Question 1

The current level of investment depends on the current level of income.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is illustrated by the distance between the aggregate expenditure line and the 45-degree line at each level of real GDP?

Accepted Answer

A)  The level of saving in an economy 
B)  Unplanned inventory change 
C)  Planned investment undertaken in an economy 
D)  The marginal propensity to save 
E)  The marginal propensity to consume 
A)  The level of saving in an economy 
B)  Unplanned inventory change 
C)  Planned investment undertaken in an economy 
D)  The marginal propensity to save 
E)  The marginal propensity to consume

Question 3

Less of an economy's resources will be channeled into building new factories and equipment when:

Accepted Answer

A)  interest rates are high. 
B)  households decide to save more of their income. 
C)  firms are optimistic about their future profits. 
D)  aggregate income increases. 
E)  an economy has a trade deficit. 
A)  interest rates are high. 
B)  households decide to save more of their income. 
C)  firms are optimistic about their future profits. 
D)  aggregate income increases. 
E)  an economy has a trade deficit.

Question 4

The amount of U.S. exports to the rest of the world is primarily determined by _____.

Accepted Answer

A)  the real disposable income in the United States 
B)  the real disposable income in other nations 
C)  the real interest rate in other nations 
D)  the real interest rate in the United States 
E)  the government budget deficits in other nations 
A)  the real disposable income in the United States 
B)  the real disposable income in other nations 
C)  the real interest rate in other nations 
D)  the real interest rate in the United States 
E)  the government budget deficits in other nations

Question 5

The table given below shows the disposable income and consumption of a household. In the table below, saving:

Accepted Answer

A)  decreases as disposable income increases. 
B)  decreases as disposable income decreases. 
C)  remains constant as disposable income increases. 
D)  is negative at a disposable income of $1,000. 
E)  is negative at a disposable income of $1,400. 
A)  decreases as disposable income increases. 
B)  decreases as disposable income decreases. 
C)  remains constant as disposable income increases. 
D)  is negative at a disposable income of $1,000. 
E)  is negative at a disposable income of $1,400.

Question 6

Along the consumption function, an increase in disposable income will:

Accepted Answer

A)  cause autonomous consumption to rise. 
B)  shift the consumption function upward. 
C)  cause a corresponding downward shift of the saving function. 
D)  cause a movement along the given consumption function. 
E)  shift the consumption function downward. 
A)  cause autonomous consumption to rise. 
B)  shift the consumption function upward. 
C)  cause a corresponding downward shift of the saving function. 
D)  cause a movement along the given consumption function. 
E)  shift the consumption function downward.

Question 7

A decrease in the price level in an economy will _____.

Accepted Answer

A)  increase the real value of dollar-denominated assets 
B)  shift the aggregate expenditure line downward 
C)  decrease the equilibrium level of output demanded 
D)  cause an upward movement along the aggregate demand curve 
E)  shift the aggregate demand curve leftward 
A)  increase the real value of dollar-denominated assets 
B)  shift the aggregate expenditure line downward 
C)  decrease the equilibrium level of output demanded 
D)  cause an upward movement along the aggregate demand curve 
E)  shift the aggregate demand curve leftward

Question 8

If consumption is greater than income, saving must be negative.

Accepted Answer

A) True 
 B)False

Question 9

If the marginal propensity to consume, MPC, is less than 1 and a household's disposable income increases by $2,000, the household's consumption will _____.

Accepted Answer

A)  increase by less than $2,000 
B)  increase by $2,000 
C)  decrease if the total income of the household is above $100,000 
D)  remain the same unless the change in income significantly affects the household's wealth 
E)  increase by more than $2,000 
A)  increase by less than $2,000 
B)  increase by $2,000 
C)  decrease if the total income of the household is above $100,000 
D)  remain the same unless the change in income significantly affects the household's wealth 
E)  increase by more than $2,000

Question 10

Expectations that disposable income will increase in the future will _____.

Accepted Answer

A)  shift the current consumption function upward 
B)  shift the current consumption function downward 
C)  result in an upward movement along the current consumption function 
D)  make the current consumption function flatter 
E)  make the current consumption function steeper 
A)  shift the current consumption function upward 
B)  shift the current consumption function downward 
C)  result in an upward movement along the current consumption function 
D)  make the current consumption function flatter 
E)  make the current consumption function steeper

Question 11

If incomes in the United States increase, other things equal, then U.S. _____.

Accepted Answer

A)  imports increase and exports remain constant 
B)  exports increase and imports decrease 
C)  imports decrease and exports decrease 
D)  imports remain constant and exports increase 
E)  net exports remains constant 
A)  imports increase and exports remain constant 
B)  exports increase and imports decrease 
C)  imports decrease and exports decrease 
D)  imports remain constant and exports increase 
E)  net exports remains constant

Question 12

As the U.S. price level rises relative to price levels in other countries, U.S. _____.

Accepted Answer

A)  consumption and net exports will both decrease 
B)  consumption and net exports will both increase 
C)  consumption would increase and net exports will decrease 
D)  consumption would decrease and net exports will increase 
E)  consumption and net exports will remain constant 
A)  consumption and net exports will both decrease 
B)  consumption and net exports will both increase 
C)  consumption would increase and net exports will decrease 
D)  consumption would decrease and net exports will increase 
E)  consumption and net exports will remain constant

Question 13

The slope of the consumption function is equal to the marginal propensity to save (MPS).

Accepted Answer

A) True 
 B)False

Question 14

If the price level in an economy decreases, other things constant, people consume _____.

Accepted Answer

A)  more because nominal income falls 
B)  less because nominal income rises 
C)  more because the real value of their wealth increases 
D)  less because real income decreases 
E)  less because the real value of their wealth decreases 
A)  more because nominal income falls 
B)  less because nominal income rises 
C)  more because the real value of their wealth increases 
D)  less because real income decreases 
E)  less because the real value of their wealth decreases

Question 15

If the marginal propensity to consume (MPC) in your classmate's nation is 3/5 and the marginal propensity to save (MPS) in your country is 1/10, which of the following must be true?

Accepted Answer

A)  The spending multiplier is larger in your classmate's nation than in your country. 
B)  The spending multiplier is smaller in your classmate's nation than in your country. 
C)  Autonomous consumption is higher in your classmate's nation than in your country. 
D)  Autonomous consumption is lower in your classmate's nation than in your country. 
E)  Total consumption is lower in your classmate's nation than in your country. 
A)  The spending multiplier is larger in your classmate's nation than in your country. 
B)  The spending multiplier is smaller in your classmate's nation than in your country. 
C)  Autonomous consumption is higher in your classmate's nation than in your country. 
D)  Autonomous consumption is lower in your classmate's nation than in your country. 
E)  Total consumption is lower in your classmate's nation than in your country.

Question 16

The table given below shows the real gross domestic product (GDP), consumption, and planned investment in an economy. The marginal propensity to save ( MPS) in the economy is _____.

Accepted Answer

A)  0 
B)  0.1 
C)  0.2 
D)  0.8 
E)  20 
A)  0 
B)  0.1 
C)  0.2 
D)  0.8 
E)  20

Question 17

In the income-expenditure model, if autonomous saving increases by $15 billion, _____.

Accepted Answer

A)  the aggregate expenditure line shifts upward by $15 billion 
B)  planned investment increases by $15 billion 
C)  the aggregate expenditure line shifts downward by $15 billion 
D)  planned investment decreases by $15 billion 
E)  the equilibrium level of real GDP demanded decreases by $15 billion 
A)  the aggregate expenditure line shifts upward by $15 billion 
B)  planned investment increases by $15 billion 
C)  the aggregate expenditure line shifts downward by $15 billion 
D)  planned investment decreases by $15 billion 
E)  the equilibrium level of real GDP demanded decreases by $15 billion

Question 18

The most important determinant of a household's consumption spending is:

Accepted Answer

A)  its disposable income. 
B)  the in-kind transfers received by the household. 
C)  the level of education of the members of the household. 
D)  the interest rate. 
E)  the ratio of wage to non-wage income of the household. 
A)  its disposable income. 
B)  the in-kind transfers received by the household. 
C)  the level of education of the members of the household. 
D)  the interest rate. 
E)  the ratio of wage to non-wage income of the household.

Question 19

The smaller the marginal propensity to save, other things constant, _____.

Accepted Answer

A)  the smaller the marginal propensity to consume 
B)  the smaller the multiplier 
C)  the flatter the consumption function 
D)  the steeper the consumption function 
E)  the steeper the saving function 
A)  the smaller the marginal propensity to consume 
B)  the smaller the multiplier 
C)  the flatter the consumption function 
D)  the steeper the consumption function 
E)  the steeper the saving function

Question 20

Expectations that the price level will increase in the future will:

Accepted Answer

A)  shift the current consumption function upward. 
B)  make the current consumption function steeper. 
C)  make the current consumption function flatter. 
D)  result in a downward movement along the current consumption function. 
E)  shift the current consumption function downward. 
A)  shift the current consumption function upward. 
B)  make the current consumption function steeper. 
C)  make the current consumption function flatter. 
D)  result in a downward movement along the current consumption function. 
E)  shift the current consumption function downward.

The current level of investment depends on the current level of income.

Which of the following is illustrated by the distance between the aggregate expenditure line and the 45-degree line at each level of real GDP?

Less of an economy's resources will be channeled into building new factories and equipment when:

The amount of U.S. exports to the rest of the world is primarily determined by _____.

The table given below shows the disposable income and consumption of a household. In the table below, saving:

Along the consumption function, an increase in disposable income will:

A decrease in the price level in an economy will _____.

If consumption is greater than income, saving must be negative.

If the marginal propensity to consume, MPC, is less than 1 and a household's disposable income increases by $2,000, the household's consumption will _____.

Expectations that disposable income will increase in the future will _____.

If incomes in the United States increase, other things equal, then U.S. _____.

As the U.S. price level rises relative to price levels in other countries, U.S. _____.

The slope of the consumption function is equal to the marginal propensity to save (MPS).

If the price level in an economy decreases, other things constant, people consume _____.

If the marginal propensity to consume (MPC) in your classmate's nation is 3/5 and the marginal propensity to save (MPS) in your country is 1/10, which of the following must be true?

The table given below shows the real gross domestic product (GDP), consumption, and planned investment in an economy. The marginal propensity to save ( MPS) in the economy is _____.

In the income-expenditure model, if autonomous saving increases by $15 billion, _____.

The most important determinant of a household's consumption spending is:

The smaller the marginal propensity to save, other things constant, _____.

Expectations that the price level will increase in the future will:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 9: Aggregate Demand

The current level of investment depends on the current level of income.

Which of the following is illustrated by the distance between the aggregate expenditure line and the 45-degree line at each level of real GDP?

Less of an economy's resources will be channeled into building new factories and equipment when:

The amount of U.S. exports to the rest of the world is primarily determined by _____.

The table given below shows the disposable income and consumption of a household. In the table below, saving:

Along the consumption function, an increase in disposable income will:

A decrease in the price level in an economy will _____.

If consumption is greater than income, saving must be negative.

If the marginal propensity to consume, MPC, is less than 1 and a household's disposable income increases by $2,000, the household's consumption will _____.

Expectations that disposable income will increase in the future will _____.

If incomes in the United States increase, other things equal, then U.S. _____.

As the U.S. price level rises relative to price levels in other countries, U.S. _____.

The slope of the consumption function is equal to the marginal propensity to save (MPS).

If the price level in an economy decreases, other things constant, people consume _____.

If the marginal propensity to consume (MPC) in your classmate's nation is 3/5 and the marginal propensity to save (MPS) in your country is 1/10, which of the following must be true?

The table given below shows the real gross domestic product (GDP), consumption, and planned investment in an economy. The marginal propensity to save ( MPS) in the economy is _____.

In the income-expenditure model, if autonomous saving increases by $15 billion, _____.

The most important determinant of a household's consumption spending is:

The smaller the marginal propensity to save, other things constant, _____.

Expectations that the price level will increase in the future will:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters