Question 1

A given change in either someone's income or net taxes would have a greater effect on their consumption spending the greater their MPC.

Accepted Answer

A) True 
 B)False  True

Question 2

When all the factors of aggregate expenditure are influenced by income, the multiplier becomes a function of the:

Accepted Answer

A) ​marginal propensity of government purchases. 
B) ​marginal propensity to consume out of disposable income. 
C) ​marginal propensity of aggregate expenditure. 
D) ​marginal propensity to import. 
A) ​marginal propensity of government purchases. 
B) ​marginal propensity to consume out of disposable income. 
C) ​marginal propensity of aggregate expenditure. 
D) ​marginal propensity to import. C

Question 3

An increase in household debt will lead to an increase in consumption expenditures.

Accepted Answer

A) True 
 B)False  False

Question 4

If consumption were a direct function of disposable income, how would a decrease in personal taxes or an increase in transfer payments affect consumption?
​

Accepted Answer

Consumption would increase if personal t

Question 5

When resources are at full capacity, output is less responsive to changes in ____ and the price level is ____.

Accepted Answer

A) ​prices; stable 
B) ​prices; less responsive 
C) ​aggregate demand; highly responsive 
D) ​aggregate demand; less responsive 
A) ​prices; stable 
B) ​prices; less responsive 
C) ​aggregate demand; highly responsive 
D) ​aggregate demand; less responsive

Question 6

The expenditure multiplier only considers the impact of consumption changes on aggregate expenditures.

Accepted Answer

A) True 
 B)False

Question 7

The concept of cost-push inflation cannot be explained by the aggregate expenditure model.

Accepted Answer

A) True 
 B)False

Question 8

A change in taxes of a given amount affects an individual's consumption spending by less than that amount, because the marginal propensity to consume is less than 1.

Accepted Answer

A) True 
 B)False

Question 9

The Keynesian-cross model implies that changes in aggregate supply cause fluctuations in real GDP.

Accepted Answer

A) True 
 B)False

Question 10

When the Keynesian-cross model is in equilibrium, income equals output and aggregate expenditure equals output.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following changes in disposable income would lead to the smallest increase in consumption?

Accepted Answer

A) ​a $20,000 increase in disposable income, if MPC equals 0.5 
B) ​a $12,000 increase in disposable income, if MPC equals 0.75 
C) ​a $15,000 increase in disposable income, if MPC equals 0.6 
D) ​a $30,000 increase in disposable income, if MPC equals 0.25 
A) ​a $20,000 increase in disposable income, if MPC equals 0.5 
B) ​a $12,000 increase in disposable income, if MPC equals 0.75 
C) ​a $15,000 increase in disposable income, if MPC equals 0.6 
D) ​a $30,000 increase in disposable income, if MPC equals 0.25

Question 12

When all the factors of aggregate expenditure are influenced by income, the multiplier is no longer solely a function of the marginal propensity of consumption.

Accepted Answer

A) True 
 B)False

Question 13

A given change in disposable income would have the smallest effect on consumption with which of the following marginal propensities to consume?

Accepted Answer

A) ​0.4 
B) ​0.6 
C) ​0.8 
D) ​0.2 
A) ​0.4 
B) ​0.6 
C) ​0.8 
D) ​0.2

Question 14

If Oscar's MPC is 0.95 and he earns an additional $2,000, how much would he spend?

Accepted Answer

A) ​$100 
B) ​$1,900 
C) ​$2,105 
D) ​$40,000 
A) ​$100 
B) ​$1,900 
C) ​$2,105 
D) ​$40,000

Question 15

A given change in disposable income would have the greatest effect on consumption with which of the following marginal propensities to consume?

Accepted Answer

A) ​0.4 
B) ​0.6 
C) ​0.8 
D) ​0.2 
A) ​0.4 
B) ​0.6 
C) ​0.8 
D) ​0.2

Question 16

If the price level is fixed, then changes in nominal income will be equivalent to changes in real income.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following allows us to determine the value of average consumption spending?

Accepted Answer

A) ​leading economic indicators 
B) ​representative household analysis 
C) ​indexing 
D) ​ratio analysis 
A) ​leading economic indicators 
B) ​representative household analysis 
C) ​indexing 
D) ​ratio analysis

Question 18

The expenditure multiplier applies only to changes in government spending.

Accepted Answer

A) True 
 B)False

Question 19

Unplanned inventory decreases prompt firms to cut back on production until equilibrium output is restored.

Accepted Answer

A) True 
 B)False

Question 20

If the marginal propensity to consume is 0.60, the marginal propensity to save will be:

Accepted Answer

A) ​greater than 0.60. 
B) ​equal to 0.40. 
C) ​equal to 0.60. 
D) ​equal to 0. 
A) ​greater than 0.60. 
B) ​equal to 0.40. 
C) ​equal to 0.60. 
D) ​equal to 0.

Exam 15: Oligopoly and Strategic Behavior

A given change in either someone's income or net taxes would have a greater effect on their consumption spending the greater their MPC.

When all the factors of aggregate expenditure are influenced by income, the multiplier becomes a function of the:

An increase in household debt will lead to an increase in consumption expenditures.

If consumption were a direct function of disposable income, how would a decrease in personal taxes or an increase in transfer payments affect consumption? ​

When resources are at full capacity, output is less responsive to changes in ____ and the price level is ____.

The expenditure multiplier only considers the impact of consumption changes on aggregate expenditures.

The concept of cost-push inflation cannot be explained by the aggregate expenditure model.

A change in taxes of a given amount affects an individual's consumption spending by less than that amount, because the marginal propensity to consume is less than 1.

The Keynesian-cross model implies that changes in aggregate supply cause fluctuations in real GDP.

When the Keynesian-cross model is in equilibrium, income equals output and aggregate expenditure equals output.

Which of the following changes in disposable income would lead to the smallest increase in consumption?

When all the factors of aggregate expenditure are influenced by income, the multiplier is no longer solely a function of the marginal propensity of consumption.

A given change in disposable income would have the smallest effect on consumption with which of the following marginal propensities to consume?

If Oscar's MPC is 0.95 and he earns an additional $2,000, how much would he spend?

A given change in disposable income would have the greatest effect on consumption with which of the following marginal propensities to consume?

If the price level is fixed, then changes in nominal income will be equivalent to changes in real income.

Which of the following allows us to determine the value of average consumption spending?

The expenditure multiplier applies only to changes in government spending.

Unplanned inventory decreases prompt firms to cut back on production until equilibrium output is restored.

If the marginal propensity to consume is 0.60, the marginal propensity to save will be:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

If consumption were a direct function of disposable income, how would a decrease in personal taxes or an increase in transfer payments affect consumption?

When resources are at full capacity, output is less responsive to changes in and the price level is .