Question 1

Keynes asserted that wealth was the most important determinant of consumer spending.

Accepted Answer

A) True 
 B)False

Question 2

Given that C = $1,000 + 0.60YD,if the level of disposable income is $1,000,the level of saving is

Accepted Answer

A) $600. 
B) $400. 
C) -$600. 
D) -$300. 
A) $600. 
B) $400. 
C) -$600. 
D) -$300.

Question 3

Use the following figure to answer the questions : Figure9.5:
  
-A movement from Point A to Point B in Figure 9.5 would result in

Accepted Answer

A) A decrease in aggregate demand. 
B) A decrease in both aggregate demand and aggregate supply. 
C) An increase in aggregate demand. 
D) An increase in aggregate demand and a decrease in aggregate supply. 
A) A decrease in aggregate demand. 
B) A decrease in both aggregate demand and aggregate supply. 
C) An increase in aggregate demand. 
D) An increase in aggregate demand and a decrease in aggregate supply.

Question 4

Use the following figure to  answer the questions : Figure9.8
 
-In Figure 9.8,if full-employment income is produced at $400 billion,we can expect inventories to

Accepted Answer

A) Rise as a result of undesired inventory investment. 
B) Rise as a result of undesired saving. 
C) Fall as a result of undesired inventory investment. 
D) Fall as a result of undesired saving. 
A) Rise as a result of undesired inventory investment. 
B) Rise as a result of undesired saving. 
C) Fall as a result of undesired inventory investment. 
D) Fall as a result of undesired saving.

Question 5

One In the News article titled "U.S.Leading Indicators Index Increases More Than Forecast" states that economic activity for this period should pick up in the next

Accepted Answer

A) 1 to 3 months. 
B) 3 to 6 months. 
C) 6 to 9 months.
D9 to 12 months. 
A) 1 to 3 months. 
B) 3 to 6 months. 
C) 6 to 9 months.
D9 to 12 months.

Question 6

According to Keynes,cyclical unemployment is caused by too

Accepted Answer

A) Much aggregate demand. 
B) Little aggregate demand. 
C) Much aggregate supply. 
D) Little aggregate supply. 
A) Much aggregate demand. 
B) Little aggregate demand. 
C) Much aggregate supply. 
D) Little aggregate supply.

Question 7

Use the following table to answer the questions : Table9.1:
  
- What is the rate of saving when income equals $300 billion in Table 9.1?

Accepted Answer

A) Zero. 
B) $50 billion. 
C) $10 billion. 
D) -$290 billion. 
A) Zero. 
B) $50 billion. 
C) $10 billion. 
D) -$290 billion.

Question 8

A recessionary gap implies that

Accepted Answer

A) Aggregate demand is less than aggregate supply at the full-employment price level. 
B) The unemployment rate is falling. 
C) Aggregate demand exceeds aggregate supply at the full-employment price level. 
D) Inventories are being depleted faster than producers desire. 
A) Aggregate demand is less than aggregate supply at the full-employment price level. 
B) The unemployment rate is falling. 
C) Aggregate demand exceeds aggregate supply at the full-employment price level. 
D) Inventories are being depleted faster than producers desire.

Question 9

Under what conditions would the APC equal the MPC at all levels of disposable income?

Accepted Answer

A) When autonomous consumption equals 0. 
B) When there is saving at very high levels of disposable income. 
C) When disposable income is greater than consumption. 
D) When the aggregate expenditure line is horizontal. 
A) When autonomous consumption equals 0. 
B) When there is saving at very high levels of disposable income. 
C) When disposable income is greater than consumption. 
D) When the aggregate expenditure line is horizontal.

Question 10

Which of the following is eliminated when output equals full-employment GDP?

Accepted Answer

A) Cyclical unemployment. 
B) Demand-pull inflation. 
C) The need for autonomous consumption. 
D) Net exports. 
A) Cyclical unemployment. 
B) Demand-pull inflation. 
C) The need for autonomous consumption. 
D) Net exports.

Question 11

The largest component of aggregate spending is government spending.

Accepted Answer

A) True 
 B)False

Question 12

The investment demand curve would shift to the left because of

Accepted Answer

A) The discovery of more efficient production methods. 
B) Expectations of a recession. 
C) Higher interest rates. 
D) A lower current income level for the economy. 
A) The discovery of more efficient production methods. 
B) Expectations of a recession. 
C) Higher interest rates. 
D) A lower current income level for the economy.

Question 13

The consumption function implies that

Accepted Answer

A) Disposable income inversely influences consumption. 
B) Consumption increases as disposable income increases. 
C) Autonomous consumption changes when people have low incomes. 
D) None of the choices are correct. 
A) Disposable income inversely influences consumption. 
B) Consumption increases as disposable income increases. 
C) Autonomous consumption changes when people have low incomes. 
D) None of the choices are correct.

Question 14

If firms become more pessimistic about future sales,then

Accepted Answer

A) The AD curve will shift to the right. 
B) The AD curve will shift to the left. 
C) There will be a rightward movement along the AD curve. 
D) There will be a leftward movement along the AD curve. 
A) The AD curve will shift to the right. 
B) The AD curve will shift to the left. 
C) There will be a rightward movement along the AD curve. 
D) There will be a leftward movement along the AD curve.

Question 15

In Figure 9.2,if the consumption function shifts from C1 to C2, it can be determined that the

Accepted Answer

A) MPC and APC have increased at each income level. 
B) MPC and APC have decreased at each income level. 
C) MPC has increased and the APC has stayed the same at each income level. 
D) APC has increased and the MPC has stayed the same at each income level. 
A) MPC and APC have increased at each income level. 
B) MPC and APC have decreased at each income level. 
C) MPC has increased and the APC has stayed the same at each income level. 
D) APC has increased and the MPC has stayed the same at each income level.

Question 16

Use the following figure to  answer the questions : Figure9.7
 
- Given the information in Figure 9.7,dissaving would occur at all income levels below

Accepted Answer

A) $100 billion per year. 
B) $150 billion per year. 
C) $200 billion per year. 
D) $300 billion per year. 
A) $100 billion per year. 
B) $150 billion per year. 
C) $200 billion per year. 
D) $300 billion per year.

Question 17

Aggregate demand is the total quantity of output

Accepted Answer

A) Demanded if the economy is in equilibrium. 
B) Demanded at alternative price levels in a given time period. 
C) Producers are willing and able to supply at alternative price levels. 
D) Consumers actually buy. 
A) Demanded if the economy is in equilibrium. 
B) Demanded at alternative price levels in a given time period. 
C) Producers are willing and able to supply at alternative price levels. 
D) Consumers actually buy.

Question 18

The marginal propensity to consume can be found by dividing

Accepted Answer

A) Total consumption by total saving. 
B) Total consumption by the number of people consuming. 
C) The change in total consumption by the change in disposable income. 
D) Disposable income by total consumption. 
A) Total consumption by total saving. 
B) Total consumption by the number of people consuming. 
C) The change in total consumption by the change in disposable income. 
D) Disposable income by total consumption.

Exam 9: Aggregate Demand Appendix: the Keynesian Cross

Keynes asserted that wealth was the most important determinant of consumer spending.

Given that C = $1,000 + 0.60YD,if the level of disposable income is $1,000,the level of saving is

Use the following figure to answer the questions : Figure9.5: -A movement from Point A to Point B in Figure 9.5 would result in

Use the following figure to answer the questions : Figure9.8 -In Figure 9.8,if full-employment income is produced at $400 billion,we can expect inventories to

One In the News article titled "U.S.Leading Indicators Index Increases More Than Forecast" states that economic activity for this period should pick up in the next

According to Keynes,cyclical unemployment is caused by too

Use the following table to answer the questions : Table9.1: - What is the rate of saving when income equals $300 billion in Table 9.1?

A recessionary gap implies that

Under what conditions would the APC equal the MPC at all levels of disposable income?

Which of the following is eliminated when output equals full-employment GDP?

The largest component of aggregate spending is government spending.

The investment demand curve would shift to the left because of

The consumption function implies that

If firms become more pessimistic about future sales,then

In Figure 9.2,if the consumption function shifts from C1 to C2, it can be determined that the

Use the following figure to answer the questions : Figure9.7 - Given the information in Figure 9.7,dissaving would occur at all income levels below

Aggregate demand is the total quantity of output

The marginal propensity to consume can be found by dividing

Economics: the Core Issues Appendix: Using Graphs

The Us Economy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice Appendix: Indifference Curves

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty Glossary Index Reference Tables

Filters

Given that C = $1,000 + 0.60Y_D,if the level of disposable income is $1,000,the level of saving is

In Figure 9.2,if the consumption function shifts from C₁ to C_2, it can be determined that the