Question 1

If the MPC is 0.8 and disposable income shrinks by $100 million.Consumption would

Accepted Answer

A)  rise by $8 million 
B)  rise by $80 million 
C)  fall by $80 million 
D)  fall by $8 million 
E)  fall by $20 million 
A)  rise by $8 million 
B)  rise by $80 million 
C)  fall by $80 million 
D)  fall by $8 million 
E)  fall by $20 million

Question 2

The expenditure multiplier acts on changes in investment spending,government purchases,net exports,and autonomous consumption.

Accepted Answer

A) True 
 B)False

Question 3

Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion.Inventories will

Accepted Answer

A)  increase by $250 billion 
B)  increase by $375 billion 
C)  increase by $400 billion 
D)  decrease by $250 billion 
E)  decrease by $375 billion 
A)  increase by $250 billion 
B)  increase by $375 billion 
C)  increase by $400 billion 
D)  decrease by $250 billion 
E)  decrease by $375 billion

Question 4

Which of the following describes the relationship among income,disposable income,taxes,and transfer payments?

Accepted Answer

A)  Taxes plus transfers equal income plus disposable income 
B)  Disposable income equals income divided by the sum of taxes and transfers 
C)  Disposable income equals income minus taxes plus transfers 
D)  Disposable income equals income plus taxes plus transfers 
E)  Taxes plus transfers equal disposable income minus income. 
A)  Taxes plus transfers equal income plus disposable income 
B)  Disposable income equals income divided by the sum of taxes and transfers 
C)  Disposable income equals income minus taxes plus transfers 
D)  Disposable income equals income plus taxes plus transfers 
E)  Taxes plus transfers equal disposable income minus income.

Question 5

If autonomous consumption is $5,000,the MPC is 0.7,net taxes are $2,000,investment spending is $4,000,and government purchases equal $2,500,and NX = $0,what is equilibrium GDP?

Accepted Answer

A)  $14,428.6 
B)  $33,666.7 
C)  $40,800 
D)  $43,000 
E)  $45,000 
A)  $14,428.6 
B)  $33,666.7 
C)  $40,800 
D)  $43,000 
E)  $45,000

Question 6

Renee plans to graduate and enter the job market in the spring.Economists are forecasting a recession during the spring.As a result,she

Accepted Answer

A)  is happy because unemployment rates are low during a recession 
B)  is happy because salaries are usually higher during a recession 
C)  does not care because the availability of jobs is not affected by whether there is a recession 
D)  is unhappy because it is generally difficult to find a job during a recession 
E)  favors increasing taxes to help head off the recession 
A)  is happy because unemployment rates are low during a recession 
B)  is happy because salaries are usually higher during a recession 
C)  does not care because the availability of jobs is not affected by whether there is a recession 
D)  is unhappy because it is generally difficult to find a job during a recession 
E)  favors increasing taxes to help head off the recession

Question 7

If real disposable income increased by $10,000 and real consumption spending increased by $7,500,what is the marginal propensity to consume (MPC)?

Accepted Answer

A)  0.25 
B)  1.0 
C)  0.75 
D)  1.75 
E)  1.25 
A)  0.25 
B)  1.0 
C)  0.75 
D)  1.75 
E)  1.25

Question 8

If the expenditure multiplier is 2.5 and investment spending increases by $2,000 billion,what will be the change in GDP?

Accepted Answer

A)  $2,000 billion 
B)  $5,000 billion 
C)  $571.4 billion 
D)  $3,500 billion 
E)  $7,000 billion 
A)  $2,000 billion 
B)  $5,000 billion 
C)  $571.4 billion 
D)  $3,500 billion 
E)  $7,000 billion

Question 9

Approximately how long does it take for the successive increases in spending and output to be completed after an initial increase in investment spending?

Accepted Answer

A)  Two years 
B)  Ten years 
C)  Six years 
D)  One year 
E)  Five years 
A)  Two years 
B)  Ten years 
C)  Six years 
D)  One year 
E)  Five years

Question 10

The largest component of aggregate expenditure is

Accepted Answer

A)  consumption spending 
B)  government purchases 
C)  net exports 
D)  capital expenditures 
E)  investment spending 
A)  consumption spending 
B)  government purchases 
C)  net exports 
D)  capital expenditures 
E)  investment spending

If the MPC is 0.8 and disposable income shrinks by $100 million.Consumption would

The expenditure multiplier acts on changes in investment spending,government purchases,net exports,and autonomous consumption.

Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion.Inventories will

Which of the following describes the relationship among income,disposable income,taxes,and transfer payments?

If autonomous consumption is $5,000,the MPC is 0.7,net taxes are $2,000,investment spending is $4,000,and government purchases equal $2,500,and NX = $0,what is equilibrium GDP?

Renee plans to graduate and enter the job market in the spring.Economists are forecasting a recession during the spring.As a result,she

If real disposable income increased by $10,000 and real consumption spending increased by $7,500,what is the marginal propensity to consume (MPC)?

If the expenditure multiplier is 2.5 and investment spending increases by $2,000 billion,what will be the change in GDP?

Approximately how long does it take for the successive increases in spending and output to be completed after an initial increase in investment spending?

The largest component of aggregate expenditure is

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

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Exam 11: The Short-run Macro Model

If the MPC is 0.8 and disposable income shrinks by $100 million.Consumption would

The expenditure multiplier acts on changes in investment spending,government purchases,net exports,and autonomous consumption.

Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion.Inventories will

Which of the following describes the relationship among income,disposable income,taxes,and transfer payments?

If autonomous consumption is $5,000,the MPC is 0.7,net taxes are $2,000,investment spending is $4,000,and government purchases equal $2,500,and NX = $0,what is equilibrium GDP?

Renee plans to graduate and enter the job market in the spring.Economists are forecasting a recession during the spring.As a result,she

If real disposable income increased by $10,000 and real consumption spending increased by $7,500,what is the marginal propensity to consume (MPC)?

If the expenditure multiplier is 2.5 and investment spending increases by $2,000 billion,what will be the change in GDP?

Approximately how long does it take for the successive increases in spending and output to be completed after an initial increase in investment spending?

The largest component of aggregate expenditure is

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters