Question 1

Keynes argued that

Accepted Answer

A)  monopolistic elements in the economy will prevent an immediate sharp fall in prices as a result of decreasing demand. 
B)  wages and prices are not flexible in a downward direction. 
C)  a and b 
D)  none of the above 
A)  monopolistic elements in the economy will prevent an immediate sharp fall in prices as a result of decreasing demand. 
B)  wages and prices are not flexible in a downward direction. 
C)  a and b 
D)  none of the above

Question 2

If consumption is $1,230 when disposable income is $1,420,and consumption is $1,400 when disposable income is $1,620,then the marginal propensity to consume (MPC)is

Accepted Answer

A)  1.15. 
B)  0.15. 
C)  6.67. 
D)  0.85. 
A)  1.15. 
B)  0.15. 
C)  6.67. 
D)  0.85.

Question 3

-Refer to Exhibit 10-8.The marginal propensity to save (MPS)is

Accepted Answer

A)  0.90. 
B)  0.10. 
C)  0.80. 
D)  0.20. 
E)  5.00. 
A)  0.90. 
B)  0.10. 
C)  0.80. 
D)  0.20. 
E)  5.00.

Question 4

Autonomous consumption is

Accepted Answer

A)  the change in consumption that results as a person's (or nation's)income increases or decreases. 
B)  that portion of total consumption that is dependent upon the level of income. 
C)  the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult. 
D)  that portion of total consumption that is independent of the level of income. 
A)  the change in consumption that results as a person's (or nation's)income increases or decreases. 
B)  that portion of total consumption that is dependent upon the level of income. 
C)  the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult. 
D)  that portion of total consumption that is independent of the level of income.

Question 5

The larger the marginal propensity to save,

Accepted Answer

A)  the smaller the multiplier. 
B)  the larger the multiplier. 
C)  the smaller the change in Real GDP,given a change in autonomous consumption. 
D)  a and c 
E)  none of the above 
A)  the smaller the multiplier. 
B)  the larger the multiplier. 
C)  the smaller the change in Real GDP,given a change in autonomous consumption. 
D)  a and c 
E)  none of the above

Question 6

If income rises from $10,000 to $10,600 and consumption rises from $9,100 to $9,622,the marginal propensity to save (MPS)is

Accepted Answer

A)  0.13. 
B)  0.87. 
C)  0.25. 
D)  0.10. 
A)  0.13. 
B)  0.87. 
C)  0.25. 
D)  0.10.

Question 7

When total production is greater than total expenditures,__________ is produced than households want to buy,which leads to __________ in inventory,which signals firms that they have __________,which causes firms to cut back production.

Accepted Answer

A)  less; decreases; underproduced 
B)  less; increases; overproduced 
C)  more; decreases; underproduced 
D)  more; increases; overproduced 
A)  less; decreases; underproduced 
B)  less; increases; overproduced 
C)  more; decreases; underproduced 
D)  more; increases; overproduced

Question 8

-Refer to Exhibit 10-1.Equilibrium Real GDP occurs at

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q1 and Q3. 
E)  none of the above 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q1 and Q3. 
E)  none of the above

Question 9

-Refer to Exhibit 10-9.What is the value of the marginal propensity to save (MPS)that would correctly fill in blank (A)and the multiplier that would correctly fill in blank (B)?

Accepted Answer

A)  0.20; 5 
B)  0.08; 8 
C)  0.08; 12.5 
D)  0.05; 0.95 
A)  0.20; 5 
B)  0.08; 8 
C)  0.08; 12.5 
D)  0.05; 0.95

Question 10

For Say's law to hold in a money economy,

Accepted Answer

A)  funds invested must give rise to an equal amount of funds spent. 
B)  funds saved must give rise to an equal amount of funds invested. 
C)  funds spent must give rise to an equal amount of output produced. 
D)  interest rates must fall when saving decreases. 
E)  b and c 
A)  funds invested must give rise to an equal amount of funds spent. 
B)  funds saved must give rise to an equal amount of funds invested. 
C)  funds spent must give rise to an equal amount of output produced. 
D)  interest rates must fall when saving decreases. 
E)  b and c

Question 11

Here is a consumption function: C = C0 + MPC(Yd).If MPC is 0.85,then we know that

Accepted Answer

A)  as Yd rises by $1,Co rises by $0.85. 
B)  as Yd rises by $1,C rises by $0.85. 
C)  Yd rises by $0.85. 
D)  as C0 rises by $0.85,Yd rises by $1. 
A)  as Yd rises by $1,Co rises by $0.85. 
B)  as Yd rises by $1,C rises by $0.85. 
C)  Yd rises by $0.85. 
D)  as C0 rises by $0.85,Yd rises by $1.

Question 12

According to efficiency wage models,labor productivity depends on

Accepted Answer

A)  the number of employees at a firm; the smaller the number of employees,the more productive each employee is. 
B)  the amount of capital that employees have to work with. 
C)  the wage rate the firm pays its employees; a cut in wages can cause labor productivity to decline. 
D)  whether or not the economy is currently producing Natural Real GDP. 
E)  none of the above 
A)  the number of employees at a firm; the smaller the number of employees,the more productive each employee is. 
B)  the amount of capital that employees have to work with. 
C)  the wage rate the firm pays its employees; a cut in wages can cause labor productivity to decline. 
D)  whether or not the economy is currently producing Natural Real GDP. 
E)  none of the above

Question 13

When the MPC = 0.80,the multiplier is

Accepted Answer

A)  5.00. 
B)  0.25. 
C)  4.00. 
D)  7.50. 
A)  5.00. 
B)  0.25. 
C)  4.00. 
D)  7.50.

Question 14

-Refer to Exhibit 10-1.At Q3,there is a tendency for Real GDP to

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  There is not enough information to answer this question. 
A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  There is not enough information to answer this question.

Question 15

On a TE-TP diagram consider a level of Real GDP at which the vertical distance to the TE line is less than the vertical distance to the 45-degree line.This level of Real GDP is __________ its equilibrium level,with __________.

Accepted Answer

A) above; TE > TP B) above; TE TP D) below; TE < TP A) above; TE > TP B) above; TE TP D) below; TE < TP

Question 16

Autonomous spending rises by $10 billion and Real GDP rises by $50 billion.What does the marginal propensity to save equal?

Accepted Answer

A)  0.10 
B)  0.20 
C)  0.80 
D)  0.90 
E)  0.50 
A)  0.10 
B)  0.20 
C)  0.80 
D)  0.90 
E)  0.50

Question 17

A decline in housing prices can help to push the economy into a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 18

-Refer to Exhibit 10-3.The marginal propensity to consume (MPC)is

Accepted Answer

A)  0.80. 
B)  0.75. 
C)  0.20. 
D)  0.25. 
E)  0.90. 
A)  0.80. 
B)  0.75. 
C)  0.20. 
D)  0.25. 
E)  0.90.

Question 19

-Refer to Exhibit 10-3.The marginal propensity to save (MPS)is

Accepted Answer

A)  0. 
B)  0.10. 
C)  0.20. 
D)  0.25. 
E)  none of the above 
A)  0. 
B)  0.10. 
C)  0.20. 
D)  0.25. 
E)  none of the above

Question 20

The economy is in equilibrium,TP = TE,and Real GDP is $4,000 billion.The MPC is 0.60,the multiplier is operative,and idle resources exist at each expenditure round.Autonomous investment spending rises by $13 billion.As a result,the __________ curve shifts __________,inventory levels unexpectedly __________,business firms __________ the quantity of goods and services they produce,and Real GDP __________ by __________.

Accepted Answer

A)  TE,downward,rise,increase,rises,$32.5 billion 
B)  TE,upward,fall,increase,rises,$101.5 billion 
C)  TE,upward,fall,decrease,rises,$32.5 billion 
D)  TE,upward,fall,increase,rises,$32.5 billion 
E)  TP,upward,fall,increase,rises,$101.5 billion 
A)  TE,downward,rise,increase,rises,$32.5 billion 
B)  TE,upward,fall,increase,rises,$101.5 billion 
C)  TE,upward,fall,decrease,rises,$32.5 billion 
D)  TE,upward,fall,increase,rises,$32.5 billion 
E)  TP,upward,fall,increase,rises,$101.5 billion

Exam 10: Monopoly

Keynes argued that

If consumption is $1,230 when disposable income is $1,420,and consumption is $1,400 when disposable income is $1,620,then the marginal propensity to consume (MPC)is

-Refer to Exhibit 10-8.The marginal propensity to save (MPS)is

Autonomous consumption is

The larger the marginal propensity to save,

If income rises from $10,000 to $10,600 and consumption rises from $9,100 to $9,622,the marginal propensity to save (MPS)is

When total production is greater than total expenditures,__________ is produced than households want to buy,which leads to __________ in inventory,which signals firms that they have __________,which causes firms to cut back production.

-Refer to Exhibit 10-1.Equilibrium Real GDP occurs at

-Refer to Exhibit 10-9.What is the value of the marginal propensity to save (MPS)that would correctly fill in blank (A)and the multiplier that would correctly fill in blank (B)?

For Say's law to hold in a money economy,

Here is a consumption function: C = C0 + MPC(Yd).If MPC is 0.85,then we know that

According to efficiency wage models,labor productivity depends on

When the MPC = 0.80,the multiplier is

-Refer to Exhibit 10-1.At Q3,there is a tendency for Real GDP to

On a TE-TP diagram consider a level of Real GDP at which the vertical distance to the TE line is less than the vertical distance to the 45-degree line.This level of Real GDP is __________ its equilibrium level,with __________.

Autonomous spending rises by $10 billion and Real GDP rises by $50 billion.What does the marginal propensity to save equal?

A decline in housing prices can help to push the economy into a recessionary gap.

-Refer to Exhibit 10-3.The marginal propensity to consume (MPC)is

-Refer to Exhibit 10-3.The marginal propensity to save (MPS)is

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

When total production is greater than total expenditures, is produced than households want to buy,which leads to in inventory,which signals firms that they have __,which causes firms to cut back production.

Here is a consumption function: C = C₀ + MPC(Y_d).If MPC is 0.85,then we know that

-Refer to Exhibit 10-1.At Q₃,there is a tendency for Real GDP to

On a TE-TP diagram consider a level of Real GDP at which the vertical distance to the TE line is less than the vertical distance to the 45-degree line.This level of Real GDP is its equilibrium level,with .