Question 1

In the consumption function: C = a + b(Y - NT),the term b represents the

Accepted Answer

A)  intercept of the consumption function 
B)  level of taxation 
C)  level of net taxation 
D)  level of income 
E)  marginal propensity to consume 
A)  intercept of the consumption function 
B)  level of taxation 
C)  level of net taxation 
D)  level of income 
E)  marginal propensity to consume E

Question 2

If Y = C + I + G + (X - M)(where C = $100,I = $50,G = $50,and X - M = -$10)the equilibrium level of Y equals

Accepted Answer

A)  $150 
B)  $180 
C)  $190 
D)  $200 
E)  $210 
A)  $150 
B)  $180 
C)  $190 
D)  $200 
E)  $210 C

Question 3

If C = 10 + 0.8Y,a $100 increase in Y would increase consumption by

Accepted Answer

A)  $10 
B)  $20 
C)  $50 
D)  $80 
E)  $100 
A)  $10 
B)  $20 
C)  $50 
D)  $80 
E)  $100 D

Question 4

Investment is the only autonomous spending component in aggregate expenditure.

Accepted Answer

A) True 
 B)False

Question 5

If the net export function is 500 - 0.15Y,then an increase in income of $1,000 will decrease net exports by $150.

Accepted Answer

A) True 
 B)False

Question 6

Increases in consumption that result from increases in investment are called induced consumption.

Accepted Answer

A) True 
 B)False

Question 7

Equilibrium output equals autonomous spending multiplied by the spending multiplier.

Accepted Answer

A) True 
 B)False

Question 8

If Y = C + I + G + (X - M)and Y = $190,C = $100,I = $50 and G = $50 then,in equilibrium,X - M must equal

Accepted Answer

A)  -$20 
B)  -$10 
C)  $10 
D)  $20 
E)  $50 
A)  -$20 
B)  -$10 
C)  $10 
D)  $20 
E)  $50

Question 9

If C = a + bY,which of the following is true?

Accepted Answer

A)  If a increases,autonomous saving will increase. 
B)  If a increases,the multiplier will increase. 
C)  If a increases,the multiplier will decrease. 
D)  If b increases,the multiplier will increase. 
E)  If b increases,the multiplier will decrease. 
A)  If a increases,autonomous saving will increase. 
B)  If a increases,the multiplier will increase. 
C)  If a increases,the multiplier will decrease. 
D)  If b increases,the multiplier will increase. 
E)  If b increases,the multiplier will decrease.

Question 10

If the marginal propensity to import increases,the spending multiplier increases.

Accepted Answer

A) True 
 B)False

Question 11

If C = $3,000 + 0.9Y,which of the following will not be true?

Accepted Answer

A)  If income is less than $30,000,saving must be negative. 
B)  If income is $30,000,then consumers are not saving. 
C)  If income equals $40,000,saving must be $0. 
D)  The marginal propensity to consume is 0.9. 
E)  Autonomous consumption is $3,000. 
A)  If income is less than $30,000,saving must be negative. 
B)  If income is $30,000,then consumers are not saving. 
C)  If income equals $40,000,saving must be $0. 
D)  The marginal propensity to consume is 0.9. 
E)  Autonomous consumption is $3,000.

Question 12

Equilibrium output can be found by solving for the value of Y in the expression a + b(Y - NT)+ I + G + X - M(Y - NT).

Accepted Answer

A) True 
 B)False

Question 13

If C = $3,000 + 0.9Y and income is $20,000,

Accepted Answer

A)  consumption is $20,000 
B)  consumption is $18,000 
C)  saving is $0 
D)  saving is -$1,000 
E)  income will increase to $200,000 
A)  consumption is $20,000 
B)  consumption is $18,000 
C)  saving is $0 
D)  saving is -$1,000 
E)  income will increase to $200,000

Question 14

The nation of Omega has an MPC of 0.70 and an MPM of 0.15.Therefore,Omega's spending multiplier is

Accepted Answer

A)  1.18 
B)  2.22 
C)  3.33 
D)  1.43 
E)  This question cannot be answered without knowing the MPS 
A)  1.18 
B)  2.22 
C)  3.33 
D)  1.43 
E)  This question cannot be answered without knowing the MPS

Question 15

If the net export function is 500 - 0.15Y,then exports are represented by -0.15Y.

Accepted Answer

A) True 
 B)False

Question 16

Consumption that is independent of the level of income is called autonomous consumption.

Accepted Answer

A) True 
 B)False

Exam 25: The Algebra of Income and Expenditure

In the consumption function: C = a + b(Y - NT),the term b represents the

If Y = C + I + G + (X - M)(where C = $100,I = $50,G = $50,and X - M = -$10)the equilibrium level of Y equals

If C = 10 + 0.8Y,a $100 increase in Y would increase consumption by

Investment is the only autonomous spending component in aggregate expenditure.

If the net export function is 500 - 0.15Y,then an increase in income of $1,000 will decrease net exports by $150.

Increases in consumption that result from increases in investment are called induced consumption.

Equilibrium output equals autonomous spending multiplied by the spending multiplier.

If Y = C + I + G + (X - M)and Y = $190,C = $100,I = $50 and G = $50 then,in equilibrium,X - M must equal

If C = a + bY,which of the following is true?

If the marginal propensity to import increases,the spending multiplier increases.

If C = $3,000 + 0.9Y,which of the following will not be true?

Equilibrium output can be found by solving for the value of Y in the expression a + b(Y - NT)+ I + G + X - M(Y - NT).

If C = $3,000 + 0.9Y and income is $20,000,

The nation of Omega has an MPC of 0.70 and an MPM of 0.15.Therefore,Omega's spending multiplier is

If the net export function is 500 - 0.15Y,then exports are represented by -0.15Y.

Consumption that is independent of the level of income is called autonomous consumption.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Productivity and Growth

Tracking the US Economy

Unemployment and Inflation

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

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

Developing and Transitional Economies

Understanding Graphs

National Income Accounts

Variable Net Exports

Variable Net Exports Revisited

The Algebra of Demand-Side Equilibrium

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