Question 1

If investment spending depends on GDP,this is called induced investment.

Accepted Answer

A) True 
 B)False  True

Question 2

Figure 9-3
  
-In Figure 9-3,equilibrium GDP is

Accepted Answer

A)  $2,000 billion. 
B)  $3,000 billion. 
C)  $4,000 billion. 
D)  $5,000 billion. 
A)  $2,000 billion. 
B)  $3,000 billion. 
C)  $4,000 billion. 
D)  $5,000 billion. C

Question 3

If net exports are reduced,the expenditure schedule will shift

Accepted Answer

A)  downward and equilibrium real GDP will rise. 
B)  upward and equilibrium real GDP will rise. 
C)  downward and equilibrium real GDP will fall. 
D)  upward and equilibrium real GDP will fall. 
A)  downward and equilibrium real GDP will rise. 
B)  upward and equilibrium real GDP will rise. 
C)  downward and equilibrium real GDP will fall. 
D)  upward and equilibrium real GDP will fall. C

Question 4

The basic reason for the multiplier effect is that,when you spend money,

Accepted Answer

A)  another person receives income. 
B)  another person must pay for it. 
C)  your money balances are reduced. 
D)  your net worth decreases. 
A)  another person receives income. 
B)  another person must pay for it. 
C)  your money balances are reduced. 
D)  your net worth decreases.

Question 5

Investment spending

Accepted Answer

A)  cannot be stimulated by decreasing the interest rate. 
B)  is often the cause of business fluctuations in the United States. 
C)  is a remarkably stable function of the level of real GDP. 
D)  is the primary solution to recessions and inflations, according to John Maynard Keynes. 
A)  cannot be stimulated by decreasing the interest rate. 
B)  is often the cause of business fluctuations in the United States. 
C)  is a remarkably stable function of the level of real GDP. 
D)  is the primary solution to recessions and inflations, according to John Maynard Keynes.

Question 6

If net exports decrease,the expenditure schedule will

Accepted Answer

A)  get steeper. 
B)  get flatter. 
C)  shift upward. 
D)  shift downward. 
A)  get steeper. 
B)  get flatter. 
C)  shift upward. 
D)  shift downward.

Question 7

Assume that the MPC is 0.85 and investment spending rises by $100 million.How much consumption spending will this generate in the second round of spending?

Accepted Answer

A)  $15 million 
B)  $85 million 
C)  $100 million 
D)  $118 million 
E)  $185 million 
A)  $15 million 
B)  $85 million 
C)  $100 million 
D)  $118 million 
E)  $185 million

Question 8

Which one of the following could cause a recessionary gap?

Accepted Answer

A)  Interest rates are too low. 
B)  Consumers spend more than they earn. 
C)  Price levels are too high. 
D)  Businesses spend more than they save. 
A)  Interest rates are too low. 
B)  Consumers spend more than they earn. 
C)  Price levels are too high. 
D)  Businesses spend more than they save.

Question 9

When demand for goods and services is high,firms are more likely to hire more workers.

Accepted Answer

A) True 
 B)False

Question 10

Injections include saving and taxes.

Accepted Answer

A) True 
 B)False

Question 11

The federal government could stimulate investment spending by

Accepted Answer

A)  phasing out the depreciation allowance on corporate income taxes. 
B)  enacting an investment tax credit. 
C)  reinstating the windfall profits tax. 
D)  reducing the tax rate on capital gains. 
E)  Both b and d are correct. 
A)  phasing out the depreciation allowance on corporate income taxes. 
B)  enacting an investment tax credit. 
C)  reinstating the windfall profits tax. 
D)  reducing the tax rate on capital gains. 
E)  Both b and d are correct.

Question 12

Workers in a nearby pizza restaurant may indirectly enjoy income increases from a nearby construction process.

Accepted Answer

A) True 
 B)False

Question 13

A change in the price level will cause a shift in the expenditure schedule.

Accepted Answer

A) True 
 B)False

Question 14

Given the slope of the aggregate demand curve,real GDP demanded will decrease when

Accepted Answer

A)  real income rises. 
B)  real income falls. 
C)  the price level falls. 
D)  the price level rises. 
A)  real income rises. 
B)  real income falls. 
C)  the price level falls. 
D)  the price level rises.

Question 15

Figure 9-4
  
-In Figure 9-4,if the economy faces an inflationary gap,what must happen to reach potential GDP?

Accepted Answer

A)  The expenditure level must rise and/or the price level must rise. 
B)  The expenditure level must rise and/or the price level must fall. 
C)  The expenditure level must fall and/or the price level must fall. 
D)  The expenditure level must fall and/or the price level must rise. 
A)  The expenditure level must rise and/or the price level must rise. 
B)  The expenditure level must rise and/or the price level must fall. 
C)  The expenditure level must fall and/or the price level must fall. 
D)  The expenditure level must fall and/or the price level must rise.

Question 16

If retail managers are ordering extra merchandise from their wholesale distributors,then it is probably t that

Accepted Answer

A)  total output is greater than total spending. 
B)  price levels are decreasing. 
C)  inventory levels are increasing. 
D)  inventory levels are decreasing. 
A)  total output is greater than total spending. 
B)  price levels are decreasing. 
C)  inventory levels are increasing. 
D)  inventory levels are decreasing.

Question 17

If businesses spend an additional $150 billion for investment projects in 2010,what will be the impact on national income (Y)if the multiplier is 2?

Accepted Answer

A)  Y will increase by $50 billion. 
B)  Y will increase by $150 billion. 
C)  Y will increase by $300 billion. 
D)  Y will increase by $450 billion. 
A)  Y will increase by $50 billion. 
B)  Y will increase by $150 billion. 
C)  Y will increase by $300 billion. 
D)  Y will increase by $450 billion.

Question 18

A higher price level would mean ____ for a person who has a bank deposit of $2 million.

Accepted Answer

A)  an increase in real income 
B)  a decrease in real wealth 
C)  a decrease in nominal income 
D)  an increase in nominal income 
A)  an increase in real income 
B)  a decrease in real wealth 
C)  a decrease in nominal income 
D)  an increase in nominal income

Question 19

A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that

Accepted Answer

A)  inventory stocks are building up. 
B)  inventory stocks are being depleted. 
C)  their profits are negative. 
D)  many of their workers have little to do. 
A)  inventory stocks are building up. 
B)  inventory stocks are being depleted. 
C)  their profits are negative. 
D)  many of their workers have little to do.

Question 20

Why do booms and recessions tend to be transmitted across national borders?

Accepted Answer

The GDPs of the major economies are link

If investment spending depends on GDP,this is called induced investment.

Figure 9-3 -In Figure 9-3,equilibrium GDP is

If net exports are reduced,the expenditure schedule will shift

The basic reason for the multiplier effect is that,when you spend money,

Investment spending

If net exports decrease,the expenditure schedule will

Assume that the MPC is 0.85 and investment spending rises by $100 million.How much consumption spending will this generate in the second round of spending?

Which one of the following could cause a recessionary gap?

When demand for goods and services is high,firms are more likely to hire more workers.

Injections include saving and taxes.

The federal government could stimulate investment spending by

Workers in a nearby pizza restaurant may indirectly enjoy income increases from a nearby construction process.

A change in the price level will cause a shift in the expenditure schedule.

Given the slope of the aggregate demand curve,real GDP demanded will decrease when

Figure 9-4 -In Figure 9-4,if the economy faces an inflationary gap,what must happen to reach potential GDP?

If retail managers are ordering extra merchandise from their wholesale distributors,then it is probably t that

If businesses spend an additional $150 billion for investment projects in 2010,what will be the impact on national income (Y)if the multiplier is 2?

A higher price level would mean ____ for a person who has a bank deposit of $2 million.

A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that

Why do booms and recessions tend to be transmitted across national borders?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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Exam 9: Demand-Side Equilibrium: Unemployment or Inflation?

If investment spending depends on GDP,this is called induced investment.

Figure 9-3 -In Figure 9-3,equilibrium GDP is

If net exports are reduced,the expenditure schedule will shift

The basic reason for the multiplier effect is that,when you spend money,

Investment spending

If net exports decrease,the expenditure schedule will

Assume that the MPC is 0.85 and investment spending rises by $100 million.How much consumption spending will this generate in the second round of spending?

Which one of the following could cause a recessionary gap?

When demand for goods and services is high,firms are more likely to hire more workers.

Injections include saving and taxes.

The federal government could stimulate investment spending by

Workers in a nearby pizza restaurant may indirectly enjoy income increases from a nearby construction process.

A change in the price level will cause a shift in the expenditure schedule.

Given the slope of the aggregate demand curve,real GDP demanded will decrease when

Figure 9-4 -In Figure 9-4,if the economy faces an inflationary gap,what must happen to reach potential GDP?

If retail managers are ordering extra merchandise from their wholesale distributors,then it is probably t that

If businesses spend an additional $150 billion for investment projects in 2010,what will be the impact on national income (Y)if the multiplier is 2?

A higher price level would mean ____ for a person who has a bank deposit of $2 million.

A level of GDP cannot be at equilibrium when aggregate demand exceeds output because firms will notice that

Why do booms and recessions tend to be transmitted across national borders?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters