Question 1

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 2

According to Keynes,the primary determinant of a person's saving is not

Accepted Answer

A) the person's level of income,but is the desired real income of the person. 
B) the person's level of savings,but is the expected interest rate in the near future. 
C) the interest rate,but is the level of savings the person has. 
D) the interest rate,but is the level of the person's real income. 
A) the person's level of income,but is the desired real income of the person. 
B) the person's level of savings,but is the expected interest rate in the near future. 
C) the interest rate,but is the level of savings the person has. 
D) the interest rate,but is the level of the person's real income.

Question 3

Suppose the economy has no income taxes or imports.The MPC equals 0.8.What does the Keynesian model predict will be the change in real GDP if investment increases by $20 billion?

Accepted Answer

The multiplier equals @#IMG-DLM& 
,which

Question 4

Which of the following would be expected to shift the consumption function up?

Accepted Answer

A) decreases in wealth 
B) expectations of harder times ahead 
C) increases in the nation's population 
D) changes in real disposable income 
A) decreases in wealth 
B) expectations of harder times ahead 
C) increases in the nation's population 
D) changes in real disposable income

Question 5

Figure 9-2  
-In Figure 9-2,when disposable income is greater than 600,then

Accepted Answer

A) savings are negative. 
B) the MPC is greater than 1. 
C) savings are positive. 
D) the MPS is negative. 
A) savings are negative. 
B) the MPC is greater than 1. 
C) savings are positive. 
D) the MPS is negative.

Question 6

Saving and savings differ in that

Accepted Answer

A) saving is a stock,and savings is a flow. 
B) saving always exceeds savings. 
C) savings is a stock,and saving is a flow. 
D) savings can be negative,but saving cannot. 
A) saving is a stock,and savings is a flow. 
B) saving always exceeds savings. 
C) savings is a stock,and saving is a flow. 
D) savings can be negative,but saving cannot.

Question 7

In Keynesian analysis,if investment remains constant when income increases or decreases,it is described as being

Accepted Answer

A) planned. 
B) autonomous. 
C) unplanned. 
D) discretionary. 
A) planned. 
B) autonomous. 
C) unplanned. 
D) discretionary.

Question 8

If,at some level of output,total planned expenditures are less than the level of real national income,

Accepted Answer

A) output and income will rise. 
B) output and income remain unchanged. 
C) output and income will either fall or remain unchanged,depending on the MPC. 
D) unplanned inventories will increase and income will fall. 
A) output and income will rise. 
B) output and income remain unchanged. 
C) output and income will either fall or remain unchanged,depending on the MPC. 
D) unplanned inventories will increase and income will fall.

Question 9

If GDP is at an equilibrium level in a closed economy,

Accepted Answer

A) C + I + G = GDP or National Income. 
B) savings will be less than planned investment. 
C) unplanned inventory accumulation will equal planned inventory accumulation. 
D) C + T - G = GDP or National Income. 
A) C + I + G = GDP or National Income. 
B) savings will be less than planned investment. 
C) unplanned inventory accumulation will equal planned inventory accumulation. 
D) C + T - G = GDP or National Income.

Question 10

Suppose the marginal propensity to consume is 0.75.What does this mean? What do we know about the marginal propensity to save? What do we know about the average propensity to consume?

Accepted Answer

A marginal propensity to consume of 0.75

Question 11

Technological progress should lead to

Accepted Answer

A) an outward (rightward)shift in the investment function. 
B) a downward movement of the investment function. 
C) an unchanged investment function. 
D) less savings. 
A) an outward (rightward)shift in the investment function. 
B) a downward movement of the investment function. 
C) an unchanged investment function. 
D) less savings.

Question 12

Which of the following is a TRUE statement?

Accepted Answer

A) The C + I + G + X - M curve has no relationship to the aggregate demand curve other than some of the variables that affect one curve also affect the other. 
B) The C + I + G + X - M curve is used to derive the aggregate demand curve,but the C + I + G + X - M curve is drawn for one price level while price levels vary along the aggregate demand curve. 
C) The C + I + G + X - M curve is used to derive the aggregate demand curve,but the aggregate demand curve is drawn for one price level. 
D) Both the C + I + G + X - M curve and the aggregate demand curve are drawn for one price level. 
A) The C + I + G + X - M curve has no relationship to the aggregate demand curve other than some of the variables that affect one curve also affect the other. 
B) The C + I + G + X - M curve is used to derive the aggregate demand curve,but the C + I + G + X - M curve is drawn for one price level while price levels vary along the aggregate demand curve. 
C) The C + I + G + X - M curve is used to derive the aggregate demand curve,but the aggregate demand curve is drawn for one price level. 
D) Both the C + I + G + X - M curve and the aggregate demand curve are drawn for one price level.

Question 13

Total planned expenditures in a closed economy are equal to

Accepted Answer

A) consumption + investment + government. 
B) consumption + savings + transfers + investment. 
C) savings + investment + government. 
D) investment + savings + transfers. 
A) consumption + investment + government. 
B) consumption + savings + transfers + investment. 
C) savings + investment + government. 
D) investment + savings + transfers.

Question 14

If the MPS = 0.33,a $100 increase in net exports will

Accepted Answer

A) reduce national income by $100. 
B) reduce national income by $300. 
C) increase national income by $33. 
D) increase national income by $300. 
A) reduce national income by $100. 
B) reduce national income by $300. 
C) increase national income by $33. 
D) increase national income by $300.

Question 15

As real disposable income increases,consumption expenditures

Accepted Answer

A) stay constant. 
B) decrease but by a smaller amount. 
C) increase but by a smaller amount. 
D) increase but by a larger amount. 
A) stay constant. 
B) decrease but by a smaller amount. 
C) increase but by a smaller amount. 
D) increase but by a larger amount.

Question 16

If an economy saves 20 percent of any increase in income,then an increase in investment of $2 billion can produce an increase in income of as much as

Accepted Answer

A) $2 billion. 
B) $10 billion. 
C) $0.4 billion. 
D) $1.6 billion. 
A) $2 billion. 
B) $10 billion. 
C) $0.4 billion. 
D) $1.6 billion.

Question 17

If an increase of $5 billion in investment is associated with an increase of $25 billion in income,the multiplier is

Accepted Answer

A) 1) 
B) 3) 
C) 5) 
D) 7) 
A) 1) 
B) 3) 
C) 5) 
D) 7)

Question 18

According to Keynesian theory,the most important determinant of saving and consumption is

Accepted Answer

A) the level of real income. 
B) the stock of liquid assets. 
C) the stock of durable goods in the consumer's possession. 
D) the level of consumer indebtedness. 
A) the level of real income. 
B) the stock of liquid assets. 
C) the stock of durable goods in the consumer's possession. 
D) the level of consumer indebtedness.

Question 19

Planned expenditures equals real disposable income

Accepted Answer

A) at every point on the consumption function. 
B) at every point on the saving function. 
C) at every point on the 45-degree line. 
D) when saving equals zero. 
A) at every point on the consumption function. 
B) at every point on the saving function. 
C) at every point on the 45-degree line. 
D) when saving equals zero.

Question 20

If equilibrium income is $400 billion,MPC = 0.9,and autonomous investment increases $40 billion,equilibrium income will be

Accepted Answer

A) $440 billion. 
B) $360 billion. 
C) $600 billion. 
D) $800 billion. 
A) $440 billion. 
B) $360 billion. 
C) $600 billion. 
D) $800 billion.

For an investment to be considered autonomous,it must

According to Keynes,the primary determinant of a person's saving is not

Suppose the economy has no income taxes or imports.The MPC equals 0.8.What does the Keynesian model predict will be the change in real GDP if investment increases by $20 billion?

Which of the following would be expected to shift the consumption function up?

Figure 9-2 -In Figure 9-2,when disposable income is greater than 600,then

Saving and savings differ in that

In Keynesian analysis,if investment remains constant when income increases or decreases,it is described as being

If,at some level of output,total planned expenditures are less than the level of real national income,

If GDP is at an equilibrium level in a closed economy,

Suppose the marginal propensity to consume is 0.75.What does this mean? What do we know about the marginal propensity to save? What do we know about the average propensity to consume?

Technological progress should lead to

Which of the following is a TRUE statement?

Total planned expenditures in a closed economy are equal to

If the MPS = 0.33,a $100 increase in net exports will

As real disposable income increases,consumption expenditures

If an economy saves 20 percent of any increase in income,then an increase in investment of $2 billion can produce an increase in income of as much as

If an increase of $5 billion in investment is associated with an increase of $25 billion in income,the multiplier is

According to Keynesian theory,the most important determinant of saving and consumption is

Planned expenditures equals real disposable income

If equilibrium income is $400 billion,MPC = 0.9,and autonomous investment increases $40 billion,equilibrium income will be

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 9: Consumption, investment, and the Multiplier

For an investment to be considered autonomous,it must

According to Keynes,the primary determinant of a person's saving is not

Suppose the economy has no income taxes or imports.The MPC equals 0.8.What does the Keynesian model predict will be the change in real GDP if investment increases by $20 billion?

Which of the following would be expected to shift the consumption function up?

Figure 9-2 -In Figure 9-2,when disposable income is greater than 600,then

Saving and savings differ in that

In Keynesian analysis,if investment remains constant when income increases or decreases,it is described as being

If,at some level of output,total planned expenditures are less than the level of real national income,

If GDP is at an equilibrium level in a closed economy,

Suppose the marginal propensity to consume is 0.75.What does this mean? What do we know about the marginal propensity to save? What do we know about the average propensity to consume?

Technological progress should lead to

Which of the following is a TRUE statement?

Total planned expenditures in a closed economy are equal to

If the MPS = 0.33,a $100 increase in net exports will

As real disposable income increases,consumption expenditures

If an economy saves 20 percent of any increase in income,then an increase in investment of $2 billion can produce an increase in income of as much as

If an increase of $5 billion in investment is associated with an increase of $25 billion in income,the multiplier is

According to Keynesian theory,the most important determinant of saving and consumption is

Planned expenditures equals real disposable income

If equilibrium income is $400 billion,MPC = 0.9,and autonomous investment increases $40 billion,equilibrium income will be

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters