Question 1

Which of the following is a basic point that Keynes made about consumption?

Accepted Answer

A)  Consumption and disposal income are inversely related. 
B)  When disposable income changes,consumption changes by a greater amount. 
C)  Consumption is dependent upon disposable income. 
D)  b and c 
E)  all of the above 
A)  Consumption and disposal income are inversely related. 
B)  When disposable income changes,consumption changes by a greater amount. 
C)  Consumption is dependent upon disposable income. 
D)  b and c 
E)  all of the above C

Question 2

Which of the following is true?

Accepted Answer

A)  If MPC = 0.50,then the multiplier is 2.00. 
B)  If MPC = 0.82,then the multiplier is 1.25. 
C)  If MPS = 0.35,then the multiplier is 2.86. 
D)  If MPC = 0.97,then the multiplier is 3.33. 
E)  a and c 
A)  If MPC = 0.50,then the multiplier is 2.00. 
B)  If MPC = 0.82,then the multiplier is 1.25. 
C)  If MPS = 0.35,then the multiplier is 2.86. 
D)  If MPC = 0.97,then the multiplier is 3.33. 
E)  a and c E

Question 3

A simple Keynesian model is representative of a closed economy,with no foreign sector.

Accepted Answer

A) True 
 B)False  True

Question 4

Inventory levels unexpectedly rise and as a result firms reduce the level of production.Which of the following is consistent with these two occurrences?

Accepted Answer

A)  TP is greater than TE. 
B)  TP is less than TE. 
C)  TP is equal to TE. 
D)  TP is equal to TE minus the rise in inventories above the optimum inventory level. 
E)  none of the above 
A)  TP is greater than TE. 
B)  TP is less than TE. 
C)  TP is equal to TE. 
D)  TP is equal to TE minus the rise in inventories above the optimum inventory level. 
E)  none of the above

Question 5

Using the concept of the multiplier,explain in detail how college students flocking to beach towns for spring break can positively impact the beach towns' economies.

Accepted Answer

College students on spring break will sp

Question 6

Here is a consumption function: C = C0 + MPC(Yd).If MPC is 0.80,then we know that

Accepted Answer

A)  as Yd rises by $1,Co rises by $0.80. 
B)  as Yd rises by $1,C rises by $0.80. 
C)  Yd rises by $0.80. 
D)  as C0 rises by $0.80,Yd rises by $1. 
A)  as Yd rises by $1,Co rises by $0.80. 
B)  as Yd rises by $1,C rises by $0.80. 
C)  Yd rises by $0.80. 
D)  as C0 rises by $0.80,Yd rises by $1.

Question 7

Which statement is consistent with what Keynes believed about consumption and disposable income?

Accepted Answer

A)  Consumption depends upon disposable income and falls as disposable income rises. 
B)  Consumption rises by the same amount as disposable income rises. 
C)  Consumption rises by less than disposable income rises. 
D)  Disposable income depends upon consumption. 
A)  Consumption depends upon disposable income and falls as disposable income rises. 
B)  Consumption rises by the same amount as disposable income rises. 
C)  Consumption rises by less than disposable income rises. 
D)  Disposable income depends upon consumption.

Question 8

The change in disposable income is $200 and the change in saving is $50.What is the marginal propensity to consume (MPC)?

Accepted Answer

A)  0.25 
B)  0.50 
C)  0.66 
D)  0.75 
E)  There is not enough information to answer the question. 
A)  0.25 
B)  0.50 
C)  0.66 
D)  0.75 
E)  There is not enough information to answer the question.

Question 9

The more firms that pay efficiency wages,the

Accepted Answer

A)  more likely the economy will get stuck in a recessionary gap. 
B)  less likely the economy will get stuck in a recessionary gap. 
C)  more likely the economy will get stuck in an inflationary gap. 
D)  more likely (over time)the economy will produce Natural Real GDP. 
E)  b and c 
A)  more likely the economy will get stuck in a recessionary gap. 
B)  less likely the economy will get stuck in a recessionary gap. 
C)  more likely the economy will get stuck in an inflationary gap. 
D)  more likely (over time)the economy will produce Natural Real GDP. 
E)  b and c

Question 10

The multiplier process following a drop in autonomous spending is

Accepted Answer

A)  just as powerful as for a rise in autonomous spending. 
B)  more powerful than for a rise in autonomous spending. 
C)  less powerful than for a rise in autonomous spending. 
D)  nonexistent,because the multiplier applies only to a rise in autonomous spending. 
A)  just as powerful as for a rise in autonomous spending. 
B)  more powerful than for a rise in autonomous spending. 
C)  less powerful than for a rise in autonomous spending. 
D)  nonexistent,because the multiplier applies only to a rise in autonomous spending.

Question 11

Which of the following statements is true?

Accepted Answer

A)  Keynes believed wages are inflexible downward but prices (of goods and services)are flexible. 
B)  Keynes believed an economy could get stuck in a recessionary gap. 
C)  Keynes originated the idea of efficiency wages. 
D)  Keynes believed the economy is self-regulating. 
E)  b and c 
A)  Keynes believed wages are inflexible downward but prices (of goods and services)are flexible. 
B)  Keynes believed an economy could get stuck in a recessionary gap. 
C)  Keynes originated the idea of efficiency wages. 
D)  Keynes believed the economy is self-regulating. 
E)  b and c

Question 12

-Refer to Exhibit 10-7.If autonomous consumption increases,which of the following is possible?

Accepted Answer

A)  The AD curve will shift rightward from AD1 to AD2,the price level will remain constant,and Real GDP will rise. 
B)  The AD curve will shift leftward from AD4 to AD3,the price level will fall,and Real GDP will remain constant. 
C)  The AD curve will shift rightward from AD3 to AD4,the price level will remain constant,and Real GDP will rise. 
D)  The AD curve will shift rightward from AD1 to AD2, the price level will rise,and Real GDP will remain constant. 
A)  The AD curve will shift rightward from AD1 to AD2,the price level will remain constant,and Real GDP will rise. 
B)  The AD curve will shift leftward from AD4 to AD3,the price level will fall,and Real GDP will remain constant. 
C)  The AD curve will shift rightward from AD3 to AD4,the price level will remain constant,and Real GDP will rise. 
D)  The AD curve will shift rightward from AD1 to AD2, the price level will rise,and Real GDP will remain constant.

Question 13

An increase in autonomous consumption,an increase in disposable income,or a decrease in the marginal propensity to consume can all increase consumption.

Accepted Answer

A) True 
 B)False

Question 14

As portrayed in terms of total expenditures (TE)and total production (TP),discuss at least three assumptions that sum up the workings of the simple Keynesian model.

Accepted Answer

The simple Keynesian model can be summar

Question 15

In a simple Keynesian model,the aggregate supply curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 16

-Refer to Exhibit 10-1.At Q1,

Accepted Answer

A)  TE > TP,and there are decreases in inventory. 
B)  TP > TE,and there are increases in inventory. 
C)  TE = TP,and there are no changes in inventory. 
D)  TE > TP,and there are increases in inventory. 
A)  TE > TP,and there are decreases in inventory. 
B)  TP > TE,and there are increases in inventory. 
C)  TE = TP,and there are no changes in inventory. 
D)  TE > TP,and there are increases in inventory.

Question 17

-Refer to Exhibit 10-1.At Q3,

Accepted Answer

A)  TE > TP,and there are decreases in inventory. 
B)  TE = TP,and there are no changes in inventory. 
C)  TP > TE,and there are increases in inventory. 
D)  TE > TP,and there are increases in inventory. 
A)  TE > TP,and there are decreases in inventory. 
B)  TE = TP,and there are no changes in inventory. 
C)  TP > TE,and there are increases in inventory. 
D)  TE > TP,and there are increases in inventory.

Question 18

-Refer to Exhibit 10-5 When TE is $200 billion,what state is the economy in?

Accepted Answer

A)  TE  TP,individuals are buying more output than firms produce. 
C)  TE = TP,the economy is in equilibrium. 
D)  TE  TP,individuals are buying less output than firms produce. 
A)  TE  TP,individuals are buying more output than firms produce. 
C)  TE = TP,the economy is in equilibrium. 
D)  TE  TP,individuals are buying less output than firms produce.

Question 19

In the simple Keynesian model,the aggregate supply curve has a horizontal segment at levels of output below the level of natural Real GDP and a vertical segment at the level of natural Real GDP.

Accepted Answer

A) True 
 B)False

Question 20

Suppose for a given economy the multiplier is 4.A change in autonomous spending will change the economy's total spending more if the aggregate supply curve is __________ than if it is __________,ceteris paribus.

Accepted Answer

A)  horizontal; upward sloping 
B)  upward sloping; horizontal 
C)  upward sloping; downward sloping 
D)  downward sloping; upward sloping 
E)  There is not enough information to answer the question. 
A)  horizontal; upward sloping 
B)  upward sloping; horizontal 
C)  upward sloping; downward sloping 
D)  downward sloping; upward sloping 
E)  There is not enough information to answer the question.

Exam 10: Monopoly

Which of the following is a basic point that Keynes made about consumption?

Which of the following is true?

A simple Keynesian model is representative of a closed economy,with no foreign sector.

Inventory levels unexpectedly rise and as a result firms reduce the level of production.Which of the following is consistent with these two occurrences?

Using the concept of the multiplier,explain in detail how college students flocking to beach towns for spring break can positively impact the beach towns' economies.

Here is a consumption function: C = C0 + MPC(Yd).If MPC is 0.80,then we know that

Which statement is consistent with what Keynes believed about consumption and disposable income?

The change in disposable income is $200 and the change in saving is $50.What is the marginal propensity to consume (MPC)?

The more firms that pay efficiency wages,the

The multiplier process following a drop in autonomous spending is

Which of the following statements is true?

-Refer to Exhibit 10-7.If autonomous consumption increases,which of the following is possible?

An increase in autonomous consumption,an increase in disposable income,or a decrease in the marginal propensity to consume can all increase consumption.

As portrayed in terms of total expenditures (TE)and total production (TP),discuss at least three assumptions that sum up the workings of the simple Keynesian model.

In a simple Keynesian model,the aggregate supply curve is upward sloping.

-Refer to Exhibit 10-1.At Q1,

-Refer to Exhibit 10-1.At Q3,

-Refer to Exhibit 10-5 When TE is $200 billion,what state is the economy in?

In the simple Keynesian model,the aggregate supply curve has a horizontal segment at levels of output below the level of natural Real GDP and a vertical segment at the level of natural Real GDP.

Suppose for a given economy the multiplier is 4.A change in autonomous spending will change the economy's total spending more if the aggregate supply curve is __________ than if it is __________,ceteris paribus.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

Here is a consumption function: C = C₀ + MPC(Y_d).If MPC is 0.80,then we know that

-Refer to Exhibit 10-1.At Q₁,

-Refer to Exhibit 10-1.At Q₃,

Suppose for a given economy the multiplier is 4.A change in autonomous spending will change the economy's total spending more if the aggregate supply curve is than if it is ,ceteris paribus.