Exam 21: The Simplest Short-Run Macro Model

Consider the following information concerning an economy with demand-determined output. There is no government or foreign trade. 1. Y = C + I 2. C = 100 + 0.5Y 3. I = 200 TABLE 21-7 -Refer to Table 21-7. The simple multiplier in this economy is

Suppose the price level is constant, output is demand-determined, and the economy is closed with no government. If the consumption function is C = 1/2)Y, the simple multiplier is

FIGURE 21-1 -Refer to Figure 21-1. The APC will be equal to one 1.0) when disposable income is equal to

FIGURE 21-2 -Refer to Figure 21-2. What is the marginal propensity to consume associated with this consumption function?

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 -Refer to Table 21-1. The marginal propensity to consume is equal to

The consumption function is based on the assumption that as real disposable income rises, aggregate desired consumption

FIGURE 21-1 -Refer to Figure 21-1. If disposable income is zero, then

Consider a simple macro model with a constant price level and demand-determined output. If the marginal propensity to spend in such a model is one, the simple multiplier is

In a simple macro model with no government and no foreign trade, the equilibrium level of national income is the level of income at which

FIGURE 21-1 -Refer to Figure 21-1. If disposable income is equal to Y3, desired consumption expenditure is equal to the vertical distance

Consider a simple macro model with demand-determined output. Using such a model, if economists want to estimate the effect of a given change in desired investment on equilibrium national income, they would multiply the change in desired investment by the reciprocal of one minus

FIGURE 21-3 -Refer to Figure 21-3. The simple multiplier could be measured by the ratio

Consider a consumption function of the following form: C = 50 + 0.6)YD. At what level of disposable income will desired savings be equal to zero?

Consider a simple macro model with a constant price level and demand-determined output. If the marginal propensity to spend in such a model is 0.4, the simple multiplier is

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired saving rises from $50 billion to $60 billion. We can conclude that the marginal propensity to save for this economy is

FIGURE 21-3 -Consider a simple macro model with a constant price level and demand-determined output. Using this model, if economists want to estimate the effect of a given change in desired investment on equilibrium national income, they would multiply the change in desired investment by the

The change in desired consumption divided by the change in disposable income that brought it about is called the

Consider a simple macro model with a constant price level and demand-determined output. If the simple multiplier is 3 and there is a $2 million increase in autonomous investment spending, then the equilibrium level of income will increase by

In a simple macro model with demand-determined output, the equilibrium level of national income is at an income

Consider the following information describing a closed economy with no government and where aggregate output is demand determined. All dollar figures are in billions. 1. the equilibrium condition is Y = C + I 2. the marginal propensity to consume is 0.90 3. the autonomous part of C is $300 4. investment is autonomous and is $100 TABLE 21-3 -Refer to Table 21-3. At the equilibrium level of national income, desired saving $billions) is