Question 1

When a person's consumption goes from $8,000 to $12,000 when her disposable income goes from $10,000 to $20,000, her MPC equals:

Accepted Answer

A) ​0.4. 
B) ​0.6. 
C) ​0.75. 
D) ​0.8. 
A) ​0.4. 
B) ​0.6. 
C) ​0.75. 
D) ​0.8.

Question 2

If the ____ is/are fixed, a change in nominal income is equivalent to a change in real income.

Accepted Answer

A) ​price level 
B) ​interest rates 
C) ​tastes and preferences 
D) ​future expectations 
A) ​price level 
B) ​interest rates 
C) ​tastes and preferences 
D) ​future expectations

Question 3

Which of the following observations concerning the Keynesian model is not true?

Accepted Answer

A) ​It is helpful in explaining the events that unfolded in the 1930s. 
B) ​It is less useful in explaining today's economy. 
C) ​It explains the stagflation of the 1970s. 
D) ​It does not incorporate possible shifts in the aggregate supply curve. 
A) ​It is helpful in explaining the events that unfolded in the 1930s. 
B) ​It is less useful in explaining today's economy. 
C) ​It explains the stagflation of the 1970s. 
D) ​It does not incorporate possible shifts in the aggregate supply curve.

Question 4

Will MPC plus MPS always equal one? Explain why or why not.
​

Accepted Answer

Yes, MPC plus MPS will always equal one.

Question 5

Assume that autonomous expenditures in an economy decreased by $10 billion. What is the change in aggregate demand at a given price level if the MPC is 0.5?

Accepted Answer

A) ​increase by $50 billion 
B) ​increase by $10 billion 
C) ​decrease by $20 billion 
D) ​decrease by $10 billion 
A) ​increase by $50 billion 
B) ​increase by $10 billion 
C) ​decrease by $20 billion 
D) ​decrease by $10 billion

Question 6

The value of the expenditure multiplier depends on the marginal propensity to consume.

Accepted Answer

A) True 
 B)False

Question 7

Explain the concept of autonomous consumption.
​

Accepted Answer

​Autonomous consumption is consumption t

Question 8

Unplanned inventory decreases:

Accepted Answer

A) ​tend to result in an decrease in income. 
B) ​tend to result in an increase in real output. 
C) ​tend to further reduce production. 
D) ​signal that demand was weaker than expected. 
A) ​tend to result in an decrease in income. 
B) ​tend to result in an increase in real output. 
C) ​tend to further reduce production. 
D) ​signal that demand was weaker than expected.

Question 9

The slope of the consumption function is equal to:

Accepted Answer

A) ​the MPC. 
B) ​the MPS. 
C) ​1/(1 - MP
C) . 
D) ​MPC - MPS. 
A) ​the MPC. 
B) ​the MPS. 
C) ​1/(1 - MP
C) . 
D) ​MPC - MPS.

Question 10

A given change in disposable income would have the greatest effect on aggregate demand 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 11

If autonomous expenditures increased by $10 billion, what is the change in aggregate demand at a given price level if the MPC to consume is 0.8?

Accepted Answer

A) ​increase by $50 billion 
B) ​increase by $100 billion 
C) ​decrease by $100 billion 
D) ​decrease by $10 billion 
A) ​increase by $50 billion 
B) ​increase by $100 billion 
C) ​decrease by $100 billion 
D) ​decrease by $10 billion

Question 12

Unplanned inventory increases:

Accepted Answer

A) ​tend to result in an increase in income. 
B) ​tend to result in an increase in real output. 
C) ​result in an increase in production. 
D) ​signal that demand was weaker than expected. 
A) ​tend to result in an increase in income. 
B) ​tend to result in an increase in real output. 
C) ​result in an increase in production. 
D) ​signal that demand was weaker than expected.

Question 13

Which of the following is the primary determinant of aggregate demand in the simplest Keynesian expenditure model?

Accepted Answer

A) ​consumption spending 
B) ​net exports 
C) investments 
D) ​government purchases 
A) ​consumption spending 
B) ​net exports 
C) investments 
D) ​government purchases

Question 14

A given change in disposable income would have the smallest effect on aggregate demand 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 15

If consumption spending is the only variable of aggregate expenditure dependent on income, the multiplier is MPC/(1 - MPC).

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is positively related to income?

Accepted Answer

A) ​consumption 
B) ​investment 
C) ​government expenditures 
D) ​all of the above 
A) ​consumption 
B) ​investment 
C) ​government expenditures 
D) ​all of the above

Question 17

​Exhibit 23-1  
-Refer to Exhibit 23-1. Which of the following would tend to move consumer spending from A to B?

Accepted Answer

A) ​increase in debt 
B) ​decrease in interest rates 
C) ​increase in consumer confidence 
D) ​increase in real wealth 
A) ​increase in debt 
B) ​decrease in interest rates 
C) ​increase in consumer confidence 
D) ​increase in real wealth

Question 18

​Exhibit 23-1  
-Refer to Exhibit 23-1. Which of the following would tend to move consumer spending from A to D?

Accepted Answer

A) ​increase in debt 
B) ​decrease in interest rates 
C) ​decrease in consumer confidence 
D) ​stock market decline 
A) ​increase in debt 
B) ​decrease in interest rates 
C) ​decrease in consumer confidence 
D) ​stock market decline

Question 19

The Keynesian-cross model is a complete macroeconomic model.

Accepted Answer

A) True 
 B)False

Question 20

A change in taxes of a given amount shifts the consumption function vertically by ____ than that amount, because the marginal propensity to consume is ____.

Accepted Answer

A) ​less; less than 1 
B) ​greater; greater than 1 
C) ​greater; always equal to 1. 
D) ​less; equal to zero. 
A) ​less; less than 1 
B) ​greater; greater than 1 
C) ​greater; always equal to 1. 
D) ​less; equal to zero.

Exam 15: Oligopoly and Strategic Behavior

When a person's consumption goes from $8,000 to $12,000 when her disposable income goes from $10,000 to $20,000, her MPC equals:

If the ____ is/are fixed, a change in nominal income is equivalent to a change in real income.

Which of the following observations concerning the Keynesian model is not true?

Will MPC plus MPS always equal one? Explain why or why not. ​

Assume that autonomous expenditures in an economy decreased by $10 billion. What is the change in aggregate demand at a given price level if the MPC is 0.5?

The value of the expenditure multiplier depends on the marginal propensity to consume.

Explain the concept of autonomous consumption. ​

Unplanned inventory decreases:

The slope of the consumption function is equal to:

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

If autonomous expenditures increased by $10 billion, what is the change in aggregate demand at a given price level if the MPC to consume is 0.8?

Unplanned inventory increases:

Which of the following is the primary determinant of aggregate demand in the simplest Keynesian expenditure model?

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

If consumption spending is the only variable of aggregate expenditure dependent on income, the multiplier is MPC/(1 - MPC).

Which of the following is positively related to income?

​Exhibit 23-1 -Refer to Exhibit 23-1. Which of the following would tend to move consumer spending from A to B?

​Exhibit 23-1 -Refer to Exhibit 23-1. Which of the following would tend to move consumer spending from A to D?

The Keynesian-cross model is a complete macroeconomic model.

A change in taxes of a given amount shifts the consumption function vertically by ____ than that amount, because the marginal propensity to consume is ____.

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

Will MPC plus MPS always equal one? Explain why or why not.

Explain the concept of autonomous consumption.

Exhibit 23-1 -Refer to Exhibit 23-1. Which of the following would tend to move consumer spending from A to B?

Exhibit 23-1 -Refer to Exhibit 23-1. Which of the following would tend to move consumer spending from A to D?

A change in taxes of a given amount shifts the consumption function vertically by than that amount, because the marginal propensity to consume is .