Question 1

In the Keynesian model,planned investment is inversely related to

Accepted Answer

A) the interest rate. 
B) the level of income. 
C) the wage rate. 
D) the tax rate. 
A) the interest rate. 
B) the level of income. 
C) the wage rate. 
D) the tax rate.

Question 2

What is the multiplier? How is it calculated? Why is the multiplier related only to consumption spending?

Accepted Answer

The multiplier is the number by which a

Question 3

If the marginal propensity to consume is 0.8 and the real national income needs to be increased by $500 billion,then

Accepted Answer

A) consumption spending needs to increase by $500 billion. 
B) saving needs to be reduced by $500 billion in order to generate the extra $500 billion. 
C) an increase in investment spending of $200 billion is needed to generate the desired increase of $500 billion. 
D) an increase in autonomous spending of $100 billion will lead to the increase of $500 billion. 
A) consumption spending needs to increase by $500 billion. 
B) saving needs to be reduced by $500 billion in order to generate the extra $500 billion. 
C) an increase in investment spending of $200 billion is needed to generate the desired increase of $500 billion. 
D) an increase in autonomous spending of $100 billion will lead to the increase of $500 billion.

Question 4

Equilibrium in the macro economy occurs when

Accepted Answer

A) total planned consumption expenditures equals real national income. 
B) planned investment spending equals net exports of zero. 
C) total planned expenditures equals real national income. 
D) net exports equals inventory changes. 
A) total planned consumption expenditures equals real national income. 
B) planned investment spending equals net exports of zero. 
C) total planned expenditures equals real national income. 
D) net exports equals inventory changes.

Question 5

If the MPC decreases,then

Accepted Answer

A) the MPS decreases. 
B) the multiplier decreases. 
C) the multiplier increases. 
D) MPC + MPS is less than 1. 
A) the MPS decreases. 
B) the multiplier decreases. 
C) the multiplier increases. 
D) MPC + MPS is less than 1.

Question 6

The consumption function shows

Accepted Answer

A) a positive relationship between an individual's stock of wealth and his level of planned consumption. 
B) a positive relationship between disposable income and planned consumption. 
C) a negative relationship between planned consumption and aggregate saving. 
D) a negative relationship between disposable income and planned consumption. 
A) a positive relationship between an individual's stock of wealth and his level of planned consumption. 
B) a positive relationship between disposable income and planned consumption. 
C) a negative relationship between planned consumption and aggregate saving. 
D) a negative relationship between disposable income and planned consumption.

Question 7

What effect does a higher aggregate price level have on TPE and aggregate demand in regards to the open economy effect?

Accepted Answer

In an open economy,our higher price leve

Question 8

The planned investment function will shift downward if

Accepted Answer

A) real disposable income increases. 
B) the interest rate falls. 
C) expectations become more pessimistic. 
D) the existing stock of capital decreases. 
A) real disposable income increases. 
B) the interest rate falls. 
C) expectations become more pessimistic. 
D) the existing stock of capital decreases.

Question 9

Explain the relationship between total planned expenditures and the aggregate demand curve.

Accepted Answer

Show how the AD curv

Question 10

The MPC can best be defined as

Accepted Answer

A) that fraction of real disposable income that is consumed. 
B) that fraction of real disposable income that is not consumed. 
C) that fraction of a change in real disposable income that is spent. 
D) that fraction of a change in real disposable income that is saved. 
A) that fraction of real disposable income that is consumed. 
B) that fraction of real disposable income that is not consumed. 
C) that fraction of a change in real disposable income that is spent. 
D) that fraction of a change in real disposable income that is saved.

Question 11

The arithmetic value of 1 - MPC equals

Accepted Answer

A) APC. 
B) MPS. 
C) APS. 
D) NNP. 
A) APC. 
B) MPS. 
C) APS. 
D) NNP.

Question 12

Dissaving occurs when

Accepted Answer

A) income exceeds consumption. 
B) planned savings is negative. 
C) the consumption function is below the 45-degree line drawn from the origin. 
D) planned savings is positive. 
A) income exceeds consumption. 
B) planned savings is negative. 
C) the consumption function is below the 45-degree line drawn from the origin. 
D) planned savings is positive.

Question 13

Explain the difference between a movement along vs.a shift in planned investment.Why does such a relationship exist? Explain fully.

Accepted Answer

List is given on page 239 in t

Question 14

A decrease in autonomous investment of $100 that occurs when MPS = 0.25 will lead to a decrease in national income of

Accepted Answer

A) $25. 
B) $100. 
C) $400. 
D) $800. 
A) $25. 
B) $100. 
C) $400. 
D) $800.

Question 15

In the Keynesian model,government spending is considered

Accepted Answer

A) a positive function of real national income. 
B) a negative function of real national income. 
C) to be a negative function of the real interest rate. 
D) to be autonomous. 
A) a positive function of real national income. 
B) a negative function of real national income. 
C) to be a negative function of the real interest rate. 
D) to be autonomous.

Question 16

If the consumption function is above the 45-degree line drawn from the origin,then the saving function will

Accepted Answer

A) be positive. 
B) be negative. 
C) equal zero. 
D) intersect the consumption function. 
A) be positive. 
B) be negative. 
C) equal zero. 
D) intersect the consumption function.

Question 17

Figure 9-1  
-In Figure 9-1,line ABC is called

Accepted Answer

A) the 45-degree line. 
B) the consumption function. 
C) the saving function. 
D) aggregate supply. 
A) the 45-degree line. 
B) the consumption function. 
C) the saving function. 
D) aggregate supply.

Question 18

A rise in the price level causes

Accepted Answer

A) an increase in aggregate demand. 
B) a decrease in aggregate demand. 
C) a reduction in the quantity of aggregate goods and services demanded. 
D) an increase in the quantity of aggregate goods and services demanded. 
A) an increase in aggregate demand. 
B) a decrease in aggregate demand. 
C) a reduction in the quantity of aggregate goods and services demanded. 
D) an increase in the quantity of aggregate goods and services demanded.

Question 19

A permanent increase in autonomous investment causes

Accepted Answer

A) a more than proportional increase in real national income. 
B) a proportional increase in real national income. 
C) a less than proportional increase in real national income. 
D) an offsetting change in saving that leaves real national income at the same level. 
A) a more than proportional increase in real national income. 
B) a proportional increase in real national income. 
C) a less than proportional increase in real national income. 
D) an offsetting change in saving that leaves real national income at the same level.

Question 20

An increase in net exports leads to an increase in real national income.Further,

Accepted Answer

A) consumption spending and saving increase. 
B) consumption spending increases but saving doesn't change. 
C) consumption spending increases while investment spending decreases. 
D) government spending decreases to offset the increase in net exports. 
A) consumption spending and saving increase. 
B) consumption spending increases but saving doesn't change. 
C) consumption spending increases while investment spending decreases. 
D) government spending decreases to offset the increase in net exports.

In the Keynesian model,planned investment is inversely related to

What is the multiplier? How is it calculated? Why is the multiplier related only to consumption spending?

If the marginal propensity to consume is 0.8 and the real national income needs to be increased by $500 billion,then

Equilibrium in the macro economy occurs when

If the MPC decreases,then

The consumption function shows

What effect does a higher aggregate price level have on TPE and aggregate demand in regards to the open economy effect?

The planned investment function will shift downward if

Explain the relationship between total planned expenditures and the aggregate demand curve.

The MPC can best be defined as

The arithmetic value of 1 - MPC equals

Dissaving occurs when

Explain the difference between a movement along vs.a shift in planned investment.Why does such a relationship exist? Explain fully.

A decrease in autonomous investment of $100 that occurs when MPS = 0.25 will lead to a decrease in national income of

In the Keynesian model,government spending is considered

If the consumption function is above the 45-degree line drawn from the origin,then the saving function will

Figure 9-1 -In Figure 9-1,line ABC is called

A rise in the price level causes

A permanent increase in autonomous investment causes

An increase in net exports leads to an increase in real national income.Further,

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

Exam 9: Consumption, investment, and the Multiplier

In the Keynesian model,planned investment is inversely related to

What is the multiplier? How is it calculated? Why is the multiplier related only to consumption spending?

If the marginal propensity to consume is 0.8 and the real national income needs to be increased by $500 billion,then

Equilibrium in the macro economy occurs when

If the MPC decreases,then

The consumption function shows

What effect does a higher aggregate price level have on TPE and aggregate demand in regards to the open economy effect?

The planned investment function will shift downward if

Explain the relationship between total planned expenditures and the aggregate demand curve.

The MPC can best be defined as

The arithmetic value of 1 - MPC equals

Dissaving occurs when

Explain the difference between a movement along vs.a shift in planned investment.Why does such a relationship exist? Explain fully.

A decrease in autonomous investment of $100 that occurs when MPS = 0.25 will lead to a decrease in national income of

In the Keynesian model,government spending is considered

If the consumption function is above the 45-degree line drawn from the origin,then the saving function will

Figure 9-1 -In Figure 9-1,line ABC is called

A rise in the price level causes

A permanent increase in autonomous investment causes

An increase in net exports leads to an increase in real national income.Further,

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