Exam 10: B: Basic Macroeconomic Relationships

If the net expected revenue from an investment is low, then the investment demand curve of an economy will:

Assume that for the entire business sector of the economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent; another $15 with an expected rate of return of 15-20 percent; and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.Refer to the above information.The expected rate of return curve:

Refer to the above diagram.At disposable income level D, the average propensity to save is equal to:

Which of the following equations represents the saving schedule implicit in the data below?

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.Suppose that consumption increased by $2 billion at each level of DI in each of the three countries.We can conclude that the:

The multiplier effect:

Technological progress will:

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.Refer to the data below.Suppose the consumption is increased by $2 billion in each of the three economies.This change could have been caused by:

Refer to the above diagram.The marginal propensity to consume is equal to:

Which of the following is likely to be an effect of an increase in acquisition, maintenance, and operating costs on the investment demand curve of an economy?

The saving schedule shown in the diagram below would shift downward if, all else equal:

If Smith's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100, it may be concluded that her marginal propensity to:

If the real interest rate in the economy is i and the expected rate of return from additional investment is r, then other things equal:

Which of the following will not cause the consumption schedule to shift?

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the multiplier in the economy is:

If for some reason households become increasingly thrifty, we could show this by:

The investment-demand curve suggests:

A specific investment will be undertaken if the expected rate of returns, r, exceeds the interest rate, i.

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.At an income level of $400 billion, the average propensity to save in economy (2) is:

The relationship between the real interest rate and investment is shown by the: