Question 1

-According to the above table, the value of the MPC is

Accepted Answer

A)  0.9. 
B)  0.1. 
C)  0.5. 
D)  0.7. 
A)  0.9. 
B)  0.1. 
C)  0.5. 
D)  0.7.

Question 2

When the economy is operating at the equilibrium level of GDP, we know that

Accepted Answer

A)  total planned real consumption expenditures equal real GDP. 
B)  planned real investment spending equals real net exports of zero. 
C)  total planned real expenditures equal real GDP. 
D)  real net exports equal inventory changes. 
A)  total planned real consumption expenditures equal real GDP. 
B)  planned real investment spending equals real net exports of zero. 
C)  total planned real expenditures equal real GDP. 
D)  real net exports equal inventory changes.

Question 3

The following would cause an upward shift in the C + I + G + X curve EXCEPT

Accepted Answer

A)  an increase in disposable income. 
B)  an increase in export spending. 
C)  a decrease in import spending 
D)  an increase in household wealth. 
A)  an increase in disposable income. 
B)  an increase in export spending. 
C)  a decrease in import spending 
D)  an increase in household wealth.

Question 4

-In the above figure, the marginal propensity to consume (MPC) equals

Accepted Answer

A)  0.8. 
B)  0.9. 
C)  0.75. 
D)  0.85. 
A)  0.8. 
B)  0.9. 
C)  0.75. 
D)  0.85.

Question 5

-In the above table, the marginal propensity to save when disposable income changes from $1,000 to $2,000 is

Accepted Answer

A)  0.1. 
B)  0.2. 
C)  0.8. 
D)  -0.2. 
A)  0.1. 
B)  0.2. 
C)  0.8. 
D)  -0.2.

Question 6

The equation   is the

Accepted Answer

A)  average propensity to consume. 
B)  average propensity to save. 
C)  marginal propensity to consume. 
D)  marginal propensity to save. 
A)  average propensity to consume. 
B)  average propensity to save. 
C)  marginal propensity to consume. 
D)  marginal propensity to save.

Question 7

Which of the following does NOT occur when the economy is operating at the equilibrium level of GDP?

Accepted Answer

A)  Total planned expenditures equal real GDP. 
B)  Real GDP tends to rise over time. 
C)  Planned investment equals actual investment. 
D)  Inventory investment equals zero. 
A)  Total planned expenditures equal real GDP. 
B)  Real GDP tends to rise over time. 
C)  Planned investment equals actual investment. 
D)  Inventory investment equals zero.

Question 8

-According to the above figure, at an income level of Y1,

Accepted Answer

A)  the economy saves an amount equal to BD. 
B)  the marginal propensity to save is falling. 
C)  the average propensity to save is greater than one. 
D)  the economy dissaves an amount equal to BD. 
A)  the economy saves an amount equal to BD. 
B)  the marginal propensity to save is falling. 
C)  the average propensity to save is greater than one. 
D)  the economy dissaves an amount equal to BD.

Question 9

Dissaving occurs when

Accepted Answer

A)  households deposit unusually large amounts of money into their savings account. 
B)  households reduce their planned monthly saving. 
C)  consumption spending exceeds real disposable income. 
D)  the average saving rate for the nation unexpectedly falls. 
A)  households deposit unusually large amounts of money into their savings account. 
B)  households reduce their planned monthly saving. 
C)  consumption spending exceeds real disposable income. 
D)  the average saving rate for the nation unexpectedly falls.

Question 10

For an investment to be considered autonomous, it must

Accepted Answer

A)  be negatively related to the interest rate. 
B)  increase as the level of income increases. 
C)  include fixed components. 
D)  be independent of the level of real disposable income. 
A)  be negatively related to the interest rate. 
B)  increase as the level of income increases. 
C)  include fixed components. 
D)  be independent of the level of real disposable income.

Question 11

Changes in real planned investment spending have

Accepted Answer

A)  a direct relationship to changes in interest rates. 
B)  an inverse relationship to changes in the interest rate. 
C)  no identifiable relationship to changes in the interest rate. 
D)  a direct relationship to changes in the level of household savings. 
A)  a direct relationship to changes in interest rates. 
B)  an inverse relationship to changes in the interest rate. 
C)  no identifiable relationship to changes in the interest rate. 
D)  a direct relationship to changes in the level of household savings.

Question 12

-In the above figure, saving will equal zero when real disposable income equals

Accepted Answer

A)  0. 
B)  60. 
C)  600. 
D)  500. 
A)  0. 
B)  60. 
C)  600. 
D)  500.

Question 13

Suppose the marginal propensity to consume (MPC) is 0.8 and there is a $2,000 increase in autonomous consumption. Given this information, real GDP will increase by

Accepted Answer

A)  $1,600. 
B)  $2,000. 
C)  $2,500. 
D)  $10,000. 
A)  $1,600. 
B)  $2,000. 
C)  $2,500. 
D)  $10,000.

Question 14

If the level of consumption is $100 billion and disposable income is $125 billion, then the

Accepted Answer

A)  APC = 0.6 and saving is positive. 
B)  APC = 0.8 and saving is negative. 
C)  APC = 0.8 and saving is positive. 
D)  APC = 0.6 and saving is negative. 
A)  APC = 0.6 and saving is positive. 
B)  APC = 0.8 and saving is negative. 
C)  APC = 0.8 and saving is positive. 
D)  APC = 0.6 and saving is negative.

Question 15

-Refer to the above table. Which variables in the table are NOT autonomous?

Accepted Answer

A)  Taxes, government spending, and saving. 
B)  Planned investment, net exports, and government spending. 
C)  Planned consumption and planned saving. 
D)  Planned saving only. 
A)  Taxes, government spending, and saving. 
B)  Planned investment, net exports, and government spending. 
C)  Planned consumption and planned saving. 
D)  Planned saving only.

Question 16

Ignoring the government and foreign sectors, equilibrium real Gross Domestic Product (GDP) is determined by

Accepted Answer

A)  the intersection of the planned saving and planned investment schedules. 
B)  the intersection of the planned saving and planned consumption schedules. 
C)  the intersection of the consumption function with the 45-degree line. 
D)  finding the real Gross Domestic Product (GDP) for which real savings are zero. 
A)  the intersection of the planned saving and planned investment schedules. 
B)  the intersection of the planned saving and planned consumption schedules. 
C)  the intersection of the consumption function with the 45-degree line. 
D)  finding the real Gross Domestic Product (GDP) for which real savings are zero.

Question 17

Which one of the following statements is true?

Accepted Answer

A)  Over the years, real consumption spending has been more volatile than real investment spending. 
B)  Over the years, real investment spending has been more volatile than real consumption spending. 
C)  Domestic real investment in the United States was highest during the Great Depression. 
D)  In the Keynesian model, changes in the volume of real investment spending are fully explained by changes in the real interest rate. 
A)  Over the years, real consumption spending has been more volatile than real investment spending. 
B)  Over the years, real investment spending has been more volatile than real consumption spending. 
C)  Domestic real investment in the United States was highest during the Great Depression. 
D)  In the Keynesian model, changes in the volume of real investment spending are fully explained by changes in the real interest rate.

Question 18

Suppose when real disposable income is $5000, planned real consumption is $4000. When real disposable income increases to $6000, planned real saving increases by $500. The new planned real consumption expenditures is

Accepted Answer

A)  $5,000. 
B)  $4,500. 
C)  $6,000. 
D)  $3,500. 
A)  $5,000. 
B)  $4,500. 
C)  $6,000. 
D)  $3,500.

Question 19

The average propensity to save (APS) is

Accepted Answer

A)  the rate at which real savings changes over time. 
B)  the percentage of real disposable income saved. 
C)  the difference between the amounts of real disposable income consumed and saved. 
D)  the percentage of additional real disposable income that will go toward real saving. 
A)  the rate at which real savings changes over time. 
B)  the percentage of real disposable income saved. 
C)  the difference between the amounts of real disposable income consumed and saved. 
D)  the percentage of additional real disposable income that will go toward real saving.

Question 20

In economics, the term "autonomous" means

Accepted Answer

A)  existing independently. 
B)  non-economic related. 
C)  disposable income. 
D)  cash payments. 
A)  existing independently. 
B)  non-economic related. 
C)  disposable income. 
D)  cash payments.

Exam 12: Consumption, Real GDP, and the Multiplier

-According to the above table, the value of the MPC is

When the economy is operating at the equilibrium level of GDP, we know that

The following would cause an upward shift in the C + I + G + X curve EXCEPT

-In the above figure, the marginal propensity to consume (MPC) equals

-In the above table, the marginal propensity to save when disposable income changes from $1,000 to $2,000 is

The equation is the

Which of the following does NOT occur when the economy is operating at the equilibrium level of GDP?

-According to the above figure, at an income level of Y1,

Dissaving occurs when

For an investment to be considered autonomous, it must

Changes in real planned investment spending have

-In the above figure, saving will equal zero when real disposable income equals

Suppose the marginal propensity to consume (MPC) is 0.8 and there is a $2,000 increase in autonomous consumption. Given this information, real GDP will increase by

If the level of consumption is $100 billion and disposable income is $125 billion, then the

-Refer to the above table. Which variables in the table are NOT autonomous?

Ignoring the government and foreign sectors, equilibrium real Gross Domestic Product (GDP) is determined by

Which one of the following statements is true?

Suppose when real disposable income is $5000, planned real consumption is $4000. When real disposable income increases to $6000, planned real saving increases by $500. The new planned real consumption expenditures is

The average propensity to save (APS) is

In economics, the term "autonomous" means

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

-According to the above figure, at an income level of Y₁,