Exam 10: B: Basic Macroeconomic Relationships

If business taxes are reduced and the real interest rate increases:

Given the expected rate of return on all possible investment opportunities in the economy:

If a $100 billion decrease in investment spending causes income to decline by $100 billion in the first round of the multiplier process and by $75 billion in the second round, income will eventually decline by:

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 $40 billion, the average propensity to consume:

The average propensity to consume indicates the:

Assume a machine which has a useful life of only one year costs $2,000.Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300.The expected rate of return on this machine is:

Refer to the consumption schedules shown in the above diagram for economies 1, 2, 3, and 4.The MPC is greatest in economy:

If the equation C = 20 + .6Y, where C is consumption and Y is disposable income, were graphed:

In contrast to the investment schedule, the consumption schedule is:

Refer to the above diagram.The average propensity to consume:

Refer to the above data.The marginal propensity to consume is:

Refer to the above diagram.At income level F the volume of saving is:

Refer to the consumption schedules shown in the above diagram for economies 1, 2, 3, and 4.Other things equal, which economy embodies the greatest degree of macroeconomic stability?

The following table illustrates the multiplier process in a private closed economy: Refer to the above table.The total change in consumption resulting from the initial change in investment will be:

If the MPC is constant at various levels of income, then the APC must also be constant at all of these income levels.

The most important determinant of consumer spending is:

The multiplier effect means that:

Refer to the above diagram.At disposable income level D, consumption:

The ________ of the late 1990s was an example of the wealth effect, while _______ of 2008 was an example of the reverse wealth effect.

Which of the following is correct?