Question 1

If the marginal propensity to consume is 0.75 and government spending decreases by $2,000 billion,what is the change in GDP?

Accepted Answer

A)  -$2,000 billion 
B)  -$8,000 billion 
C)  $2,000 billion 
D)  $1,500 billion 
E)  $8,000 billion 
A)  -$2,000 billion 
B)  -$8,000 billion 
C)  $2,000 billion 
D)  $1,500 billion 
E)  $8,000 billion

Question 2

Roughly what fraction of total spending is consumption spending?

Accepted Answer

A)  One-half 
B)  One-eighth 
C)  Two-fifths 
D)  One-quarter 
E)  Two-thirds. 
A)  One-half 
B)  One-eighth 
C)  Two-fifths 
D)  One-quarter 
E)  Two-thirds.

Question 3

If income increases by $10,000,government purchases are fixed at $1,000,investment spending is fixed at $2,000,net exports are fixed at $500,and the marginal propensity to consume is 0.70,by how much does aggregate expenditure increase?

Accepted Answer

A)  $700 
B)  $2,000 
C)  $7,000 
D)  $1,000 
E)  $1,400 
A)  $700 
B)  $2,000 
C)  $7,000 
D)  $1,000 
E)  $1,400

Question 4

A rise in aggregate expenditure is always

Accepted Answer

A)  smaller than the rise in income that causes it 
B)  larger than the rise in income that causes it 
C)  the same as the rise in income that causes it 
D)  smaller than the increase in consumer spending that causes it 
E)  smaller than investment spending 
A)  smaller than the rise in income that causes it 
B)  larger than the rise in income that causes it 
C)  the same as the rise in income that causes it 
D)  smaller than the increase in consumer spending that causes it 
E)  smaller than investment spending

Question 5

At each level of income,net taxes reduce disposable income,thereby reducing consumption spending.

Accepted Answer

A) True 
 B)False

Question 6

Suppose you observed firms' inventory stocks drop by $100 billion.If you knew that aggregate expenditure was $3,000 billion,what would GDP be?

Accepted Answer

A)  $3,000 billion 
B)  $2,000 billion 
C)  $2,900 billion 
D)  $1,000 billion 
E)  $3,100 billion 
A)  $3,000 billion 
B)  $2,000 billion 
C)  $2,900 billion 
D)  $1,000 billion 
E)  $3,100 billion

Question 7

Which of the following describes the relationship between the change in inventories and aggregate expenditure?

Accepted Answer

A)  Aggregate expenditure equals the change in inventories minus GDP. 
B)  The change in inventories equals GDP divided by aggregate expenditures. 
C)  Aggregate expenditures equals GDP divided by the change in inventories. 
D)  Aggregate expenditures equals GDP minus the change in inventories. 
E)  The change in inventories equals GDP multiplied by aggregate expenditure. 
A)  Aggregate expenditure equals the change in inventories minus GDP. 
B)  The change in inventories equals GDP divided by aggregate expenditures. 
C)  Aggregate expenditures equals GDP divided by the change in inventories. 
D)  Aggregate expenditures equals GDP minus the change in inventories. 
E)  The change in inventories equals GDP multiplied by aggregate expenditure.

Question 8

The short-run macro model is used most often to determine changes in

Accepted Answer

A)  nominal output 
B)  net output 
C)  gross output 
D)  financial output 
E)  real output. 
A)  nominal output 
B)  net output 
C)  gross output 
D)  financial output 
E)  real output.

Question 9

If an economy is at equilibrium,it will also be operating at full employment.

Accepted Answer

A) True 
 B)False

Question 10

The most recent recession in the United States began in December 2007.

Accepted Answer

A) True 
 B)False

Question 11

In the short-run macro model,adjustment toward equilibrium is facilitated by price changes.

Accepted Answer

A) True 
 B)False

Question 12

The marginal propensity to consume is always

Accepted Answer

A)  greater than 1 
B)  between 0 and 1 
C)  less than 0 
D)  between 0 and -1 
E)  between 0 and 0.6 
A)  greater than 1 
B)  between 0 and 1 
C)  less than 0 
D)  between 0 and -1 
E)  between 0 and 0.6

Question 13

If the marginal propensity to consume is 0.5 and disposable income increases by $10,000,by how much will consumption spending increase?

Accepted Answer

A)  $10,000 
B)  $500 
C)  $50 
D)  $5,000 
E)  $9,524 
A)  $10,000 
B)  $500 
C)  $50 
D)  $5,000 
E)  $9,524

Question 14

When aggregate expenditure at a particular level of GDP is more than output,

Accepted Answer

A)  output will increase 
B)  output will decrease 
C)  output will remain constant 
D)  there is not enough information to determine what happens to output 
E)  prices will rise 
A)  output will increase 
B)  output will decrease 
C)  output will remain constant 
D)  there is not enough information to determine what happens to output 
E)  prices will rise

Question 15

Use the table below to determine autonomous consumption spending.

Accepted Answer

A)  $0 
B)  $100 
C)  $180 
D)  $200 
E)  $1,000 
A)  $0 
B)  $100 
C)  $180 
D)  $200 
E)  $1,000

Question 16

-Consider Figure 11-10 above.Which of the following is true?

Accepted Answer

A)  Equilibrium GDP is $8 trillion 
B)  Unplanned inventory changes are $0.4 trillion when GDP is $8 trillion 
C)  Equilibrium GDP is $7 trillion 
D)  The MPC is 1 
E)  Government expenditures are $8.6 trillion 
A)  Equilibrium GDP is $8 trillion 
B)  Unplanned inventory changes are $0.4 trillion when GDP is $8 trillion 
C)  Equilibrium GDP is $7 trillion 
D)  The MPC is 1 
E)  Government expenditures are $8.6 trillion

Question 17

Use the table below to find the marginal propensity to save.

Accepted Answer

A)  0 
B)  0.25 
C)  0.5 
D)  0.75 
E)  0.80 
A)  0 
B)  0.25 
C)  0.5 
D)  0.75 
E)  0.80

Question 18

The consumption function shows the relationship between real consumption spending and

Accepted Answer

A)  real wealth 
B)  the interest rate 
C)  expectations 
D)  real disposable income 
E)  debt 
A)  real wealth 
B)  the interest rate 
C)  expectations 
D)  real disposable income 
E)  debt

Question 19

The consumption function shows

Accepted Answer

A)  the relationship between consumption and saving 
B)  the relationship between consumption and real disposable income 
C)  the relationship between consumption and real income 
D)  the relationship between consumption and nominal income 
E)  the relationship between total consumption and consumption for durable goods. 
A)  the relationship between consumption and saving 
B)  the relationship between consumption and real disposable income 
C)  the relationship between consumption and real income 
D)  the relationship between consumption and nominal income 
E)  the relationship between total consumption and consumption for durable goods.

Question 20

The part of consumption that is determined by income is referred to as autonomous consumption.

Accepted Answer

A) True 
 B)False

If the marginal propensity to consume is 0.75 and government spending decreases by $2,000 billion,what is the change in GDP?

Roughly what fraction of total spending is consumption spending?

If income increases by $10,000,government purchases are fixed at $1,000,investment spending is fixed at $2,000,net exports are fixed at $500,and the marginal propensity to consume is 0.70,by how much does aggregate expenditure increase?

A rise in aggregate expenditure is always

At each level of income,net taxes reduce disposable income,thereby reducing consumption spending.

Suppose you observed firms' inventory stocks drop by $100 billion.If you knew that aggregate expenditure was $3,000 billion,what would GDP be?

Which of the following describes the relationship between the change in inventories and aggregate expenditure?

The short-run macro model is used most often to determine changes in

If an economy is at equilibrium,it will also be operating at full employment.

The most recent recession in the United States began in December 2007.

In the short-run macro model,adjustment toward equilibrium is facilitated by price changes.

The marginal propensity to consume is always

If the marginal propensity to consume is 0.5 and disposable income increases by $10,000,by how much will consumption spending increase?

When aggregate expenditure at a particular level of GDP is more than output,

Use the table below to determine autonomous consumption spending.

-Consider Figure 11-10 above.Which of the following is true?

Use the table below to find the marginal propensity to save.

The consumption function shows the relationship between real consumption spending and

The consumption function shows

The part of consumption that is determined by income is referred to as autonomous consumption.

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 marginal propensity to consume is 0.75 and government spending decreases by $2,000 billion,what is the change in GDP?

Roughly what fraction of total spending is consumption spending?

If income increases by $10,000,government purchases are fixed at $1,000,investment spending is fixed at $2,000,net exports are fixed at $500,and the marginal propensity to consume is 0.70,by how much does aggregate expenditure increase?

A rise in aggregate expenditure is always

At each level of income,net taxes reduce disposable income,thereby reducing consumption spending.

Suppose you observed firms' inventory stocks drop by $100 billion.If you knew that aggregate expenditure was $3,000 billion,what would GDP be?

Which of the following describes the relationship between the change in inventories and aggregate expenditure?

The short-run macro model is used most often to determine changes in

If an economy is at equilibrium,it will also be operating at full employment.

The most recent recession in the United States began in December 2007.

In the short-run macro model,adjustment toward equilibrium is facilitated by price changes.

The marginal propensity to consume is always

If the marginal propensity to consume is 0.5 and disposable income increases by $10,000,by how much will consumption spending increase?

When aggregate expenditure at a particular level of GDP is more than output,

Use the table below to determine autonomous consumption spending.

-Consider Figure 11-10 above.Which of the following is true?

Use the table below to find the marginal propensity to save.

The consumption function shows the relationship between real consumption spending and

The consumption function shows

The part of consumption that is determined by income is referred to as autonomous consumption.

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