Question 1

What does the marginal propensity to expend mean?

Accepted Answer

A) It is the fraction of income that is not spent. 
B) It is the ratio of change in income that results from a change in expenditures. 
C) It is the ratio of change in expenditures that results from a change in income. 
D) It is the fraction of income that is taxed. 
A) It is the fraction of income that is not spent. 
B) It is the ratio of change in income that results from a change in expenditures. 
C) It is the ratio of change in expenditures that results from a change in income. 
D) It is the fraction of income that is taxed.

Question 2

The following parameters are for Narata:
MPC = 0.68;MPM = 0.08
What are the values of its MPE,MLR and multiplier.

Accepted Answer

MPE = 0.6;

Question 3

-Refer to the above graph to answer this question.What is the value of total leakages at equilibrium?

Accepted Answer

A) $200. 
B) $300. 
C) $600. 
D) Cannot be determined. 
A) $200. 
B) $300. 
C) $600. 
D) Cannot be determined.

Question 4

Which of the following equations is correct for an economy that does not have a government or a foreign sector?

Accepted Answer

A) MPC x MPS = 1 
B) MPC/MPS = 1 
C) MPC - MPS = 1 
D) MPC + MPS = 1 
A) MPC x MPS = 1 
B) MPC/MPS = 1 
C) MPC - MPS = 1 
D) MPC + MPS = 1

Question 5

All of the following factors except one will cause the aggregate expenditure function to graphically shift upward.Which is the exception?

Accepted Answer

A) An increase in the age of the stock of consumer durable goods in the possession of consumers. 
B) The expectation of a future decline in the consumer price index. 
C) A big increase in the stock market index. 
D) The expectation of an economic boom in the near future. 
A) An increase in the age of the stock of consumer durable goods in the possession of consumers. 
B) The expectation of a future decline in the consumer price index. 
C) A big increase in the stock market index. 
D) The expectation of an economic boom in the near future.

Question 6

Assume an economy has a budget deficit.Now suppose national income increases,what is its impact on the budget deficit? Explain.

Accepted Answer

An increase in national income will redu

Question 7

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

Accepted Answer

A) C = 40 + 0.6Y 
B) C = 80 + 0.6Y 
C) C = 0.8Y 
D) C = 40 + 0.8Y 
E) C = 340 + 0.6Y 
A) C = 40 + 0.6Y 
B) C = 80 + 0.6Y 
C) C = 0.8Y 
D) C = 40 + 0.8Y 
E) C = 340 + 0.6Y

Question 8

A change in the price level shifts the aggregate expenditure curve but does not shift the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 9

Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14.
-Refer to the above graph to answer this question.What is the value of the multiplier in this economy?

Accepted Answer

A) 1.5. 
B) 1.67. 
C) 2. 
D) 4. 
E) Cannot be determined. 
A) 1.5. 
B) 1.67. 
C) 2. 
D) 4. 
E) Cannot be determined.

Question 10

What is meant by the term the marginal leakage rate?

Accepted Answer

A) Total leakages as a fraction of aggregate expenditures. 
B) Total leakages as a fraction of the level of income. 
C) The ratio of change in income that results from a change in leakages. 
D) The ratio of change in leakages that results from a change in income. 
A) Total leakages as a fraction of aggregate expenditures. 
B) Total leakages as a fraction of the level of income. 
C) The ratio of change in income that results from a change in leakages. 
D) The ratio of change in leakages that results from a change in income.

Question 11

The basis of the parameters for an economy shown in Table 6.5.(All figures are in $billion. )
  
-Refer to Table 6.5 to answer this question.What is the value of equilibrium income in this economy?

Accepted Answer

A) $3,840. 
B) $3,967. 
C) $4,000. 
D) $4,133. 
E) $5,000. 
A) $3,840. 
B) $3,967. 
C) $4,000. 
D) $4,133. 
E) $5,000.

Question 12

If X is an autonomous $150 and the MPM is 0.1,what is the value of XN at an income of $1,000?

Accepted Answer

A) +$50. 
B) +$100. 
C) +$150. 
D) -$100. 
A) +$50. 
B) +$100. 
C) +$150. 
D) -$100.

Question 13

What circumstances will lead to a smaller multiplier?

Accepted Answer

A) If the MLR becomes smaller. 
B) If the MPE becomes bigger. 
C) If the MPC becomes bigger. 
D) If the MPM becomes smaller. 
E) If the MPS becomes bigger. 
A) If the MLR becomes smaller. 
B) If the MPE becomes bigger. 
C) If the MPC becomes bigger. 
D) If the MPM becomes smaller. 
E) If the MPS becomes bigger.

Question 14

All of the following,except one,will cause an increase in autonomous consumption.Which is the exception?

Accepted Answer

A) A decrease in autonomous taxes. 
B) Increased optimism in Canada's future economic prospects. 
C) A sharp drop in the value of stock prices. 
D) An increase in the average age of consumer durables. 
A) A decrease in autonomous taxes. 
B) Increased optimism in Canada's future economic prospects. 
C) A sharp drop in the value of stock prices. 
D) An increase in the average age of consumer durables.

Question 15

What is meant by expenditure equilibrium?

Accepted Answer

A) The income at which savings equals consumption. 
B) The level of aggregate expenditures at which savings equals consumption. 
C) The income at which the value of production and aggregate expenditures are equal. 
D) The income at which the level of aggregate expenditures is zero. 
E) Where income is equal to the value of production. 
A) The income at which savings equals consumption. 
B) The level of aggregate expenditures at which savings equals consumption. 
C) The income at which the value of production and aggregate expenditures are equal. 
D) The income at which the level of aggregate expenditures is zero. 
E) Where income is equal to the value of production.

Question 16

-Refer to the above graph to answer this question.What is the value of the MPM?

Accepted Answer

A) 0. 
B) 0.1 
C) 0.2 
D) 0.6 
E) 1 
A) 0. 
B) 0.1 
C) 0.2 
D) 0.6 
E) 1

What does the marginal propensity to expend mean?

The following parameters are for Narata: MPC = 0.68;MPM = 0.08 What are the values of its MPE,MLR and multiplier.

-Refer to the above graph to answer this question.What is the value of total leakages at equilibrium?

Which of the following equations is correct for an economy that does not have a government or a foreign sector?

All of the following factors except one will cause the aggregate expenditure function to graphically shift upward.Which is the exception?

Assume an economy has a budget deficit.Now suppose national income increases,what is its impact on the budget deficit? Explain.

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

A change in the price level shifts the aggregate expenditure curve but does not shift the aggregate demand curve.

Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14. -Refer to the above graph to answer this question.What is the value of the multiplier in this economy?

What is meant by the term the marginal leakage rate?

The basis of the parameters for an economy shown in Table 6.5.(All figures are in $billion. ) -Refer to Table 6.5 to answer this question.What is the value of equilibrium income in this economy?

If X is an autonomous $150 and the MPM is 0.1,what is the value of X_N at an income of $1,000?

What circumstances will lead to a smaller multiplier?

All of the following,except one,will cause an increase in autonomous consumption.Which is the exception?

What is meant by expenditure equilibrium?

-Refer to the above graph to answer this question.What is the value of the MPM?

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

What does the marginal propensity to expend mean?

The following parameters are for Narata: MPC = 0.68;MPM = 0.08 What are the values of its MPE,MLR and multiplier.

-Refer to the above graph to answer this question.What is the value of total leakages at equilibrium?

Which of the following equations is correct for an economy that does not have a government or a foreign sector?

All of the following factors except one will cause the aggregate expenditure function to graphically shift upward.Which is the exception?

Assume an economy has a budget deficit.Now suppose national income increases,what is its impact on the budget deficit? Explain.

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

A change in the price level shifts the aggregate expenditure curve but does not shift the aggregate demand curve.

Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14. -Refer to the above graph to answer this question.What is the value of the multiplier in this economy?

What is meant by the term the marginal leakage rate?

The basis of the parameters for an economy shown in Table 6.5.(All figures are in $billion. ) -Refer to Table 6.5 to answer this question.What is the value of equilibrium income in this economy?

If X is an autonomous $150 and the MPM is 0.1,what is the value of XN at an income of $1,000?

What circumstances will lead to a smaller multiplier?

All of the following,except one,will cause an increase in autonomous consumption.Which is the exception?

What is meant by expenditure equilibrium?

-Refer to the above graph to answer this question.What is the value of the MPM?

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

If X is an autonomous $150 and the MPM is 0.1,what is the value of X_N at an income of $1,000?