Question 1

An increase in real net exports leads to an increase in real GDP. Further

Accepted Answer

A) real consumption spending and real saving increase. 
B) real consumption spending increases but real saving does not change. 
C) real consumption spending increases while real investment spending decreases. 
D) real government spending decreases to offset the increase in real net exports. 
A) real consumption spending and real saving increase. 
B) real consumption spending increases but real saving does not change. 
C) real consumption spending increases while real investment spending decreases. 
D) real government spending decreases to offset the increase in real net exports.

Question 2

-Refer to the above figure. The figure represents the consumption function for a consumer. The distance between A and B represents

Accepted Answer

A) the amount of autonomous consumption. 
B) the amount of autonomous saving. 
C) the amount of total consumption. 
D) none of the above. 
A) the amount of autonomous consumption. 
B) the amount of autonomous saving. 
C) the amount of total consumption. 
D) none of the above.

Question 3

What can we say about APC + APS and MPC + MPS?

Accepted Answer

A) Each must sum to 1. 
B) MPC + MPS = 100% of total income. 
C) APC + APS = 100% of the change in income. 
D) MPC + MPS always equals 1, but the sum of APC + APS can vary. 
A) Each must sum to 1. 
B) MPC + MPS = 100% of total income. 
C) APC + APS = 100% of the change in income. 
D) MPC + MPS always equals 1, but the sum of APC + APS can vary.

Question 4

Note: Amounts in billions.
-Refer to the above table. If real GDP is $12 billion, total planned expenditures and unplanned inventory changes are respectively

Accepted Answer

A) $0 and $14 billion. 
B) $13.2 billion and -$0.8 billion. 
C) $12.4 billion and -$0.4 billion. 
D) $12.4 billion and $0.4 billion. 
A) $0 and $14 billion. 
B) $13.2 billion and -$0.8 billion. 
C) $12.4 billion and -$0.4 billion. 
D) $12.4 billion and $0.4 billion.

Question 5

If the marginal propensity to save (MPS)is 0.1, the multiplier will be

Accepted Answer

A) 0.1. 
B) 1. 
C) 5. 
D) 10. 
A) 0.1. 
B) 1. 
C) 5. 
D) 10.

Question 6

-According to the above figure, the average propensity to save (APS)is zero at point

Accepted Answer

A) D. 
B) F. 
C) I. 
D) J. 
A) D. 
B) F. 
C) I. 
D) J.

Question 7

The average propensity to consume (APC)equals

Accepted Answer

A) real disposable income divided by consumption expenditures. 
B) consumption expenditures divided by real disposable income. 
C) the change in consumption expenditures divided by the change in real disposable income. 
D) the change in real disposable income divided by the change in consumption expenditures. 
A) real disposable income divided by consumption expenditures. 
B) consumption expenditures divided by real disposable income. 
C) the change in consumption expenditures divided by the change in real disposable income. 
D) the change in real disposable income divided by the change in consumption expenditures.

Question 8

The part of consumption that does not depend upon the level of disposable income is

Accepted Answer

A) autonomous consumption. 
B) saving. 
C) savings. 
D) average propensity to consume. 
A) autonomous consumption. 
B) saving. 
C) savings. 
D) average propensity to consume.

Question 9

For a closed economy with no government, we know that at every level of GDP actual investment equals

Accepted Answer

A) planned investment. 
B) planned saving. 
C) the difference between planned saving and actual saving. 
D) the difference between planned investment and actual saving. 
A) planned investment. 
B) planned saving. 
C) the difference between planned saving and actual saving. 
D) the difference between planned investment and actual saving.

Question 10

If businesses expect the economic activity to expand

Accepted Answer

A) the planned investment function relating investment to the interest rate will shift to the left. 
B) the planned investment function relating investment to the interest rate will remain unchanged, but will move downward along the curve. 
C) the planned investment function relating investment to the interest rate will steepen. 
D) the planned investment function relating investment to the interest rate will shift to the right. 
A) the planned investment function relating investment to the interest rate will shift to the left. 
B) the planned investment function relating investment to the interest rate will remain unchanged, but will move downward along the curve. 
C) the planned investment function relating investment to the interest rate will steepen. 
D) the planned investment function relating investment to the interest rate will shift to the right.

Question 11

Suppose that aggregate demand increases along the upward sloping portion of the aggregate supply curve. What is the result?

Accepted Answer

A) Nominal GDP and real GDP decrease by the same amount. 
B) Nominal GDP and real GDP increase by the same amount. 
C) Nominal GDP increases more than real GDP increases. 
D) Real GDP increases more than nominal GDP increases. 
A) Nominal GDP and real GDP decrease by the same amount. 
B) Nominal GDP and real GDP increase by the same amount. 
C) Nominal GDP increases more than real GDP increases. 
D) Real GDP increases more than nominal GDP increases.

Question 12

If the marginal propensity to save (MPS)= 0.1, then

Accepted Answer

A) the MPC = 0.9. 
B) the APS = 0.1. 
C) the APC = 0.9. 
D) consumption equals $1,800 when income equals $2,000. 
A) the MPC = 0.9. 
B) the APS = 0.1. 
C) the APC = 0.9. 
D) consumption equals $1,800 when income equals $2,000.

Question 13

If the marginal propensity to consume is unchanged and autonomous consumption expenditures increase, then

Accepted Answer

A) saving at every level of disposable income increases. 
B) the break-even disposable income decreases. 
C) the break-even disposable income increases. 
D) saving is unaffected. 
A) saving at every level of disposable income increases. 
B) the break-even disposable income decreases. 
C) the break-even disposable income increases. 
D) saving is unaffected.

Question 14

If consumption is $750 when real disposable income is $1,000, the average propensity to consume is

Accepted Answer

A) 0.80. 
B) 0.75. 
C) 0.50. 
D) 0.25. 
A) 0.80. 
B) 0.75. 
C) 0.50. 
D) 0.25.

Question 15

The fraction of a change in real disposable income that is spent is referred to as the

Accepted Answer

A) APC. 
B) MPC. 
C) MPS. 
D) APS. 
A) APC. 
B) MPC. 
C) MPS. 
D) APS.

Question 16

-According to the above table, if real Gross Domestic Product (GDP)is $25,000, planned saving equals

Accepted Answer

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

Question 17

-Use the above table. The autonomous consumption in this table is

Accepted Answer

A) $140. 
B) $20. 
C) $0. 
D) $50. 
A) $140. 
B) $20. 
C) $0. 
D) $50.

Question 18

What is the primary determinant of real saving and real consumption according to Keynes?
 Explain.

Accepted Answer

Keynes argued that real consumption and

Question 19

In a closed economy, equilibrium real Gross Domestic Product (GDP)occurs where

Accepted Answer

A) the C + I + G line crosses the 45-degree line. 
B) planned expenditures exceed national income. 
C) saving exceeds planned investment. 
D) all of these. 
A) the C + I + G line crosses the 45-degree line. 
B) planned expenditures exceed national income. 
C) saving exceeds planned investment. 
D) all of these.

Question 20

If the marginal propensity to consume (MPC)is 0.9, then the multiplier for a change in autonomous spending will be

Accepted Answer

A) 0.1. 
B) 9. 
C) 10. 
D) 100. 
A) 0.1. 
B) 9. 
C) 10. 
D) 100.

An increase in real net exports leads to an increase in real GDP. Further

-Refer to the above figure. The figure represents the consumption function for a consumer. The distance between A and B represents

What can we say about APC + APS and MPC + MPS?

Note: Amounts in billions. -Refer to the above table. If real GDP is $12 billion, total planned expenditures and unplanned inventory changes are respectively

If the marginal propensity to save (MPS)is 0.1, the multiplier will be

-According to the above figure, the average propensity to save (APS)is zero at point

The average propensity to consume (APC)equals

The part of consumption that does not depend upon the level of disposable income is

For a closed economy with no government, we know that at every level of GDP actual investment equals

If businesses expect the economic activity to expand

Suppose that aggregate demand increases along the upward sloping portion of the aggregate supply curve. What is the result?

If the marginal propensity to save (MPS)= 0.1, then

If the marginal propensity to consume is unchanged and autonomous consumption expenditures increase, then

If consumption is $750 when real disposable income is $1,000, the average propensity to consume is

The fraction of a change in real disposable income that is spent is referred to as the

-According to the above table, if real Gross Domestic Product (GDP)is $25,000, planned saving equals

-Use the above table. The autonomous consumption in this table is

What is the primary determinant of real saving and real consumption according to Keynes? Explain.

In a closed economy, equilibrium real Gross Domestic Product (GDP)occurs where

If the marginal propensity to consume (MPC)is 0.9, then the multiplier for a change in autonomous spending will be

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

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Exam 11: Consumption, Real GDP, and the Multiplier

An increase in real net exports leads to an increase in real GDP. Further

-Refer to the above figure. The figure represents the consumption function for a consumer. The distance between A and B represents

What can we say about APC + APS and MPC + MPS?

Note: Amounts in billions. -Refer to the above table. If real GDP is $12 billion, total planned expenditures and unplanned inventory changes are respectively

If the marginal propensity to save (MPS)is 0.1, the multiplier will be

-According to the above figure, the average propensity to save (APS)is zero at point

The average propensity to consume (APC)equals

The part of consumption that does not depend upon the level of disposable income is

For a closed economy with no government, we know that at every level of GDP actual investment equals

If businesses expect the economic activity to expand

Suppose that aggregate demand increases along the upward sloping portion of the aggregate supply curve. What is the result?

If the marginal propensity to save (MPS)= 0.1, then

If the marginal propensity to consume is unchanged and autonomous consumption expenditures increase, then

If consumption is $750 when real disposable income is $1,000, the average propensity to consume is

The fraction of a change in real disposable income that is spent is referred to as the

-According to the above table, if real Gross Domestic Product (GDP)is $25,000, planned saving equals

-Use the above table. The autonomous consumption in this table is

What is the primary determinant of real saving and real consumption according to Keynes? Explain.

In a closed economy, equilibrium real Gross Domestic Product (GDP)occurs where

If the marginal propensity to consume (MPC)is 0.9, then the multiplier for a change in autonomous spending will be

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