Question 1

The investment demand curve of an economy is:

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) horizontal. 
D) vertical. 
A) downward sloping. 
B) upward sloping. 
C) horizontal. 
D) vertical.

Question 2

If the MPC is .8 and the disposable income is $200, then

Accepted Answer

A) consumption and saving cannot be determined from the information given. 
B) saving will be $20. 
C) personal consumption expenditures will be $80. 
D) saving will be $40. 
A) consumption and saving cannot be determined from the information given. 
B) saving will be $20. 
C) personal consumption expenditures will be $80. 
D) saving will be $40.

Question 3

An upward shift of the saving schedule suggests:

Accepted Answer

A) nothing with respect to changes in the APC and APS. 
B) that the APC and APS have both decreased at each GDP level. 
C) that the APC and APS have both increased at each GDP level. 
D) that the APC has decreased and the APS has increased at each GDP level. 
A) nothing with respect to changes in the APC and APS. 
B) that the APC and APS have both decreased at each GDP level. 
C) that the APC and APS have both increased at each GDP level. 
D) that the APC has decreased and the APS has increased at each GDP level.

Question 4

The average propensity to consume can be defined as income divided by consumption.

Accepted Answer

A) True 
 B)False

Question 5

The saving schedule is drawn on the assumption that as income increases:

Accepted Answer

A) saving will decline absolutely and as a percentage of income. 
B) saving will increase absolutely, but remain constant as a percentage of income. 
C) saving will increase absolutely, but decline as a percentage of income. 
D) saving will increase absolutely and as a percentage of income. 
A) saving will decline absolutely and as a percentage of income. 
B) saving will increase absolutely, but remain constant as a percentage of income. 
C) saving will increase absolutely, but decline as a percentage of income. 
D) saving will increase absolutely and as a percentage of income.

Question 6

Refer to the diagram given below.   The diagram given above shows consumption schedules.As income rises, the marginal propensity to consume remains constant for:

Accepted Answer

A) none of the consumption schedules. 
B) only C3. 
C) only C1, C2, and C3. 
D) only C4. 
A) none of the consumption schedules. 
B) only C3. 
C) only C1, C2, and C3. 
D) only C4.

Question 7

The slope of the consumption schedule is measured by the MPC.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following will cause a movement up along an economy's saving schedule?

Accepted Answer

A) an increase in household debt outstanding 
B) an increase in disposable income 
C) an increase in stock prices 
D) an increase in interest rates 
A) an increase in household debt outstanding 
B) an increase in disposable income 
C) an increase in stock prices 
D) an increase in interest rates

Question 9

Suppose an economy's consumption schedule shifts from C1to C2as shown in the diagram below.We can say that its:

Accepted Answer

A) MPC has increased but its APC at each income level is unchanged. 
B) APC at each income level is increased but its MPC is unchanged. 
C) MPC and APC at each income level have both increased. 
D) MPC and APC at each income level have both decreased. 
A) MPC has increased but its APC at each income level is unchanged. 
B) APC at each income level is increased but its MPC is unchanged. 
C) MPC and APC at each income level have both increased. 
D) MPC and APC at each income level have both decreased.

Question 10

The department of finance estimates that the actual multiplier in Canada ranges from:

Accepted Answer

A) 0.1 to 1.6. 
B) 0.4 to 2.1. 
C) 0.7 to 3.4. 
D) 0.2 to 0.9. 
A) 0.1 to 1.6. 
B) 0.4 to 2.1. 
C) 0.7 to 3.4. 
D) 0.2 to 0.9.

Question 11

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the highest marginal propensity to consume?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 12

The greater is the marginal propensity to consume:

Accepted Answer

A) the smaller is the marginal propensity to save. 
B) the higher is the interest rate. 
C) the lower is the average propensity to consume. 
D) the lower is the price level. 
A) the smaller is the marginal propensity to save. 
B) the higher is the interest rate. 
C) the lower is the average propensity to consume. 
D) the lower is the price level.

Question 13

1 - MPC = MPS.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following countries had the lowest gross investment expenditure as a percentage of GDP in 2014, as per Image 10.2 Global Perspective?

Accepted Answer

A) China 
B) Korea 
C) Canada 
D) United States 
A) China 
B) Korea 
C) Canada 
D) United States

Question 15

If the marginal propensity to consume is.9, then the marginal propensity to save must be:

Accepted Answer

A) 1 
B) .1. 
C) 1.1. 
D) .9. 
A) 1 
B) .1. 
C) 1.1. 
D) .9.

Question 16

The simple multiplier:

Accepted Answer

A) occurs only in response to a change in the level of investment spending. 
B) can be found by taking the reciprocal of the MPS. 
C) occurs only when intended investment increases as GDP increases. 
D) is measured by the slope of the saving schedule. 
A) occurs only in response to a change in the level of investment spending. 
B) can be found by taking the reciprocal of the MPS. 
C) occurs only when intended investment increases as GDP increases. 
D) is measured by the slope of the saving schedule.

Question 17

Refer to the above diagram.The break-even level of disposable income:

Accepted Answer

A) is zero. 
B) is minus $10. 
C) is $100. 
D) cannot be determined from the information given. 
A) is zero. 
B) is minus $10. 
C) is $100. 
D) cannot be determined from the information given.

Question 18

If the MPS is only half as large as the MPC, the multiplier:

Accepted Answer

A) is 2. 
B) is 3. 
C) is 4. 
D) cannot be determined from the information given. 
A) is 2. 
B) is 3. 
C) is 4. 
D) cannot be determined from the information given.

Question 19

Refer to the above diagram.The APC diminishes as income increases for:

Accepted Answer

A) none of the consumption schedules shown. 
B) C3 only. 
C) C1, and C2. 
D) C4 only. 
A) none of the consumption schedules shown. 
B) C3 only. 
C) C1, and C2. 
D) C4 only.

Question 20

Which of the following is a non-income factor affecting consumption?

Accepted Answer

A) Wealth 
B) Real interest rates 
C) Borrowing 
D) All the answer choices are correct. 
A) Wealth 
B) Real interest rates 
C) Borrowing 
D) All the answer choices are correct.

Exam 10: B: Basic Macroeconomic Relationships

The investment demand curve of an economy is:

If the MPC is .8 and the disposable income is $200, then

An upward shift of the saving schedule suggests:

The average propensity to consume can be defined as income divided by consumption.

The saving schedule is drawn on the assumption that as income increases:

Refer to the diagram given below. The diagram given above shows consumption schedules.As income rises, the marginal propensity to consume remains constant for:

The slope of the consumption schedule is measured by the MPC.

Which one of the following will cause a movement up along an economy's saving schedule?

Suppose an economy's consumption schedule shifts from C1to C2as shown in the diagram below.We can say that its:

The department of finance estimates that the actual multiplier in Canada ranges from:

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the highest marginal propensity to consume?

The greater is the marginal propensity to consume:

1 - MPC = MPS.

Which of the following countries had the lowest gross investment expenditure as a percentage of GDP in 2014, as per Image 10.2 Global Perspective?

If the marginal propensity to consume is.9, then the marginal propensity to save must be:

The simple multiplier:

Refer to the above diagram.The break-even level of disposable income:

If the MPS is only half as large as the MPC, the multiplier:

Refer to the above diagram.The APC diminishes as income increases for:

Which of the following is a non-income factor affecting consumption?

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

Suppose an economy's consumption schedule shifts from C₁to C₂as shown in the diagram below.We can say that its: