Question 1

Fluctuations in total output are the reverse image of fluctuations in

Accepted Answer

A) the inflation rate. 
B) the unemployment rate. 
C) gross domestic product. 
D) the GDP deflator. 
A) the inflation rate. 
B) the unemployment rate. 
C) gross domestic product. 
D) the GDP deflator.

Question 2

Events that shift the Ap demand schedule to the left also cause ________ the IS curve.

Accepted Answer

A) movements downward along 
B) movements upward along 
C) parallel rightward shifts of 
D) parallel leftward shifts of 
A) movements downward along 
B) movements upward along 
C) parallel rightward shifts of 
D) parallel leftward shifts of

Question 3

In the consumption function C = a + c(Y -T),the "marginal propensity to consume" appears as

Accepted Answer

A) a. 
B) c. 
C) cY. 
D) -cT. 
A) a. 
B) c. 
C) cY. 
D) -cT.

Question 4

Assume that the marginal propensity to consume equals 0.8,the income tax rate equals 0.3,and the marginal propensity to import equals 0.2.The marginal leakage rate is ________ and the size of the multiplier is ________.

Accepted Answer

A) 0.70;3.33 
B) 0.60;2.5 
C) 0.64;1.56 
D) 0.50;2.0 
A) 0.70;3.33 
B) 0.60;2.5 
C) 0.64;1.56 
D) 0.50;2.0

Question 5

In the four-part diagram used to construct the IS curve,a lower interest rate

Accepted Answer

A) has no effect on Y. 
B) has no effect on the position of the demand for autonomous planned spending curve. 
C) has no effect on the position of the IS curve. 
D) none of the above. 
A) has no effect on Y. 
B) has no effect on the position of the demand for autonomous planned spending curve. 
C) has no effect on the position of the IS curve. 
D) none of the above.

Question 6

An exogenous rise in government expenditures will have the same effect on GDP as an equal rise in either autonomous ________ or autonomous ________.

Accepted Answer

A) consumption;investment 
B) taxes;consumption 
C) savings;investment 
D) taxes;investment 
A) consumption;investment 
B) taxes;consumption 
C) savings;investment 
D) taxes;investment

Question 7

If disposable income increases by $100 and saving increased by $25,ceteris paribus,we may conclude that

Accepted Answer

A) the marginal propensity to consume is 0.25. 
B) the marginal propensity to save is 0.25. 
C) $15 is autonomous consumption. 
D) a change in disposable income is induced by a change in consumption. 
A) the marginal propensity to consume is 0.25. 
B) the marginal propensity to save is 0.25. 
C) $15 is autonomous consumption. 
D) a change in disposable income is induced by a change in consumption.

Question 8

If Ap is total autonomous planned spending,c is the marginal propensity to consume,s is the marginal propensity to save,and Y is the equilibrium income level,then

Accepted Answer

A) Ap/Y. 
B) Y = Ap/s. 
C) sY. 
D) cAp. 
A) Ap/Y. 
B) Y = Ap/s. 
C) sY. 
D) cAp.

Question 9

Net exports ________ the autonomous expenditure multiplier.

Accepted Answer

A) reduce 
B) increase 
C) A or B 
D) have no effect on 
A) reduce 
B) increase 
C) A or B 
D) have no effect on

Question 10

If business firms are more optimistic during the expansion phase of the business cycle,they

Accepted Answer

A) raise their expected rates of return on projects and investment increases. 
B) lower their expected rates of return on projects and investment increases. 
C) raise their expected rates of return on projects and investment decreases. 
D) lower their prices and increase investment. 
A) raise their expected rates of return on projects and investment increases. 
B) lower their expected rates of return on projects and investment increases. 
C) raise their expected rates of return on projects and investment decreases. 
D) lower their prices and increase investment.

Question 11

Assuming that there are NO income taxes,if both autonomous taxes,and government expenditures were to rise by $100 million,we would expect equilibrium GDP to

Accepted Answer

A) rise by $100 million. 
B) rise,but by a multiple of $100 million. 
C) rise by less than $100 million. 
D) remain unaffected because leakages have changed by the same amount. 
A) rise by $100 million. 
B) rise,but by a multiple of $100 million. 
C) rise by less than $100 million. 
D) remain unaffected because leakages have changed by the same amount.

Question 12

Figure 3-3
  
-In Figure 3-3 above,when income is 700,unplanned inventory investment is

Accepted Answer

A) -180. 
B) 180. 
C) 300. 
D) -300. 
E) -120. 
A) -180. 
B) 180. 
C) 300. 
D) -300. 
E) -120.

Question 13

If s = MPS,and t = income tax rate,the marginal leakage rate is

Accepted Answer

A) s(1 - t)+ t. 
B) s -t. 
C) s(1 - t). 
D) t(1 - s)+ t. 
A) s(1 - t)+ t. 
B) s -t. 
C) s(1 - t). 
D) t(1 - s)+ t.

Question 14

Stability of the U.S.economy between 1985 and 2007 referred to as

Accepted Answer

A) Great Moderation. 
B) the Great Depression. 
C) Automatic Stabilizer. 
D) Fiscal Discretion. 
A) Great Moderation. 
B) the Great Depression. 
C) Automatic Stabilizer. 
D) Fiscal Discretion.

Question 15

In the simplest Keynesian model of the determination of income,interest rates are assumed

Accepted Answer

A) to be exogenous and to influence desired spending. 
B) to be endogenous and not to influence desired spending. 
C) to be endogenous and to influence desired spending. 
D) to be exogenous and not to influence spending. 
A) to be exogenous and to influence desired spending. 
B) to be endogenous and not to influence desired spending. 
C) to be endogenous and to influence desired spending. 
D) to be exogenous and not to influence spending.

Question 16

Should autonomous consumption rise by one dollar,the effect of this on equilibrium income can be offset if net taxes are

Accepted Answer

A) raised by one dollar. 
B) lowered by one dollar. 
C) raised by c dollars. 
D) lowered by c dollars. 
E) raised by (1/c)dollars. 
A) raised by one dollar. 
B) lowered by one dollar. 
C) raised by c dollars. 
D) lowered by c dollars. 
E) raised by (1/c)dollars.

Question 17

A marginal propensity to save of 0.20 results in a multiplier of

Accepted Answer

A) 2. 
B) 5. 
C) 1.25. 
D) 8. 
E) 1. 
A) 2. 
B) 5. 
C) 1.25. 
D) 8. 
E) 1.

Question 18

Figure 3-3
  
-In Figure 3-3 above,when income is 1,500,unplanned inventory investment is

Accepted Answer

A) 200. 
B) 300. 
C) 500. 
D) -200. 
E) -500. 
A) 200. 
B) 300. 
C) 500. 
D) -200. 
E) -500.

Question 19

In the consumption function C = a + c(Y -T), "autonomous consumption" appears as

Accepted Answer

A) a 
B) c 
C) cY. 
D) -cT. 
E) c(Y - T). 
A) a 
B) c 
C) cY. 
D) -cT. 
E) c(Y - T).

Question 20

Suppose that equilibrium income is 3200 and the multiplier is 2.38.Equilibrium income would rise to 3400 if planned investment

Accepted Answer

A) rises by 84.03. 
B) rises by 476. 
C) falls by 84.03. 
D) falls by 476. 
A) rises by 84.03. 
B) rises by 476. 
C) falls by 84.03. 
D) falls by 476.

Fluctuations in total output are the reverse image of fluctuations in

Events that shift the Ap demand schedule to the left also cause ________ the IS curve.

In the consumption function C = a + c(Y -T),the "marginal propensity to consume" appears as

Assume that the marginal propensity to consume equals 0.8,the income tax rate equals 0.3,and the marginal propensity to import equals 0.2.The marginal leakage rate is and the size of the multiplier is .

In the four-part diagram used to construct the IS curve,a lower interest rate

An exogenous rise in government expenditures will have the same effect on GDP as an equal rise in either autonomous or autonomous .

If disposable income increases by $100 and saving increased by $25,ceteris paribus,we may conclude that

If Ap is total autonomous planned spending,c is the marginal propensity to consume,s is the marginal propensity to save,and Y is the equilibrium income level,then

Net exports ________ the autonomous expenditure multiplier.

If business firms are more optimistic during the expansion phase of the business cycle,they

Assuming that there are NO income taxes,if both autonomous taxes,and government expenditures were to rise by $100 million,we would expect equilibrium GDP to

Figure 3-3 -In Figure 3-3 above,when income is 700,unplanned inventory investment is

If s = MPS,and t = income tax rate,the marginal leakage rate is

Stability of the U.S.economy between 1985 and 2007 referred to as

In the simplest Keynesian model of the determination of income,interest rates are assumed

Should autonomous consumption rise by one dollar,the effect of this on equilibrium income can be offset if net taxes are

A marginal propensity to save of 0.20 results in a multiplier of

Figure 3-3 -In Figure 3-3 above,when income is 1,500,unplanned inventory investment is

In the consumption function C = a + c(Y -T), "autonomous consumption" appears as

Suppose that equilibrium income is 3200 and the multiplier is 2.38.Equilibrium income would rise to 3400 if planned investment

What Is Macroeconomics

The Measurement of Income,prices,and Unemployment

Strong and Weak Policy Effects in the Is-Lm Model

Financial Markets, financial Regulation, and Economic Instability

The Government Budget, the Government Debt, and the Limitations of Fiscal Policy

International Trade, exchange Rates, and Macroeconomic Policy

Aggregate Demand, aggregate Supply, and the Great Depression

Inflation: Its Causes and Cures

The Goals of Stabilization Policy: Low Inflation and Low Unemployment

The Theory of Economic Growth

The Big Questions of Economic Growth

Money,banks,and the Federal Reserve

The Goals, tools, and Rules of Monetary Policy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro and New Keynesian Macro

Conclusion: Where We Stand

Filters

Exam 3: Income and Interest Rates: the Keynesian Cross Model and the Is Curve

Fluctuations in total output are the reverse image of fluctuations in

Events that shift the Ap demand schedule to the left also cause ________ the IS curve.

In the consumption function C = a + c(Y -T),the "marginal propensity to consume" appears as

Assume that the marginal propensity to consume equals 0.8,the income tax rate equals 0.3,and the marginal propensity to import equals 0.2.The marginal leakage rate is ________ and the size of the multiplier is ________.

In the four-part diagram used to construct the IS curve,a lower interest rate

An exogenous rise in government expenditures will have the same effect on GDP as an equal rise in either autonomous ________ or autonomous ________.

If disposable income increases by $100 and saving increased by $25,ceteris paribus,we may conclude that

If Ap is total autonomous planned spending,c is the marginal propensity to consume,s is the marginal propensity to save,and Y is the equilibrium income level,then

Net exports ________ the autonomous expenditure multiplier.

If business firms are more optimistic during the expansion phase of the business cycle,they

Assuming that there are NO income taxes,if both autonomous taxes,and government expenditures were to rise by $100 million,we would expect equilibrium GDP to

Figure 3-3 -In Figure 3-3 above,when income is 700,unplanned inventory investment is

If s = MPS,and t = income tax rate,the marginal leakage rate is

Stability of the U.S.economy between 1985 and 2007 referred to as

In the simplest Keynesian model of the determination of income,interest rates are assumed

Should autonomous consumption rise by one dollar,the effect of this on equilibrium income can be offset if net taxes are

A marginal propensity to save of 0.20 results in a multiplier of

Figure 3-3 -In Figure 3-3 above,when income is 1,500,unplanned inventory investment is

In the consumption function C = a + c(Y -T), "autonomous consumption" appears as

Suppose that equilibrium income is 3200 and the multiplier is 2.38.Equilibrium income would rise to 3400 if planned investment

What Is Macroeconomics

The Measurement of Income,prices,and Unemployment

Strong and Weak Policy Effects in the Is-Lm Model

Financial Markets, financial Regulation, and Economic Instability

The Government Budget, the Government Debt, and the Limitations of Fiscal Policy

International Trade, exchange Rates, and Macroeconomic Policy

Aggregate Demand, aggregate Supply, and the Great Depression

Inflation: Its Causes and Cures

The Goals of Stabilization Policy: Low Inflation and Low Unemployment

The Theory of Economic Growth

The Big Questions of Economic Growth

Money,banks,and the Federal Reserve

The Goals, tools, and Rules of Monetary Policy

The Economics of Consumption Behavior

The Economics of Investment Behavior

New Classical Macro and New Keynesian Macro

Conclusion: Where We Stand

Filters

Assume that the marginal propensity to consume equals 0.8,the income tax rate equals 0.3,and the marginal propensity to import equals 0.2.The marginal leakage rate is and the size of the multiplier is .

An exogenous rise in government expenditures will have the same effect on GDP as an equal rise in either autonomous or autonomous .