Question 1

How do economists define the marginal propensity to consume (MPC)?

Accepted Answer

A) as the fraction of total disposable income that households save 
B) as the fraction of total disposable income that households spend on consumption 
C) as the additional disposable income households earn in a given period 
D) as the additional consumption that results from one dollar increase in disposable income 
A) as the fraction of total disposable income that households save 
B) as the fraction of total disposable income that households spend on consumption 
C) as the additional disposable income households earn in a given period 
D) as the additional consumption that results from one dollar increase in disposable income

Question 2

What impact would a combination of improved,expected future profitability of businesses and higher business taxes have?

Accepted Answer

A) It would leave the investment demand curve unchanged. 
B) It would decrease the investment demand curve. 
C) It could either increase or decrease the investment demand curve. 
D) It would increase the investment demand curve. 
A) It would leave the investment demand curve unchanged. 
B) It would decrease the investment demand curve. 
C) It could either increase or decrease the investment demand curve. 
D) It would increase the investment demand curve.

Question 3

As the price level decreases,what is the effect on the quantity of RGDP demanded in the economy?

Accepted Answer

A) It first decreases and then increases. 
B) It decreases. 
C) It increases. 
D) It remains the same. 
A) It first decreases and then increases. 
B) It decreases. 
C) It increases. 
D) It remains the same.

Question 4

What impact would a higher real interest rate have?

Accepted Answer

A) It would increase the supply of national savings. 
B) It would decrease the dollar amount of national savings, but not shift the supply of national savings curve to the left. 
C) It would decrease the supply of national savings. 
D) It would increase the dollar amount of national savings, but not shift the supply of national savings curve to the right. 
A) It would increase the supply of national savings. 
B) It would decrease the dollar amount of national savings, but not shift the supply of national savings curve to the left. 
C) It would decrease the supply of national savings. 
D) It would increase the dollar amount of national savings, but not shift the supply of national savings curve to the right.

Question 5

Which of the following changes in disposable income would lead to the greatest increase in consumption?

Accepted Answer

A) a $20 000 increase in disposable income, if MPC equals 0.5 
B) a $15 000 increase in disposable income, if MPC equals 0.6 
C) a $12 000 increase in disposable income, if MPC equals 0.75 
D) a $30 000 increase in disposable income, if MPC equals 0.25 
A) a $20 000 increase in disposable income, if MPC equals 0.5 
B) a $15 000 increase in disposable income, if MPC equals 0.6 
C) a $12 000 increase in disposable income, if MPC equals 0.75 
D) a $30 000 increase in disposable income, if MPC equals 0.25

Question 6

What would result from a decrease in the supply of national savings curve?

Accepted Answer

A) an increase in the dollar amount of savings 
B) an increase in real interest rates 
C) an increase in the dollar amount of investment 
D) a decrease in real interest rates 
A) an increase in the dollar amount of savings 
B) an increase in real interest rates 
C) an increase in the dollar amount of investment 
D) a decrease in real interest rates

Question 7

What would be the impact on aggregate demand (AD)if exports and imports both rose,but exports rose more than imports?

Accepted Answer

A) AD could either increase or decrease. 
B) AD would increase. 
C) AD would be unaffected. 
D) AD would decrease. 
A) AD could either increase or decrease. 
B) AD would increase. 
C) AD would be unaffected. 
D) AD would decrease.

Question 8

Which of the following describes marginal propensity to consume (MPC)and average propensity to consume (APC)?

Accepted Answer

A) MPC is less than 1, but APC can be either greater or less than 1. 
B) Both MPC and APC are always less than 1. 
C) MPC is less than 1, but APC is always equal to 1. 
D) MPC and APC are always greater than or equal to 1. 
A) MPC is less than 1, but APC can be either greater or less than 1. 
B) Both MPC and APC are always less than 1. 
C) MPC is less than 1, but APC is always equal to 1. 
D) MPC and APC are always greater than or equal to 1.

Question 9

What impact will a decrease in the Canadian price level have?

Accepted Answer

A) It will decrease real GDP demanded in Canada. 
B) It will decrease Canadian exports. 
C) It will increase money demand in Canada. 
D) It will decrease Canadian imports. 
A) It will decrease real GDP demanded in Canada. 
B) It will decrease Canadian exports. 
C) It will increase money demand in Canada. 
D) It will decrease Canadian imports.

Question 10

What impact would a combination of higher business taxes,reduced expected future profitability of businesses,and a reduction in the level of new profitable technological investment opportunities have?

Accepted Answer

A) It would increase the investment demand curve. 
B) It would leave the investment demand curve unchanged. 
C) It could either increase or decrease the investment demand curve. 
D) It would decrease the investment demand curve. 
A) It would increase the investment demand curve. 
B) It would leave the investment demand curve unchanged. 
C) It could either increase or decrease the investment demand curve. 
D) It would decrease the investment demand curve.

Question 11

Explain under what condition changes in net exports add to aggregate demand; decrease aggregate demand; or have at net no effect on aggregate demand.

Accepted Answer

Aggregate demand is increased when net e

Question 12

If Don spends $10 000 on consumption when he has no disposable income and then spends 75 cents out of every dollar of disposable income he earns on consumption,which of the following statements about Don's consumption is the most accurate?

Accepted Answer

A) Don's MPC equals 0.75. 
B) Don's APC will rise as his income rises. 
C) Don spends $20 000 on consumption when his disposable income is $20 000. 
D) Don's APC equals 0.75. 
A) Don's MPC equals 0.75. 
B) Don's APC will rise as his income rises. 
C) Don spends $20 000 on consumption when his disposable income is $20 000. 
D) Don's APC equals 0.75.

Question 13

What occurs at higher real interest rates?

Accepted Answer

A) People save less. 
B) People pay more taxes. 
C) People save more. 
D) People consume more. 
A) People save less. 
B) People pay more taxes. 
C) People save more. 
D) People consume more.

Question 14

If consumption is a direct function of disposable income,what would an increase in personal taxes do?

Accepted Answer

A) decrease both consumption and aggregate demand 
B) decrease net exports 
C) decrease consumption but not aggregate demand 
D) increase consumption but not aggregate demand 
A) decrease both consumption and aggregate demand 
B) decrease net exports 
C) decrease consumption but not aggregate demand 
D) increase consumption but not aggregate demand

Question 15

Which of the following tends to increase economic growth?

Accepted Answer

A) a decrease in taxes, holding government spending constant 
B) a reduction in government spending, holding taxes constant 
C) an increase in government spending, holding taxes constant 
D) an increase in taxes, holding government spending constant 
A) a decrease in taxes, holding government spending constant 
B) a reduction in government spending, holding taxes constant 
C) an increase in government spending, holding taxes constant 
D) an increase in taxes, holding government spending constant

Question 16

What would increase the supply of national savings curve?

Accepted Answer

A) a decrease in disposable income 
B) an increase in expected future earnings 
C) an increase in disposable income 
D) an increase in real interest rates 
A) a decrease in disposable income 
B) an increase in expected future earnings 
C) an increase in disposable income 
D) an increase in real interest rates

Question 17

If you are living in a period of continued high inflation on a fixed income (that is NOT indexed),what is the impact on the cost of the goods and services you buy and your income?

Accepted Answer

A) the cost of goods and services increases and your income remains the same 
B) the cost of goods and services decreases and your income remains the same 
C) the cost of goods and services and your income both increase 
D) the cost of goods and services and your income both decrease 
A) the cost of goods and services increases and your income remains the same 
B) the cost of goods and services decreases and your income remains the same 
C) the cost of goods and services and your income both increase 
D) the cost of goods and services and your income both decrease

Question 18

If the country is experiencing rapid economic growth and increasing personal incomes,what is the expected result on consumption and investment?

Accepted Answer

A) Consumption and investment will both increase. 
B) Consumption will decrease and investment will increase. 
C) Consumption will increase and investment will decrease. 
D) Consumption and investment will both decrease. 
A) Consumption and investment will both increase. 
B) Consumption will decrease and investment will increase. 
C) Consumption will increase and investment will decrease. 
D) Consumption and investment will both decrease.

Question 19

If net exports are negative,then aggregate demand will be less than the sum of consumption,investment,and government purchases.

Accepted Answer

A) True 
 B)False

Question 20

Other things being equal,what will occur as the price level increases?

Accepted Answer

A) Aggregate demand decreases. 
B) The quantity of real gross domestic product demanded decreases. 
C) Aggregate demand increases. 
D) The quantity of real gross domestic product demanded increases. 
A) Aggregate demand decreases. 
B) The quantity of real gross domestic product demanded decreases. 
C) Aggregate demand increases. 
D) The quantity of real gross domestic product demanded increases.

How do economists define the marginal propensity to consume (MPC)?

What impact would a combination of improved,expected future profitability of businesses and higher business taxes have?

As the price level decreases,what is the effect on the quantity of RGDP demanded in the economy?

What impact would a higher real interest rate have?

Which of the following changes in disposable income would lead to the greatest increase in consumption?

What would result from a decrease in the supply of national savings curve?

What would be the impact on aggregate demand (AD)if exports and imports both rose,but exports rose more than imports?

Which of the following describes marginal propensity to consume (MPC)and average propensity to consume (APC)?

What impact will a decrease in the Canadian price level have?

What impact would a combination of higher business taxes,reduced expected future profitability of businesses,and a reduction in the level of new profitable technological investment opportunities have?

Explain under what condition changes in net exports add to aggregate demand; decrease aggregate demand; or have at net no effect on aggregate demand.

If Don spends $10 000 on consumption when he has no disposable income and then spends 75 cents out of every dollar of disposable income he earns on consumption,which of the following statements about Don's consumption is the most accurate?

What occurs at higher real interest rates?

If consumption is a direct function of disposable income,what would an increase in personal taxes do?

Which of the following tends to increase economic growth?

What would increase the supply of national savings curve?

If you are living in a period of continued high inflation on a fixed income (that is NOT indexed),what is the impact on the cost of the goods and services you buy and your income?

If the country is experiencing rapid economic growth and increasing personal incomes,what is the expected result on consumption and investment?

If net exports are negative,then aggregate demand will be less than the sum of consumption,investment,and government purchases.

Other things being equal,what will occur as the price level increases?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters

Exam 8: Aggregate Demand

How do economists define the marginal propensity to consume (MPC)?

What impact would a combination of improved,expected future profitability of businesses and higher business taxes have?

As the price level decreases,what is the effect on the quantity of RGDP demanded in the economy?

What impact would a higher real interest rate have?

Which of the following changes in disposable income would lead to the greatest increase in consumption?

What would result from a decrease in the supply of national savings curve?

What would be the impact on aggregate demand (AD)if exports and imports both rose,but exports rose more than imports?

Which of the following describes marginal propensity to consume (MPC)and average propensity to consume (APC)?

What impact will a decrease in the Canadian price level have?

What impact would a combination of higher business taxes,reduced expected future profitability of businesses,and a reduction in the level of new profitable technological investment opportunities have?

Explain under what condition changes in net exports add to aggregate demand; decrease aggregate demand; or have at net no effect on aggregate demand.

If Don spends $10 000 on consumption when he has no disposable income and then spends 75 cents out of every dollar of disposable income he earns on consumption,which of the following statements about Don's consumption is the most accurate?

What occurs at higher real interest rates?

If consumption is a direct function of disposable income,what would an increase in personal taxes do?

Which of the following tends to increase economic growth?

What would increase the supply of national savings curve?

If you are living in a period of continued high inflation on a fixed income (that is NOT indexed),what is the impact on the cost of the goods and services you buy and your income?

If the country is experiencing rapid economic growth and increasing personal incomes,what is the expected result on consumption and investment?

If net exports are negative,then aggregate demand will be less than the sum of consumption,investment,and government purchases.

Other things being equal,what will occur as the price level increases?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters