Question 1

A decrease in stock prices will _____ the net wealth of households and _____ consumption.

Accepted Answer

A)  reduce; increase 
B)  reduce; decrease 
C)  reduce; not change 
D)  increase; increase 
E)  increase; decrease 
A)  reduce; increase 
B)  reduce; decrease 
C)  reduce; not change 
D)  increase; increase 
E)  increase; decrease

Question 2

If the marginal propensity to consume (MPC) is 0.75, the simple multiplier is _____

Accepted Answer

A)  25. 
B)  75. 
C)  5. 
D)  ¾. 
E)  4. 
A)  25. 
B)  75. 
C)  5. 
D)  ¾. 
E)  4.

Question 3

If the simple spending multiplier is 10, the marginal propensity to save (MPS) is _____

Accepted Answer

A)  1/10. 
B)  9/10. 
C)  1/9. 
D)  10/9. 
E)  9. 
A)  1/10. 
B)  9/10. 
C)  1/9. 
D)  10/9. 
E)  9.

Question 4

An increase in the price level in an economy will _____

Accepted Answer

A)  shift the aggregate expenditure line upward. 
B)  shift the aggregate expenditure line downward. 
C)  cause an upward movement along the aggregate expenditure line. 
D)  cause a downward movement along the aggregate expenditure line. 
E)  shift the aggregate demand curve downward. 
A)  shift the aggregate expenditure line upward. 
B)  shift the aggregate expenditure line downward. 
C)  cause an upward movement along the aggregate expenditure line. 
D)  cause a downward movement along the aggregate expenditure line. 
E)  shift the aggregate demand curve downward.

Question 5

An increase in the U.S. price level, other things constant, will _____

Accepted Answer

A)  increase U.S. exports and decrease U.S. imports. 
B)  increase U.S. exports and leave U.S. imports unchanged. 
C)  decrease U.S. exports and increase U.S. imports. 
D)  decrease U.S. exports and leave U.S. imports unchanged. 
E)  leave both U.S. exports and U.S. imports unchanged. 
A)  increase U.S. exports and decrease U.S. imports. 
B)  increase U.S. exports and leave U.S. imports unchanged. 
C)  decrease U.S. exports and increase U.S. imports. 
D)  decrease U.S. exports and leave U.S. imports unchanged. 
E)  leave both U.S. exports and U.S. imports unchanged.

Question 6

If planned spending exceeds the amount produced, how would a firm like John Deere satisfy an increased demand for tractors initially?

Accepted Answer

A)  by drawing down tractor inventories 
B)  by increasing the production of tractors 
C)  by increasing the price for tractors 
D)  by waiting for demand to decrease 
E)  They will not be able to, and will lose sales. 
A)  by drawing down tractor inventories 
B)  by increasing the production of tractors 
C)  by increasing the price for tractors 
D)  by waiting for demand to decrease 
E)  They will not be able to, and will lose sales.

Question 7

Identify the correct statement.

Accepted Answer

A)  An increase in the price level in an economy will increase the real value of dollar-denominated assets. 
B)  An increase in the price level in an economy will shift the aggregate expenditure line upward. 
C)  An increase in the price level in an economy will decrease the equilibrium level of output demanded. 
D)  An increase in the price level in an economy will decrease the real GDP demanded along the aggregate demand curve. 
E)  An increase in the price level in an economy will shift the aggregate demand curve rightward. 
A)  An increase in the price level in an economy will increase the real value of dollar-denominated assets. 
B)  An increase in the price level in an economy will shift the aggregate expenditure line upward. 
C)  An increase in the price level in an economy will decrease the equilibrium level of output demanded. 
D)  An increase in the price level in an economy will decrease the real GDP demanded along the aggregate demand curve. 
E)  An increase in the price level in an economy will shift the aggregate demand curve rightward.

Question 8

Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging, and other expenses. So far, she has managed to save $20,000. What is the change in her consumption per month after the increase in income?

Accepted Answer

A)  $3,500 
B)  $3,000 
C)  $2,700 
D)  $3,150 
E)  $450 
A)  $3,500 
B)  $3,000 
C)  $2,700 
D)  $3,150 
E)  $450

Question 9

Which of the following is true of net taxes?

Accepted Answer

A)  The level of net taxes varies directly with the level of transfer payments. 
B)  The level of net taxes varies inversely with the level of transfer payments. 
C)  Net taxes must always be less than zero. 
D)  Net taxes increase when income tax rates are reduced. 
E)  Net taxes increase when income decreases. 
A)  The level of net taxes varies directly with the level of transfer payments. 
B)  The level of net taxes varies inversely with the level of transfer payments. 
C)  Net taxes must always be less than zero. 
D)  Net taxes increase when income tax rates are reduced. 
E)  Net taxes increase when income decreases.

Question 10

Table 9.2
  
-Refer to Table 9.2, which shows the values of different components of aggregate expenditure of an economy. The marginal propensity to consume (MPC) equals _____

Accepted Answer

A)  0.20 or 1/5. 
B)  0.40 or 2/5. 
C)  0.80 or 4/5. 
D)  0.90 or 9/10. 
E)  0.60 or 3/5. 
A)  0.20 or 1/5. 
B)  0.40 or 2/5. 
C)  0.80 or 4/5. 
D)  0.90 or 9/10. 
E)  0.60 or 3/5.

Question 11

Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging and other expenses. So far, she has managed to save $20,000. What is the change in her saving per month after the increase in income?

Accepted Answer

A)  $500 
B)  $450 
C)  $350 
D)  $300 
E)  $50 
A)  $500 
B)  $450 
C)  $350 
D)  $300 
E)  $50

Question 12

In 2005, what was the average saving rate as a percentage of income among urban households in China?

Accepted Answer

A)  0 percent 
B)  5 percent 
C)  10 percent 
D)  25 percent 
E)  30 percent 
A)  0 percent 
B)  5 percent 
C)  10 percent 
D)  25 percent 
E)  30 percent

Question 13

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.

Question 14

Facing reduced inventory, how would a firm like John Deere satisfy an increased demand for tractors if they have already drawn down inventories?

Accepted Answer

A)  by increasing tractor inventories 
B)  by increasing the production of tractors 
C)  by increasing the price for tractors 
D)  by waiting for demand to decrease 
E)  They will not be able to, and will lose sales. 
A)  by increasing tractor inventories 
B)  by increasing the production of tractors 
C)  by increasing the price for tractors 
D)  by waiting for demand to decrease 
E)  They will not be able to, and will lose sales.

Question 15

An increase in the price level will _____

Accepted Answer

A)  make the consumption function flatter. 
B)  make the consumption function steeper. 
C)  increase consumption because wages will increase. 
D)  decrease consumption because falling interest rates make it cheaper to borrow. 
E)  decrease consumption because the value of net wealth will decrease. 
A)  make the consumption function flatter. 
B)  make the consumption function steeper. 
C)  increase consumption because wages will increase. 
D)  decrease consumption because falling interest rates make it cheaper to borrow. 
E)  decrease consumption because the value of net wealth will decrease.

Question 16

Which of the following is not true about a change in the price level?

Accepted Answer

A)  It will shift the aggregate demand curve. 
B)  It will shift the aggregate expenditure curve. 
C)  It will result in a new value of equilibrium real GDP demanded. 
D)  It will change the real value of dollar-denominated assets. 
E)  It will shift the consumption function. 
A)  It will shift the aggregate demand curve. 
B)  It will shift the aggregate expenditure curve. 
C)  It will result in a new value of equilibrium real GDP demanded. 
D)  It will change the real value of dollar-denominated assets. 
E)  It will shift the consumption function.

Question 17

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 18

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 19

Which of the following is true of the relationship between disposable income and consumption?

Accepted Answer

A)  Disposable income and consumption are both dependent variables. 
B)  Disposable income and consumption are both independent variables. 
C)  Disposable income is the dependent variable and consumption is the independent variable. 
D)  Consumption is the dependent variable and disposable income is the independent variable. 
E)  Disposable income and consumption are negatively related to each other. 
A)  Disposable income and consumption are both dependent variables. 
B)  Disposable income and consumption are both independent variables. 
C)  Disposable income is the dependent variable and consumption is the independent variable. 
D)  Consumption is the dependent variable and disposable income is the independent variable. 
E)  Disposable income and consumption are negatively related to each other.

Question 20

The relationship in the economy between consumption and income is called _____

Accepted Answer

A)  disposable income. 
B)  the consumption function. 
C)  the marginal propensity to consume. 
D)  the marginal propensity to save. 
E)  net wealth. 
A)  disposable income. 
B)  the consumption function. 
C)  the marginal propensity to consume. 
D)  the marginal propensity to save. 
E)  net wealth.

A decrease in stock prices will _ the net wealth of households and _ consumption.

If the marginal propensity to consume (MPC) is 0.75, the simple multiplier is _____

If the simple spending multiplier is 10, the marginal propensity to save (MPS) is _____

An increase in the price level in an economy will _____

An increase in the U.S. price level, other things constant, will _____

If planned spending exceeds the amount produced, how would a firm like John Deere satisfy an increased demand for tractors initially?

Identify the correct statement.

Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging, and other expenses. So far, she has managed to save $20,000. What is the change in her consumption per month after the increase in income?

Which of the following is true of net taxes?

Table 9.2 -Refer to Table 9.2, which shows the values of different components of aggregate expenditure of an economy. The marginal propensity to consume (MPC) equals _____

Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging and other expenses. So far, she has managed to save $20,000. What is the change in her saving per month after the increase in income?

In 2005, what was the average saving rate as a percentage of income among urban households in China?

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

Facing reduced inventory, how would a firm like John Deere satisfy an increased demand for tractors if they have already drawn down inventories?

An increase in the price level will _____

Which of the following is not true about a change in the price level?

A decrease in the price level in an economy will _____

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

Which of the following is true of the relationship between disposable income and consumption?

The relationship in the economy between consumption and income is called _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 9: Aggregate Demand.

A decrease in stock prices will _____ the net wealth of households and _____ consumption.

If the marginal propensity to consume (MPC) is 0.75, the simple multiplier is _____

If the simple spending multiplier is 10, the marginal propensity to save (MPS) is _____

An increase in the price level in an economy will _____

An increase in the U.S. price level, other things constant, will _____

If planned spending exceeds the amount produced, how would a firm like John Deere satisfy an increased demand for tractors initially?

Identify the correct statement.

Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging, and other expenses. So far, she has managed to save $20,000. What is the change in her consumption per month after the increase in income?

Which of the following is true of net taxes?

Table 9.2 -Refer to Table 9.2, which shows the values of different components of aggregate expenditure of an economy. The marginal propensity to consume (MPC) equals _____

Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging and other expenses. So far, she has managed to save $20,000. What is the change in her saving per month after the increase in income?

In 2005, what was the average saving rate as a percentage of income among urban households in China?

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

Facing reduced inventory, how would a firm like John Deere satisfy an increased demand for tractors if they have already drawn down inventories?

An increase in the price level will _____

Which of the following is not true about a change in the price level?

A decrease in the price level in an economy will _____

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

Which of the following is true of the relationship between disposable income and consumption?

The relationship in the economy between consumption and income is called _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

A decrease in stock prices will _ the net wealth of households and _ consumption.