Question 1

The break-even point refers to

Accepted Answer

A) the amount of autonomous consumption. 
B) the point at which planned real consumption equals real disposable income. 
C) the maximum amount of dissaving a person can experience. 
D) a point at which planned real consumption is for greater than real disposable income. 
A) the amount of autonomous consumption. 
B) the point at which planned real consumption equals real disposable income. 
C) the maximum amount of dissaving a person can experience. 
D) a point at which planned real consumption is for greater than real disposable income.

Question 2

Explain how the aggregate demand curve is related to the C + I + G + X curve.

Accepted Answer

The C + I + G + X curve determines equil

Question 3

The income-expenditure model of real GDP determination is due to the work of

Accepted Answer

A) Adam Smith. 
B) J. B. Say. 
C) John Maynard Keynes. 
D) Roger Miller. 
A) Adam Smith. 
B) J. B. Say. 
C) John Maynard Keynes. 
D) Roger Miller.

Question 4

-In the above figure, the equilibrium level of planned saving plus net taxes is

Accepted Answer

A) $1.0 trillion. 
B) $2.0 trillion. 
C) $3.0 trillion. 
D) $4.0 trillion. 
A) $1.0 trillion. 
B) $2.0 trillion. 
C) $3.0 trillion. 
D) $4.0 trillion.

Question 5

Which would increase real planned investment demand?

Accepted Answer

A) a decrease in new technologies available 
B) a decline in profit expectations 
C) a decrease in business taxes 
D) an increase in nominal interest rates 
A) a decrease in new technologies available 
B) a decline in profit expectations 
C) a decrease in business taxes 
D) an increase in nominal interest rates

Question 6

-Use the above table. Which of the following is TRUE if real disposable income is $150?

Accepted Answer

A) APC is less than MPC. 
B) APC = 0.8. 
C) APS = 0.2. 
D) APS is less than MPS. 
A) APC is less than MPC. 
B) APC = 0.8. 
C) APS = 0.2. 
D) APS is less than MPS.

Question 7

Keynes thought that the key to determining the broader economic effects of investment fluctuations

Accepted Answer

A) was to examine how businesses react to flexible prices and wages. 
B) was to closely regulate the real interest rate. 
C) was to understand the relationship between how much people earn and their willingness to engage in personal consumption spending. 
D) was to understand how changes in the money supply influences consumption decisions. 
A) was to examine how businesses react to flexible prices and wages. 
B) was to closely regulate the real interest rate. 
C) was to understand the relationship between how much people earn and their willingness to engage in personal consumption spending. 
D) was to understand how changes in the money supply influences consumption decisions.

Question 8

Which one of the following is TRUE in an open economy with a government sector?

Accepted Answer

A) The equilibrium level of real GDP occurs when real net export spending equals zero. 
B) The equilibrium level of real GDP occurs when planned real saving equals government spending. 
C) The equilibrium level of real GDP occurs when total planned real expenditures equal real GDP. 
D) The equilibrium level of real GDP occurs when planned real investment spending is zero. 
A) The equilibrium level of real GDP occurs when real net export spending equals zero. 
B) The equilibrium level of real GDP occurs when planned real saving equals government spending. 
C) The equilibrium level of real GDP occurs when total planned real expenditures equal real GDP. 
D) The equilibrium level of real GDP occurs when planned real investment spending is zero.

Question 9

If firms' unplanned inventories are increasing, then in a closed, private economy

Accepted Answer

A) the level of real national income will rise. 
B) the level of real national income will not change in the foreseeable future. 
C) actual consumption is greater than planned consumption. 
D) consumers are saving more than businesses anticipated. 
A) the level of real national income will rise. 
B) the level of real national income will not change in the foreseeable future. 
C) actual consumption is greater than planned consumption. 
D) consumers are saving more than businesses anticipated.

Question 10

All of the following will shift the consumption function EXCEPT

Accepted Answer

A) a change in wealth. 
B) a change in the rate of interest. 
C) a change in income. 
D) a change in expectations concerning economic conditions. 
A) a change in wealth. 
B) a change in the rate of interest. 
C) a change in income. 
D) a change in expectations concerning economic conditions.

Question 11

Saving differs from savings in that

Accepted Answer

A) saving is a flow while savings is a stock. 
B) saving is a stock while savings is a flow. 
C) saving is both a flow and a stock while savings is a stock. 
D) saving is a stock while savings is both a flow and a stock. 
A) saving is a flow while savings is a stock. 
B) saving is a stock while savings is a flow. 
C) saving is both a flow and a stock while savings is a stock. 
D) saving is a stock while savings is both a flow and a stock.

Question 12

-According to the above table, the value of MPS is

Accepted Answer

A) 0.9. 
B) 0.2. 
C) 0.1. 
D) increasing as real disposable income rises. 
A) 0.9. 
B) 0.2. 
C) 0.1. 
D) increasing as real disposable income rises.

Question 13

-In the above diagram, what happens if the real GDP is $3 trillion?
 $5 trillion?
 $7 trillion?
 What is the equilibrium level of real GDP?
 Why?

Accepted Answer

At real GDP of $3 trillion, planned real

Question 14

Changes in business inventories are known as

Accepted Answer

A) consumer durable. 
B) consumption goods. 
C) fixed investment. 
D) inventory investment. 
A) consumer durable. 
B) consumption goods. 
C) fixed investment. 
D) inventory investment.

Question 15

The 45-degree reference line indicates all points at which

Accepted Answer

A) planned real consumption expenditures and planned real saving are equal. 
B) planned real saving and planned real investment are equal. 
C) planned real consumption expenditures and real GDP are equal. 
D) planned real saving and planned real saving are equal. 
A) planned real consumption expenditures and planned real saving are equal. 
B) planned real saving and planned real investment are equal. 
C) planned real consumption expenditures and real GDP are equal. 
D) planned real saving and planned real saving are equal.

Question 16

In the Keynesian model, whenever planned saving exceeds planned investment

Accepted Answer

A) there will be unplanned inventory accumulation. 
B) there will be unplanned inventory depletion. 
C) real GDP will not be influenced. 
D) the interest rate will remain unchanged. 
A) there will be unplanned inventory accumulation. 
B) there will be unplanned inventory depletion. 
C) real GDP will not be influenced. 
D) the interest rate will remain unchanged.

Question 17

Which one of the following statements is TRUE?

Accepted Answer

A) In the classical model, the supply of saving is determined by the rate of interest. 
B) In the classical model, the supply of saving is determined by the level of income. 
C) In the Keynesian model, the supply of saving is determined by the rate of interest. 
D) In the Keynesian model, the supply of saving is determined by the level of investment. 
A) In the classical model, the supply of saving is determined by the rate of interest. 
B) In the classical model, the supply of saving is determined by the level of income. 
C) In the Keynesian model, the supply of saving is determined by the rate of interest. 
D) In the Keynesian model, the supply of saving is determined by the level of investment.

Question 18

The relationship between planned real consumption expenditures of households and their current level of real disposable income is

Accepted Answer

A) investment. 
B) dissaving. 
C) saving. 
D) the consumption function. 
A) investment. 
B) dissaving. 
C) saving. 
D) the consumption function.

Question 19

What is the multiplier?
 How is it calculated?
 Why is the multiplier related only to consumption spending?

Accepted Answer

The multiplier is the number by which a

Question 20

The average propensity to consume (APC)is

Accepted Answer

A) the rate at which real consumption spending changes over time. 
B) the percentage of real disposable income saved. 
C) the percentage of real disposable income consumed. 
D) the percentage of additional real disposable income that will go toward additional consumption spending. 
A) the rate at which real consumption spending changes over time. 
B) the percentage of real disposable income saved. 
C) the percentage of real disposable income consumed. 
D) the percentage of additional real disposable income that will go toward additional consumption spending.

The break-even point refers to

Explain how the aggregate demand curve is related to the C + I + G + X curve.

The income-expenditure model of real GDP determination is due to the work of

-In the above figure, the equilibrium level of planned saving plus net taxes is

Which would increase real planned investment demand?

-Use the above table. Which of the following is TRUE if real disposable income is $150?

Keynes thought that the key to determining the broader economic effects of investment fluctuations

Which one of the following is TRUE in an open economy with a government sector?

If firms' unplanned inventories are increasing, then in a closed, private economy

All of the following will shift the consumption function EXCEPT

Saving differs from savings in that

-According to the above table, the value of MPS is

-In the above diagram, what happens if the real GDP is $3 trillion? $5 trillion? $7 trillion? What is the equilibrium level of real GDP? Why?

Changes in business inventories are known as

The 45-degree reference line indicates all points at which

In the Keynesian model, whenever planned saving exceeds planned investment

Which one of the following statements is TRUE?

The relationship between planned real consumption expenditures of households and their current level of real disposable income is

What is the multiplier? How is it calculated? Why is the multiplier related only to consumption spending?

The average propensity to consume (APC)is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 11: Consumption, Real GDP, and the Multiplier

The break-even point refers to

Explain how the aggregate demand curve is related to the C + I + G + X curve.

The income-expenditure model of real GDP determination is due to the work of

-In the above figure, the equilibrium level of planned saving plus net taxes is

Which would increase real planned investment demand?

-Use the above table. Which of the following is TRUE if real disposable income is $150?

Keynes thought that the key to determining the broader economic effects of investment fluctuations

Which one of the following is TRUE in an open economy with a government sector?

If firms' unplanned inventories are increasing, then in a closed, private economy

All of the following will shift the consumption function EXCEPT

Saving differs from savings in that

-According to the above table, the value of MPS is

-In the above diagram, what happens if the real GDP is $3 trillion? $5 trillion? $7 trillion? What is the equilibrium level of real GDP? Why?

Changes in business inventories are known as

The 45-degree reference line indicates all points at which

In the Keynesian model, whenever planned saving exceeds planned investment

Which one of the following statements is TRUE?

The relationship between planned real consumption expenditures of households and their current level of real disposable income is

What is the multiplier? How is it calculated? Why is the multiplier related only to consumption spending?

The average propensity to consume (APC)is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters