Question 1

The following data relates to a national economy (all figures in $billions):
  
-Refer to the above graph to answer this question.What is the value of the multiplier?

Accepted Answer

A) 0.5. 
B) 1. 
C) 2. 
D) $600. 
A) 0.5. 
B) 1. 
C) 2. 
D) $600. C

Question 2

What are induced consumption and the marginal propensity to consume,respectively?

Accepted Answer

A) The amount of income that results from higher levels of consumption and the change in income divided by the change in consumption. 
B) The amount of consumption that results from higher levels of income and the change in consumption divided by the change in income. 
C) The amount of consumption that occurs at zero income and the change in consumption divided by the change in income. 
D) The amount of consumption that occurs at zero income and the change in income divided by the change in consumption. 
A) The amount of income that results from higher levels of consumption and the change in income divided by the change in consumption. 
B) The amount of consumption that results from higher levels of income and the change in consumption divided by the change in income. 
C) The amount of consumption that occurs at zero income and the change in consumption divided by the change in income. 
D) The amount of consumption that occurs at zero income and the change in income divided by the change in consumption. B

Question 3

The rate of interest is an important determinant of investment spending,even if a firm does not need to borrow funds.Why is this?

Accepted Answer

A) Because the lower the rate of interest,the higher will be the opportunity cost of investment. 
B) Because instead of investing,the firm always has the choice of putting its funds in a savings account which will pay a return. 
C) Because investment is usually more profitable than saving. 
D) Because the higher the rate of interest,the lower inflation rate. 
A) Because the lower the rate of interest,the higher will be the opportunity cost of investment. 
B) Because instead of investing,the firm always has the choice of putting its funds in a savings account which will pay a return. 
C) Because investment is usually more profitable than saving. 
D) Because the higher the rate of interest,the lower inflation rate. B

Question 4

What is the marginal propensity to import?

Accepted Answer

A) It is the change in incomes resulting from a change in imports. 
B) It is the effect on net exports resulting from a change in imports. 
C) It is the effect on imports of a change in the exchange rate. 
D) It is the change in imports that results from a change in income. 
A) It is the change in incomes resulting from a change in imports. 
B) It is the effect on net exports resulting from a change in imports. 
C) It is the effect on imports of a change in the exchange rate. 
D) It is the change in imports that results from a change in income.

Question 5

MTR = 0.2;MPS = 0.2
-Refer to the above information to answer this question.What is the value of the MLR?

Accepted Answer

A) 0.04 
B) 0.4 
C) 0.5 
D) 0.8 
A) 0.04 
B) 0.4 
C) 0.5 
D) 0.8

Question 6

Which of the following must be true if an economy has a positive level of autonomous consumption?

Accepted Answer

A) Induced consumption must be very small. 
B) Savings must be greater than zero at all levels of income. 
C) Savings must be less than zero at all levels of income. 
D) The economy has negative savings at zero income. 
E) The economy has negative induced spending at zero income. 
A) Induced consumption must be very small. 
B) Savings must be greater than zero at all levels of income. 
C) Savings must be less than zero at all levels of income. 
D) The economy has negative savings at zero income. 
E) The economy has negative induced spending at zero income.

Question 7

What happens to the value of net exports as national income increases?

Accepted Answer

A) It increases because the level of imports increases. 
B) It decreases because the level of imports decreases. 
C) It increases because the level of imports decreases. 
D) It decreases because the level of imports increases. 
E) It is not affected by the level of national income. 
A) It increases because the level of imports increases. 
B) It decreases because the level of imports decreases. 
C) It increases because the level of imports decreases. 
D) It decreases because the level of imports increases. 
E) It is not affected by the level of national income.

Question 8

All except one of the following statements concerning the equilibrium level of income are correct.Which is incorrect?

Accepted Answer

A) There will be no tendency for firms to increase or decrease production. 
B) The economy is operating at full employment. 
C) Unplanned investment in inventories will not occur. 
D) Leakages equal injections. 
E) Aggregate expenditures equal income. 
A) There will be no tendency for firms to increase or decrease production. 
B) The economy is operating at full employment. 
C) Unplanned investment in inventories will not occur. 
D) Leakages equal injections. 
E) Aggregate expenditures equal income.

Question 9

What shifts the aggregate expenditures function? What changes its slope?

Accepted Answer

Any change in autonomous expenditures sh

Question 10

If in an economy,the marginal tax rate = 0.1,the marginal propensity to save = 0.25,and the marginal propensity to import = 0.05,what is the value of the multiplier?

Accepted Answer

A) 1.43 
B) 1.54 
C) 1.67 
D) 2.0 
E) 2.5 
A) 1.43 
B) 1.54 
C) 1.67 
D) 2.0 
E) 2.5

Question 11

Explain how an increase in the price level will impact the AE function.

Accepted Answer

An increase in the price level will shif

Question 12

The following data relates to a national economy (all figures in $billions):
  
-Refer to the table above to answer this question.What is the level of aggregate expenditures when income equals $2,000?

Accepted Answer

A) $1,800 
B) $2,000 
C) $2,200 
D) $2,400 
E) Cannot be determined from the information. 
A) $1,800 
B) $2,000 
C) $2,200 
D) $2,400 
E) Cannot be determined from the information.

Question 13

The net export function for the economy of Bertan is XN = 500 - 0.1Y.
a)Suppose income is $3,000.What is the value of the trade surplus or deficit?
b)What range of income will give Bertan a trade surplus?
c)What range of income will give Bertan a trade deficit?
d)At what level of income will there be a zero balance of trade?

Accepted Answer

a)Trade surplus,$200

Question 14

-Refer to the information above to answer this question.What is the value of equilibrium income?

Accepted Answer

A) 600. 
B) 800. 
C) 1,000. 
D) 1,500. 
E) 2,000. 
A) 600. 
B) 800. 
C) 1,000. 
D) 1,500. 
E) 2,000.

Question 15

What is induced spending?

Accepted Answer

A) The portion of total spending that is dependent of the level of income. 
B) The portion of total spending that is independent of the level of income. 
C) The level of spending which varies with the level of prices. 
D) The portion of income that is dependent on the level of spending. 
A) The portion of total spending that is dependent of the level of income. 
B) The portion of total spending that is independent of the level of income. 
C) The level of spending which varies with the level of prices. 
D) The portion of income that is dependent on the level of spending.

Question 16

What is meant by the term the marginal propensity to expend?

Accepted Answer

A) Aggregate expenditures as a fraction of income. 
B) Autonomous expenditures as a fraction of income. 
C) The ratio of change in aggregate expenditures that results from a change in income. 
D) The ratio of change in autonomous expenditures that results from a change in income. 
A) Aggregate expenditures as a fraction of income. 
B) Autonomous expenditures as a fraction of income. 
C) The ratio of change in aggregate expenditures that results from a change in income. 
D) The ratio of change in autonomous expenditures that results from a change in income.

Question 17

-Refer to the above information to answer this question.What is the algebraic expression for the net export function?

Accepted Answer

A) Xn = 0.1Y. 
B) Xn = 30 + 0.1Y. 
C) Xn = 80 + 0.1Y. 
D) Xn = 80 - 0.1Y. 
A) Xn = 0.1Y. 
B) Xn = 30 + 0.1Y. 
C) Xn = 80 + 0.1Y. 
D) Xn = 80 - 0.1Y.

Question 18

-Refer to Table 6.9 to answer this question.What is the value of the multiplier?

Accepted Answer

A) 0.5. 
B) 1. 
C) 2. 
D) 2.5. 
E) 5. 
A) 0.5. 
B) 1. 
C) 2. 
D) 2.5. 
E) 5.

Question 19

-Refer to the information above to answer this question.Which of the following is an expression for the savings function (out of national income)?

Accepted Answer

A) S = -90 + 0.2Y 
B) S = -80 + 0.2Y 
C) S = -90 + 0.15Y 
D) S = -40 + 0.15Y 
E) S = -15 + 0.15Y 
A) S = -90 + 0.2Y 
B) S = -80 + 0.2Y 
C) S = -90 + 0.15Y 
D) S = -40 + 0.15Y 
E) S = -15 + 0.15Y

Question 20

-Refer to the information above to answer this question.What is the equation for aggregate expenditures?

Accepted Answer

A) AE = 4,500. 
B) AE = 3,500. 
C) AE = 4,500 + Y. 
D) AE = 4,500 + 0.6Y. 
E) AE = 11,250 + 0.6Y. 
A) AE = 4,500. 
B) AE = 3,500. 
C) AE = 4,500 + Y. 
D) AE = 4,500 + 0.6Y. 
E) AE = 11,250 + 0.6Y.

The following data relates to a national economy (all figures in $billions): -Refer to the above graph to answer this question.What is the value of the multiplier?

What are induced consumption and the marginal propensity to consume,respectively?

The rate of interest is an important determinant of investment spending,even if a firm does not need to borrow funds.Why is this?

What is the marginal propensity to import?

MTR = 0.2;MPS = 0.2 -Refer to the above information to answer this question.What is the value of the MLR?

Which of the following must be true if an economy has a positive level of autonomous consumption?

What happens to the value of net exports as national income increases?

All except one of the following statements concerning the equilibrium level of income are correct.Which is incorrect?

What shifts the aggregate expenditures function? What changes its slope?

If in an economy,the marginal tax rate = 0.1,the marginal propensity to save = 0.25,and the marginal propensity to import = 0.05,what is the value of the multiplier?

Explain how an increase in the price level will impact the AE function.

The following data relates to a national economy (all figures in $billions): -Refer to the table above to answer this question.What is the level of aggregate expenditures when income equals $2,000?

-Refer to the information above to answer this question.What is the value of equilibrium income?

What is induced spending?

What is meant by the term the marginal propensity to expend?

-Refer to the above information to answer this question.What is the algebraic expression for the net export function?

-Refer to Table 6.9 to answer this question.What is the value of the multiplier?

-Refer to the information above to answer this question.Which of the following is an expression for the savings function (out of national income)?

-Refer to the information above to answer this question.What is the equation for aggregate expenditures?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 6: Aggregate Expenditures

The following data relates to a national economy (all figures in $billions): -Refer to the above graph to answer this question.What is the value of the multiplier?

What are induced consumption and the marginal propensity to consume,respectively?

The rate of interest is an important determinant of investment spending,even if a firm does not need to borrow funds.Why is this?

What is the marginal propensity to import?

MTR = 0.2;MPS = 0.2 -Refer to the above information to answer this question.What is the value of the MLR?

Which of the following must be true if an economy has a positive level of autonomous consumption?

What happens to the value of net exports as national income increases?

All except one of the following statements concerning the equilibrium level of income are correct.Which is incorrect?

What shifts the aggregate expenditures function? What changes its slope?

If in an economy,the marginal tax rate = 0.1,the marginal propensity to save = 0.25,and the marginal propensity to import = 0.05,what is the value of the multiplier?

Explain how an increase in the price level will impact the AE function.

The following data relates to a national economy (all figures in $billions): -Refer to the table above to answer this question.What is the level of aggregate expenditures when income equals $2,000?

-Refer to the information above to answer this question.What is the value of equilibrium income?

What is induced spending?

What is meant by the term the marginal propensity to expend?

-Refer to the above information to answer this question.What is the algebraic expression for the net export function?

-Refer to Table 6.9 to answer this question.What is the value of the multiplier?

-Refer to the information above to answer this question.Which of the following is an expression for the savings function (out of national income)?

-Refer to the information above to answer this question.What is the equation for aggregate expenditures?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters