Question 1

If the MPC is 0.60 and disposable income increases from $20,000 billion to $22,000 billion,consumption will increase by

Accepted Answer

A) $2,000 billion. 
B) $800 billion. 
C) $1,200 billion. 
D) $600 billion. 
A) $2,000 billion. 
B) $800 billion. 
C) $1,200 billion. 
D) $600 billion.

Question 2

Keynes was concerned that at macroeconomic equilibrium in a laissez faire free market economy,full employment

Accepted Answer

A) And price stability might not continue simultaneously. 
B) Would continue but price stability might not. 
C) Might not continue but price stability would. 
D) None of the choices are correct. 
A) And price stability might not continue simultaneously. 
B) Would continue but price stability might not. 
C) Might not continue but price stability would. 
D) None of the choices are correct.

Question 3

Which of the following is not true about the marginal propensity to consume?

Accepted Answer

A) It is equal to the change in consumption divided by the change in disposable income. 
B) It is equal to the slope of the consumption function. 
C) It is equal to 1 - MPS. 
D) It is always equal to or greater than 1. 
A) It is equal to the change in consumption divided by the change in disposable income. 
B) It is equal to the slope of the consumption function. 
C) It is equal to 1 - MPS. 
D) It is always equal to or greater than 1.

Question 4

A sudden increase in confidence by the business community could best be represented by

Accepted Answer

A) The consumption curve shifting downward. 
B) The AS curve shifting downward. 
C) An aggregate expenditure curve shifting upward. 
D) An aggregate expenditure curve shifting downwarD.When businesses feel good about the future,investment will be higher,resulting in a higher equilibrium level of output. 
A) The consumption curve shifting downward. 
B) The AS curve shifting downward. 
C) An aggregate expenditure curve shifting upward. 
D) An aggregate expenditure curve shifting downwarD.When businesses feel good about the future,investment will be higher,resulting in a higher equilibrium level of output.

Question 5

If the economy is in equilibrium,how can a recessionary gap exist,and how will producers respond to this gap?

Accepted Answer

Equilibrium occurs where desired spendin

Question 6

Which of the following will cause an increase in U.S.imports?

Accepted Answer

A) An increase in U.S.consumer confidence. 
B) An increase in foreign consumer income. 
C) An increase in foreign business investment. 
D) A decrease in U.S.wealth. 
A) An increase in U.S.consumer confidence. 
B) An increase in foreign consumer income. 
C) An increase in foreign business investment. 
D) A decrease in U.S.wealth.

Question 7

Which of the following will cause a decrease in U.S.gross exports?

Accepted Answer

A) An increase in foreign consumer income. 
B) A decrease in foreign business purchases of U.S.output. 
C) An increase in foreign wealth. 
D) None of the choices are correct. 
A) An increase in foreign consumer income. 
B) A decrease in foreign business purchases of U.S.output. 
C) An increase in foreign wealth. 
D) None of the choices are correct.

Question 8

Keynes was concerned that at macroeconomic equilibrium the economy would experience

Accepted Answer

A) Full employment and price stability. 
B) Full employment but not price stability. 
C) Price stability but not full employment. 
D) Neither full employment nor price stability. 
A) Full employment and price stability. 
B) Full employment but not price stability. 
C) Price stability but not full employment. 
D) Neither full employment nor price stability.

Question 9

Autonomous consumption depends on all of the following except

Accepted Answer

A) Innovation. 
B) Wealth. 
C) Credit. 
D) Expectations. 
A) Innovation. 
B) Wealth. 
C) Credit. 
D) Expectations.

Question 10

If disposable income increases from $9,000 billion to $11,000 billion,and consumption increases from $9,500 billion to $11,000 billion,the MPC must be

Accepted Answer

A) 0.75. 
B) 1.00. 
C) 0.90. 
D) 0.25. 
A) 0.75. 
B) 1.00. 
C) 0.90. 
D) 0.25.

Question 11

All of the following will shift the investment curve except

Accepted Answer

A) Innovation. 
B) Improvements in available technology. 
C) Changes to expectations. 
D) Changes to the interest rate. 
A) Innovation. 
B) Improvements in available technology. 
C) Changes to expectations. 
D) Changes to the interest rate.

Question 12

According to Keynesian theory,which of the following is not true at each short-term macro equilibrium?

Accepted Answer

A) The economy may or may not be at full employment. 
B) The aggregate demand curve intersects the aggregate supply curve. 
C) All macroeconomic goals are achieved. 
D) Producers are selling everything they currently produce. 
A) The economy may or may not be at full employment. 
B) The aggregate demand curve intersects the aggregate supply curve. 
C) All macroeconomic goals are achieved. 
D) Producers are selling everything they currently produce.

Question 13

Given that C = $500 + 0.8YD,if the level of disposable income is $1,000,the level of saving is

Accepted Answer

A) $300. 
B) -$300. 
C) $500. 
D) -$1,300. 
A) $300. 
B) -$300. 
C) $500. 
D) -$1,300.

Question 14

Complete Table 9.2.(Data are expressed in billions of dollars.) $\begin{array}{cccc}
\text { Full Employment } & \text { Consumers } & \text { Investors Desire } & \text { Total Private } \
\text { Income (Output) } & \text { Desire to Spend } & \text { to Spend } & \text { Spending }&\text { Total Saving }\\hline
\$ 500 & \$ 300 & \$ 250&\$\_\_\_&\$\_\_\_ \
600 & 375 & 250&\$\_\_\_&\$\_\_\_ \
700 & 450 & 250&\$\_\_\_&\$\_\_\_ \
800 & 525 & 250&\$\_\_\_&\$\_\_\_
\end{array}$

$\text { Table } 9.2$ Given the information in Table 9.2,saving is equal to $200 billion at an output level of

Accepted Answer

A) $500 billion. 
B) $600 billion. 
C) $700 billion. 
D) $800 billion. 
A) $500 billion. 
B) $600 billion. 
C) $700 billion. 
D) $800 billion.

Question 15

Most economists today recognize that a short-run macro failure is possible.
In the short run,the macro equilibrium could be below the full-employment level of output.

Accepted Answer

A) True 
 B)False

Question 16

Complete Table 9.2.(Data are expressed in billions of dollars.) $\begin{array}{cccc}
\text { Full Employment } & \text { Consumers } & \text { Investors Desire } & \text { Total Private } \
\text { Income (Output) } & \text { Desire to Spend } & \text { to Spend } & \text { Spending }&\text { Total Saving }\\hline
\$ 500 & \$ 300 & \$ 250&\$\_\_\_&\$\_\_\_ \
600 & 375 & 250&\$\_\_\_&\$\_\_\_ \
700 & 450 & 250&\$\_\_\_&\$\_\_\_ \
800 & 525 & 250&\$\_\_\_&\$\_\_\_
\end{array}$

$\text { Table } 9.2$ If the full-employment level of income (YF)in Table 9.2 is $700 billion,

Accepted Answer

A) The economy is in equilibrium. 
B) There is a recessionary gap of $250 billion. 
C) There is an inflationary gap of $450 billion. 
D) There is an inflationary gap of $700 billion. 
A) The economy is in equilibrium. 
B) There is a recessionary gap of $250 billion. 
C) There is an inflationary gap of $450 billion. 
D) There is an inflationary gap of $700 billion.

Question 17

Keynes asserted that wealth was the most important determinant of consumer spending.
Keynes believed that disposable income was the most important determinant of consumer spending.

Accepted Answer

A) True 
 B)False

Question 18

An increase in the income-dependent portion of the consumption function would correspond to a

Accepted Answer

A) Shift of the consumption function upward. 
B) Shift of the consumption function downward. 
C) Movement along the consumption function to the right. 
D) Movement along the consumption function to the left. 
A) Shift of the consumption function upward. 
B) Shift of the consumption function downward. 
C) Movement along the consumption function to the right. 
D) Movement along the consumption function to the left.

Question 19

If tax policies become less favorable,then

Accepted Answer

A) The AD curve will not be affected. 
B) There will be a movement to the right along the AD curve. 
C) The AD curve will shift to the left. 
D) The AD curve will shift to the right. 
A) The AD curve will not be affected. 
B) There will be a movement to the right along the AD curve. 
C) The AD curve will shift to the left. 
D) The AD curve will shift to the right.

Question 20

A movement from Point A to Point B in Figure 9.5 would result in

Accepted Answer

A) A decrease in aggregate demand. 
B) A decrease in both aggregate demand and aggregate supply. 
C) An increase in aggregate demand. 
D) An increase in aggregate demand and a decrease in aggregate supply. 
A) A decrease in aggregate demand. 
B) A decrease in both aggregate demand and aggregate supply. 
C) An increase in aggregate demand. 
D) An increase in aggregate demand and a decrease in aggregate supply.

If the MPC is 0.60 and disposable income increases from $20,000 billion to $22,000 billion,consumption will increase by

Keynes was concerned that at macroeconomic equilibrium in a laissez faire free market economy,full employment

Which of the following is not true about the marginal propensity to consume?

A sudden increase in confidence by the business community could best be represented by

If the economy is in equilibrium,how can a recessionary gap exist,and how will producers respond to this gap?

Which of the following will cause an increase in U.S.imports?

Which of the following will cause a decrease in U.S.gross exports?

Keynes was concerned that at macroeconomic equilibrium the economy would experience

Autonomous consumption depends on all of the following except

If disposable income increases from $9,000 billion to $11,000 billion,and consumption increases from $9,500 billion to $11,000 billion,the MPC must be

All of the following will shift the investment curve except

According to Keynesian theory,which of the following is not true at each short-term macro equilibrium?

Given that C = $500 + 0.8Y_D,if the level of disposable income is $1,000,the level of saving is

Most economists today recognize that a short-run macro failure is possible. In the short run,the macro equilibrium could be below the full-employment level of output.

Keynes asserted that wealth was the most important determinant of consumer spending. Keynes believed that disposable income was the most important determinant of consumer spending.

An increase in the income-dependent portion of the consumption function would correspond to a

If tax policies become less favorable,then

A movement from Point A to Point B in Figure 9.5 would result in

Economics: The Core Issues

The Us Economy: A Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

International Trade

International Finance

Global Poverty

Filters

Exam 9: Aggregate Demand

If the MPC is 0.60 and disposable income increases from $20,000 billion to $22,000 billion,consumption will increase by

Keynes was concerned that at macroeconomic equilibrium in a laissez faire free market economy,full employment

Which of the following is not true about the marginal propensity to consume?

A sudden increase in confidence by the business community could best be represented by

If the economy is in equilibrium,how can a recessionary gap exist,and how will producers respond to this gap?

Which of the following will cause an increase in U.S.imports?

Which of the following will cause a decrease in U.S.gross exports?

Keynes was concerned that at macroeconomic equilibrium the economy would experience

Autonomous consumption depends on all of the following except

If disposable income increases from $9,000 billion to $11,000 billion,and consumption increases from $9,500 billion to $11,000 billion,the MPC must be

All of the following will shift the investment curve except

According to Keynesian theory,which of the following is not true at each short-term macro equilibrium?

Given that C = $500 + 0.8YD,if the level of disposable income is $1,000,the level of saving is

Most economists today recognize that a short-run macro failure is possible. In the short run,the macro equilibrium could be below the full-employment level of output.

Keynes asserted that wealth was the most important determinant of consumer spending. Keynes believed that disposable income was the most important determinant of consumer spending.

An increase in the income-dependent portion of the consumption function would correspond to a

If tax policies become less favorable,then

A movement from Point A to Point B in Figure 9.5 would result in

Economics: The Core Issues

The Us Economy: A Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

International Trade

International Finance

Global Poverty

Filters

Given that C = $500 + 0.8Y_D,if the level of disposable income is $1,000,the level of saving is