Question 1

If disposable income is $3,000 and saving is $1,200, how much is the average propensity to consume?

Accepted Answer

A)  0.4 
B)  0.6 
C)  1.2 
D)  2.5 
A)  0.4 
B)  0.6 
C)  1.2 
D)  2.5

Question 2

The increase in aggregate spending needed to bring an economy back to full employment is called

Accepted Answer

A)  goal-oriented spending. 
B)  the inflationary gap. 
C)  gap closure spending. 
D)  the recessionary gap. 
A)  goal-oriented spending. 
B)  the inflationary gap. 
C)  gap closure spending. 
D)  the recessionary gap.

Question 3

A depression economy has considerable slack; therefore

Accepted Answer

A)  unemployment is high. 
B)  there is no excess plant capacity. 
C)  all resources are being used efficiently. 
D)  there is an increase in aggregate price levels. 
A)  unemployment is high. 
B)  there is no excess plant capacity. 
C)  all resources are being used efficiently. 
D)  there is an increase in aggregate price levels.

Question 4

Classical economists claim that _____ is the primary determinant of saving, and Keynes claimed that _____ is the primary determinant of saving.

Accepted Answer

A)  the interest rate; income 
B)  income; the interest rate 
C)  taxes; government spending 
D)  GDP; disposable income 
A)  the interest rate; income 
B)  income; the interest rate 
C)  taxes; government spending 
D)  GDP; disposable income

Question 5

Which one of these helps determine consumption and saving in the Keynesian model?

Accepted Answer

A)  wealth 
B)  imports 
C)  technology 
D)  government regulations 
A)  wealth 
B)  imports 
C)  technology 
D)  government regulations

Question 6

With respect to income, the investment schedule in the short run is

Accepted Answer

A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  relatively elastic. 
D)  relatively inelastic. 
A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  relatively elastic. 
D)  relatively inelastic.

Question 7

The average propensity to consume is calculated by dividing income by spending.

Accepted Answer

A) True 
 B)False

Question 8

What are the determinants of consumption and savings in the Keynesian model? Explain each determinant briefly.

Accepted Answer

Income is the principal determinant of c

Question 9

Keynes believed that saving is a function of

Accepted Answer

A)  the interest rate. 
B)  income. 
C)  GDP. 
D)  the price of money. 
A)  the interest rate. 
B)  income. 
C)  GDP. 
D)  the price of money.

Question 10

If income is $5,000 per month and consumption spending is $4,500 per month, what is the average propensity to consume?

Accepted Answer

A)  -500 
B)  0.9 
C)  1.11 
D)  500 
A)  -500 
B)  0.9 
C)  1.11 
D)  500

Question 11

One reason so many people focus on the trade deficit is that if a county imports more goods and services, equilibrium income will rise, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 12

Suppose the government believes consumers should spend $1 billion more to get the economy out of a recession. The government wants to provide income to households by providing them with jobs and paying them directly. If the marginal propensity to consume is 0.8, the government should increase income by

Accepted Answer

A)  $0.2 billion. 
B)  $0.25 billion. 
C)  $0.8 billion. 
D)  $1 billion. 
A)  $0.2 billion. 
B)  $0.25 billion. 
C)  $0.8 billion. 
D)  $1 billion.

Question 13

Which two countries currently had the highest savings rates in 2018?

Accepted Answer

A)  China and India 
B)  China and Japan 
C)  China and the United States 
D)  Japan and the United States 
A)  China and India 
B)  China and Japan 
C)  China and the United States 
D)  Japan and the United States

Question 14

If the marginal propensity to save is 0.2, then the multiplier is 4.

Accepted Answer

A) True 
 B)False

Question 15

The multiplier effect relates a change in savings to the resulting change in investment.

Accepted Answer

A) True 
 B)False

Question 16

Describe macroeconomic equilibrium in the full Keynesian model, with the government and foreign sectors. Compare this description with the simple Keynesian model.

Accepted Answer

In the simple Keynesian model of the dom

Question 17

(Table) The table shows data on consumption at various levels of income. Assume there is no private investment. The value of the marginal propensity to save is

Accepted Answer

A)  0.1. 
B)  0.25. 
C)  0.75. 
D)  0.9. 
A)  0.1. 
B)  0.25. 
C)  0.75. 
D)  0.9.

Question 18

Between 1929 and 1933, government spending _____ and net exports _____.

Accepted Answer

A)  declined; stayed the same 
B)  declined; declined 
C)  stayed the same; declined 
D)  stayed the same; stayed the same 
A)  declined; stayed the same 
B)  declined; declined 
C)  stayed the same; declined 
D)  stayed the same; stayed the same

Question 19

Suppose the marginal propensity to consume in Economia is 0.75. People feel increasing confidence in their economy and spend $5 billion more on vacations. Equilibrium income will then rise by

Accepted Answer

A)  $4 billion. 
B)  $5 billion. 
C)  $20 billion. 
D)  $75 billion. 
A)  $4 billion. 
B)  $5 billion. 
C)  $20 billion. 
D)  $75 billion.

Question 20

Spending by federal, state, and local governments has grown from _____ of GDP in the 1930s to more than _____ today.

Accepted Answer

A)  5%; 50% 
B)  10%; 30% 
C)  30%; 70% 
D)  5%; 10% 
A)  5%; 50% 
B)  10%; 30% 
C)  30%; 70% 
D)  5%; 10%

If disposable income is $3,000 and saving is $1,200, how much is the average propensity to consume?

The increase in aggregate spending needed to bring an economy back to full employment is called

A depression economy has considerable slack; therefore

Classical economists claim that _ is the primary determinant of saving, and Keynes claimed that _ is the primary determinant of saving.

Which one of these helps determine consumption and saving in the Keynesian model?

With respect to income, the investment schedule in the short run is

The average propensity to consume is calculated by dividing income by spending.

What are the determinants of consumption and savings in the Keynesian model? Explain each determinant briefly.

Keynes believed that saving is a function of

If income is $5,000 per month and consumption spending is $4,500 per month, what is the average propensity to consume?

One reason so many people focus on the trade deficit is that if a county imports more goods and services, equilibrium income will rise, ceteris paribus.

Which two countries currently had the highest savings rates in 2018?

If the marginal propensity to save is 0.2, then the multiplier is 4.

The multiplier effect relates a change in savings to the resulting change in investment.

Describe macroeconomic equilibrium in the full Keynesian model, with the government and foreign sectors. Compare this description with the simple Keynesian model.

(Table) The table shows data on consumption at various levels of income. Assume there is no private investment. The value of the marginal propensity to save is

Between 1929 and 1933, government spending _ and net exports _.

Suppose the marginal propensity to consume in Economia is 0.75. People feel increasing confidence in their economy and spend $5 billion more on vacations. Equilibrium income will then rise by

Spending by federal, state, and local governments has grown from _ of GDP in the 1930s to more than _ today.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 8: Aggregate Expenditures

If disposable income is $3,000 and saving is $1,200, how much is the average propensity to consume?

The increase in aggregate spending needed to bring an economy back to full employment is called

A depression economy has considerable slack; therefore

Classical economists claim that _____ is the primary determinant of saving, and Keynes claimed that _____ is the primary determinant of saving.

Which one of these helps determine consumption and saving in the Keynesian model?

With respect to income, the investment schedule in the short run is

The average propensity to consume is calculated by dividing income by spending.

What are the determinants of consumption and savings in the Keynesian model? Explain each determinant briefly.

Keynes believed that saving is a function of

If income is $5,000 per month and consumption spending is $4,500 per month, what is the average propensity to consume?

One reason so many people focus on the trade deficit is that if a county imports more goods and services, equilibrium income will rise, ceteris paribus.

Which two countries currently had the highest savings rates in 2018?

If the marginal propensity to save is 0.2, then the multiplier is 4.

The multiplier effect relates a change in savings to the resulting change in investment.

Describe macroeconomic equilibrium in the full Keynesian model, with the government and foreign sectors. Compare this description with the simple Keynesian model.

(Table) The table shows data on consumption at various levels of income. Assume there is no private investment. The value of the marginal propensity to save is

Between 1929 and 1933, government spending _____ and net exports _____.

Suppose the marginal propensity to consume in Economia is 0.75. People feel increasing confidence in their economy and spend $5 billion more on vacations. Equilibrium income will then rise by

Spending by federal, state, and local governments has grown from _____ of GDP in the 1930s to more than _____ today.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Classical economists claim that _ is the primary determinant of saving, and Keynes claimed that _ is the primary determinant of saving.

Between 1929 and 1933, government spending _ and net exports _.

Spending by federal, state, and local governments has grown from _ of GDP in the 1930s to more than _ today.