Question 1

-Refer to the graph above to answer this question.What is the equation for the consumption function?

Accepted Answer

A) C = 100 + 0.2Y. 
B) C = 100 + 0.4Y. 
C) C = 100 + 0.6Y. 
D) C = 100 + 0.8Y. 
E) C = -100 + 0.8Y. 
A) C = 100 + 0.2Y. 
B) C = 100 + 0.4Y. 
C) C = 100 + 0.6Y. 
D) C = 100 + 0.8Y. 
E) C = -100 + 0.8Y.

Question 2

What is meant by the marginal propensity to save?

Accepted Answer

A) The ratio of change in savings to the corresponding change in income. 
B) The ratio of change in income to the corresponding change in savings. 
C) The ratio of change in savings to the corresponding change in consumption. 
D) The portion of savings that is independent of the level of income. 
A) The ratio of change in savings to the corresponding change in income. 
B) The ratio of change in income to the corresponding change in savings. 
C) The ratio of change in savings to the corresponding change in consumption. 
D) The portion of savings that is independent of the level of income.

Question 3

What is the wealth effect?

Accepted Answer

A) The effect of a change of wealth on consumption. 
B) The effect of a change of wealth on savings. 
C) Total consumer wealth divided by income. 
D) The effect of a change in income on wealth. 
A) The effect of a change of wealth on consumption. 
B) The effect of a change of wealth on savings. 
C) Total consumer wealth divided by income. 
D) The effect of a change in income on wealth.

Question 4

What has evidence from modern economies shown to be true of the MPC?

Accepted Answer

A) It is higher among richer members of a society. 
B) It is higher among poorer members of a society. 
C) It does not depend on the level of income. 
D) It is on average equal to 0.53. 
A) It is higher among richer members of a society. 
B) It is higher among poorer members of a society. 
C) It does not depend on the level of income. 
D) It is on average equal to 0.53.

Question 5

In Altus,income rose by $80 billion over the past year.During the same period,its aggregate expenditures increased by $55.What are the values of its MPE,MLR and multiplier?

Accepted Answer

MPE = 0.6875 (55/80)

Question 6

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

Accepted Answer

A) AE = 500 + 0.5Y. 
B) AE = 500 + 0.67Y. 
C) AE = 520 + 0.67Y. 
D) AE = 750 + 0.67Y. 
A) AE = 500 + 0.5Y. 
B) AE = 500 + 0.67Y. 
C) AE = 520 + 0.67Y. 
D) AE = 750 + 0.67Y.

Question 7

What is the difference between the real balances effect and the wealth effect?

Accepted Answer

A) The former involves income changes while the latter does not. 
B) The latter involves income changes while the former does not. 
C) The former involves price level changes while the latter involves changes in the value of assets. 
D) There is no significant difference. 
A) The former involves income changes while the latter does not. 
B) The latter involves income changes while the former does not. 
C) The former involves price level changes while the latter involves changes in the value of assets. 
D) There is no significant difference.

Question 8

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

Accepted Answer

A) A sharp increase in stock prices. 
B) Rising fears of political uncertainty concerning the possible break-up of the country. 
C) A dramatic increase in the prices of most consumer goods. 
D) An increase in income tax rates. 
A) A sharp increase in stock prices. 
B) Rising fears of political uncertainty concerning the possible break-up of the country. 
C) A dramatic increase in the prices of most consumer goods. 
D) An increase in income tax rates.

Question 9

All of the following except one are correct statements of the multiplier.Which is the exception?

Accepted Answer

A) 1/MPE. 
B) ∆ income/∆ autonomous expenditures. 
C) 1/(1 - MP
E) . 
D) 1/MLR 
A) 1/MPE. 
B) ∆ income/∆ autonomous expenditures. 
C) 1/(1 - MP
E) . 
D) 1/MLR

Question 10

In the following table,you are given the following parameters for the economy of Atris:
   a)What is the value of expenditures equilibrium?
b)What is the value of total leakages and injections at expenditures equilibrium?
c)Suppose autonomous expenditure increases by $25.What is the new value of expenditure equilibrium?

Accepted Answer

a)$3,000
b

Question 11

-Refer to the above graph to answer this question.If autonomous taxes were to increase,what would be the result?

Accepted Answer

A) The AE curve would shift up parallel and the equilibrium level of income would increase. 
B) The AE curve would shift up parallel and the equilibrium level of income would decrease. 
C) The AE curve would shift down parallel and the equilibrium level of income would increase. 
D) The AE curve would shift down parallel and the equilibrium level of income would decrease. 
A) The AE curve would shift up parallel and the equilibrium level of income would increase. 
B) The AE curve would shift up parallel and the equilibrium level of income would decrease. 
C) The AE curve would shift down parallel and the equilibrium level of income would increase. 
D) The AE curve would shift down parallel and the equilibrium level of income would decrease.

Question 12

What is the effect on MPE,if there is an increase in
a)MPC
b)MPS
c)MPM
d)MTR

Accepted Answer

a)MPE will increase

Question 13

-Refer to the above information to answer this question.What is the algebraic expression for consumption as a function of national income?

Accepted Answer

A) C = 20 + 0.6Y. 
B) C = -20 + 0.6Y. 
C) C = 20 + 0.8Y. 
D) C = -20 + 0.8Y. 
A) C = 20 + 0.6Y. 
B) C = -20 + 0.6Y. 
C) C = 20 + 0.8Y. 
D) C = -20 + 0.8Y.

Question 14

If the MPS is 0.3,then what is the value of the MPC?

Accepted Answer

A) 1 minus 0.3 
B) 0.3 minus 1 
C) The reciprocal of the MPS. 
D) 0.3 x 0.7 
E) 0.3 
A) 1 minus 0.3 
B) 0.3 minus 1 
C) The reciprocal of the MPS. 
D) 0.3 x 0.7 
E) 0.3

Question 15

Assume the MPE has a value of 0.8 and investment spending increases by $5 billion,what will the level of GDP increase by?

Accepted Answer

A) $1 billion. 
B) $4 billion. 
C) $25 billion. 
D) $40 billion. 
E) $20 billion. 
A) $1 billion. 
B) $4 billion. 
C) $25 billion. 
D) $40 billion. 
E) $20 billion.

Question 16

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

Accepted Answer

A) T = 50 + 0.25Y. 
B) T = -50 + 0.25Y. 
C) T = 175 + 0.25Y. 
D) T = 175 + 0.35Y. 
A) T = 50 + 0.25Y. 
B) T = -50 + 0.25Y. 
C) T = 175 + 0.25Y. 
D) T = 175 + 0.35Y.

Question 17

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

Accepted Answer

A) $300. 
B) $400. 
C) $500. 
D) $600. 
E) $1,000. 
A) $300. 
B) $400. 
C) $500. 
D) $600. 
E) $1,000.

Question 18

If the MPE is equal to 0.4,what is the value of the MLR?

Accepted Answer

A) 0.6. 
B) 2.5. 
C) 0.4. 
D) 40. 
A) 0.6. 
B) 2.5. 
C) 0.4. 
D) 40.

Question 19

-Refer to the above information to answer this question.What is the value of the multiplier in this economy?

Accepted Answer

A) 1. 
B) 1.54. 
C) 2. 
D) 2.5. 
E) 5. 
A) 1. 
B) 1.54. 
C) 2. 
D) 2.5. 
E) 5.

Question 20

What four factors will cause a change in autonomous consumption?

Accepted Answer

The following will cause a cha

-Refer to the graph above to answer this question.What is the equation for the consumption function?

What is meant by the marginal propensity to save?

What is the wealth effect?

What has evidence from modern economies shown to be true of the MPC?

In Altus,income rose by $80 billion over the past year.During the same period,its aggregate expenditures increased by $55.What are the values of its MPE,MLR and multiplier?

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

What is the difference between the real balances effect and the wealth effect?

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

All of the following except one are correct statements of the multiplier.Which is the exception?

-Refer to the above graph to answer this question.If autonomous taxes were to increase,what would be the result?

What is the effect on MPE,if there is an increase in a)MPC b)MPS c)MPM d)MTR

-Refer to the above information to answer this question.What is the algebraic expression for consumption as a function of national income?

If the MPS is 0.3,then what is the value of the MPC?

Assume the MPE has a value of 0.8 and investment spending increases by $5 billion,what will the level of GDP increase by?

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

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

If the MPE is equal to 0.4,what is the value of the MLR?

-Refer to the above information to answer this question.What is the value of the multiplier in this economy?

What four factors will cause a change in autonomous consumption?

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

-Refer to the graph above to answer this question.What is the equation for the consumption function?

What is meant by the marginal propensity to save?

What is the wealth effect?

What has evidence from modern economies shown to be true of the MPC?

In Altus,income rose by $80 billion over the past year.During the same period,its aggregate expenditures increased by $55.What are the values of its MPE,MLR and multiplier?

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

What is the difference between the real balances effect and the wealth effect?

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

All of the following except one are correct statements of the multiplier.Which is the exception?

-Refer to the above graph to answer this question.If autonomous taxes were to increase,what would be the result?

What is the effect on MPE,if there is an increase in a)MPC b)MPS c)MPM d)MTR

-Refer to the above information to answer this question.What is the algebraic expression for consumption as a function of national income?

If the MPS is 0.3,then what is the value of the MPC?

Assume the MPE has a value of 0.8 and investment spending increases by $5 billion,what will the level of GDP increase by?

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

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

If the MPE is equal to 0.4,what is the value of the MLR?

-Refer to the above information to answer this question.What is the value of the multiplier in this economy?

What four factors will cause a change in autonomous consumption?

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