Question 1

Saving remaining constant, the average propensity to save declines with an increase in disposable income.

Accepted Answer

A) True 
 B)False

Question 2

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.?
  
-Refer to Table 9.3. Calculate the marginal propensity to consume in the economy.

Accepted Answer

A)  0.25 
B)  0.50 
C)  0.75 
D)  0.80 
E)  1.25 
A)  0.25 
B)  0.50 
C)  0.75 
D)  0.80 
E)  1.25

Question 3

Other things equal, when the U.S. dollar depreciates, domestic exports rise at every level of domestic income.

Accepted Answer

A) True 
 B)False

Question 4

Any increase in autonomous consumption is associated with:

Accepted Answer

A)  an equivalent increase in autonomous saving. 
B)  an equivalent decrease in autonomous saving. 
C)  an equivalent increase in the slope of the saving function. 
D)  an equivalent decrease in the slope of the consumption function. 
E)  an equivalent movement along the consumption function. 
A)  an equivalent increase in autonomous saving. 
B)  an equivalent decrease in autonomous saving. 
C)  an equivalent increase in the slope of the saving function. 
D)  an equivalent decrease in the slope of the consumption function. 
E)  an equivalent movement along the consumption function.

Question 5

The consumption function becomes flatter if:

Accepted Answer

A)  the average propensity to spend increases. 
B)  the marginal propensity to spend increases. 
C)  the marginal propensity to save increases. 
D)  the autonomous consumption increases. 
E)  the autonomous consumption decreases. 
A)  the average propensity to spend increases. 
B)  the marginal propensity to spend increases. 
C)  the marginal propensity to save increases. 
D)  the autonomous consumption increases. 
E)  the autonomous consumption decreases.

Question 6

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.?
  
-Refer to Table 9.3. At an income level of $300, the average propensity to save equals:

Accepted Answer

A)  0.10. 
B)  0.23. 
C)  0.33. 
D)  0.67. 
E)  1.50. 
A)  0.10. 
B)  0.23. 
C)  0.33. 
D)  0.67. 
E)  1.50.

Question 7

The United States introduced investment tax credit in 1962 and has continued to offer it till date. This has reduced the volatility of investments in the country.

Accepted Answer

A) True 
 B)False

Question 8

According to the permanent income hypothesis, when income rises above the permanent income level, the household saves at a lower rate than the long-run MPS.

Accepted Answer

A) True 
 B)False

Question 9

The figure given below represents the saving function of an economy.?Figure 9.1
  
-Refer to Figure 9.1. At the real GDP level of $400 billion, which of the following statements is true?

Accepted Answer

A)  There is dissaving. 
B)  Saving is equal to $10 billion. 
C)  Consumption is equal to disposable income. 
D)  The slope of the saving function is equal to zero. 
E)  The slope of the consumption function is equal to zero. 
A)  There is dissaving. 
B)  Saving is equal to $10 billion. 
C)  Consumption is equal to disposable income. 
D)  The slope of the saving function is equal to zero. 
E)  The slope of the consumption function is equal to zero.

Question 10

In the country of Marzipana, total consumption in Year 1 was $56,000 million and in Year 2 was $60,000 million. It has been observed that each time disposable income changes in this country by $100, consumption changes by $70. Using this information compute the change in disposable income from Year 1 to Year 2.

Accepted Answer

A)  Disposable income increased by $2,800 million in Year 2. 
B)  Disposable income decreased by $2,000 million in Year 2. 
C)  Disposable income increased by $2,000 million in Year 2. 
D)  Disposable income increased by $4,500 million in Year 2. 
E)  Disposable income decreased by $2,600 million in Year 2. 
A)  Disposable income increased by $2,800 million in Year 2. 
B)  Disposable income decreased by $2,000 million in Year 2. 
C)  Disposable income increased by $2,000 million in Year 2. 
D)  Disposable income increased by $4,500 million in Year 2. 
E)  Disposable income decreased by $2,600 million in Year 2.

Question 11

Which of the following is least likely to contribute to the volatility of investment spending?

Accepted Answer

A)  Expectations about business conditions 
B)  Changes in government spending 
C)  Changes in tax laws 
D)  Changes in capacity utilization 
E)  Interest rate fluctuations 
A)  Expectations about business conditions 
B)  Changes in government spending 
C)  Changes in tax laws 
D)  Changes in capacity utilization 
E)  Interest rate fluctuations

Question 12

All of the following would cause exports to decline, except:

Accepted Answer

A)  a depreciation of the domestic currency. 
B)  a decline in foreign income. 
C)  stricter government regulations on international trade. 
D)  a decline in foreign preferences for domestic goods. 
E)  foreign import quotas on domestic products. 
A)  a depreciation of the domestic currency. 
B)  a decline in foreign income. 
C)  stricter government regulations on international trade. 
D)  a decline in foreign preferences for domestic goods. 
E)  foreign import quotas on domestic products.

Question 13

Investment is considered to be negatively correlated with current real GDP.

Accepted Answer

A) True 
 B)False

Question 14

The sum of the MPC and the MPS is always:

Accepted Answer

A)  greater than 1. 
B)  less than 1. 
C)  equal to 1. 
D)  equal to zero. 
E)  between 0 and 1. 
A)  greater than 1. 
B)  less than 1. 
C)  equal to 1. 
D)  equal to zero. 
E)  between 0 and 1.

Question 15

The consumer confidence index can be defined as:

Accepted Answer

A)  an economic index that measures how consumers feel about their government. 
B)  an economic index that measures how confident companies are about keeping their current consumers. 
C)  an economic index that measures household expectations about the economy. 
D)  an economic index that measures how investors feel about their investments in the stock market. 
E)  an economic index used to measure consumers' confidence on a particular brand. 
A)  an economic index that measures how consumers feel about their government. 
B)  an economic index that measures how confident companies are about keeping their current consumers. 
C)  an economic index that measures household expectations about the economy. 
D)  an economic index that measures how investors feel about their investments in the stock market. 
E)  an economic index used to measure consumers' confidence on a particular brand.

Question 16

The average propensity to save (APS) is the proportion of disposable income that is saved.

Accepted Answer

A) True 
 B)False

Question 17

-Refer to Table 9.2. If a firm purchases the machine by taking out a one-year loan, how much interest will the firm have to pay?

Accepted Answer

A)  $301,500 
B)  $30,150 
C)  $270,000 
D)  $27,000 
E)  $9,000 
A)  $301,500 
B)  $30,150 
C)  $270,000 
D)  $27,000 
E)  $9,000

Question 18

Dissaving occurs when:

Accepted Answer

A)  disposable income is greater than consumption. 
B)  consumption is greater than disposable income. 
C)  consumption is equal to disposable income. 
D)  consumption is greater than personal income. 
E)  consumption is less than personal income. 
A)  disposable income is greater than consumption. 
B)  consumption is greater than disposable income. 
C)  consumption is equal to disposable income. 
D)  consumption is greater than personal income. 
E)  consumption is less than personal income.

Question 19

Economists have proved that a substantial increase in income during a month does not affect consumption much in the short run unless it is perceived as a permanent increase.

Accepted Answer

A) True 
 B)False

Question 20

Dissaving occurs when the consumption function lies below the 45-degree line.

Accepted Answer

A) True 
 B)False

Saving remaining constant, the average propensity to save declines with an increase in disposable income.

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.? -Refer to Table 9.3. Calculate the marginal propensity to consume in the economy.

Other things equal, when the U.S. dollar depreciates, domestic exports rise at every level of domestic income.

Any increase in autonomous consumption is associated with:

The consumption function becomes flatter if:

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.? -Refer to Table 9.3. At an income level of $300, the average propensity to save equals:

The United States introduced investment tax credit in 1962 and has continued to offer it till date. This has reduced the volatility of investments in the country.

According to the permanent income hypothesis, when income rises above the permanent income level, the household saves at a lower rate than the long-run MPS.

The figure given below represents the saving function of an economy.?Figure 9.1 -Refer to Figure 9.1. At the real GDP level of $400 billion, which of the following statements is true?

Which of the following is least likely to contribute to the volatility of investment spending?

All of the following would cause exports to decline, except:

Investment is considered to be negatively correlated with current real GDP.

The sum of the MPC and the MPS is always:

The consumer confidence index can be defined as:

The average propensity to save (APS) is the proportion of disposable income that is saved.

-Refer to Table 9.2. If a firm purchases the machine by taking out a one-year loan, how much interest will the firm have to pay?

Dissaving occurs when:

Economists have proved that a substantial increase in income during a month does not affect consumption much in the short run unless it is perceived as a permanent increase.

Dissaving occurs when the consumption function lies below the 45-degree line.

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

Filters

Exam 9: Aggregate Expenditures

Saving remaining constant, the average propensity to save declines with an increase in disposable income.

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.? -Refer to Table 9.3. Calculate the marginal propensity to consume in the economy.

Other things equal, when the U.S. dollar depreciates, domestic exports rise at every level of domestic income.

Any increase in autonomous consumption is associated with:

The consumption function becomes flatter if:

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.? -Refer to Table 9.3. At an income level of $300, the average propensity to save equals:

The United States introduced investment tax credit in 1962 and has continued to offer it till date. This has reduced the volatility of investments in the country.

According to the permanent income hypothesis, when income rises above the permanent income level, the household saves at a lower rate than the long-run MPS.

The figure given below represents the saving function of an economy.?Figure 9.1 -Refer to Figure 9.1. At the real GDP level of $400 billion, which of the following statements is true?

Which of the following is least likely to contribute to the volatility of investment spending?

All of the following would cause exports to decline, except:

Investment is considered to be negatively correlated with current real GDP.

The sum of the MPC and the MPS is always:

The consumer confidence index can be defined as:

The average propensity to save (APS) is the proportion of disposable income that is saved.

-Refer to Table 9.2. If a firm purchases the machine by taking out a one-year loan, how much interest will the firm have to pay?

Dissaving occurs when:

Economists have proved that a substantial increase in income during a month does not affect consumption much in the short run unless it is perceived as a permanent increase.

Dissaving occurs when the consumption function lies below the 45-degree line.

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

Filters