factors will not affect the profit expectations of business firms and change the level of investment?

Other things equal, a marginal propensity to import of 0.8 implies that a $100 million increase in domestic income will lead to an $80 million decrease in net exports.

The table given below reports the consumption expenditure of a nation at different levels of disposable income.? -Refer to Table 9.1. At an income level of $10,000, the APS equals -0.20. Therefore, the APC has to be equal to:

The table given below reports the consumption expenditure of a nation at different levels of disposable income.? -Refer to Table 9.1. When disposable income is $20,000, consumption spending equals:

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

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