Question 1

How can autonomous consumption be greater than zero when income is zero?

Accepted Answer

Autonomous consumption is the level of c

Question 2

The change in total spending from additional income is

Accepted Answer

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

Question 3

Which of the following is eliminated when output equals full-employment GDP?

Accepted Answer

A) Cyclical unemployment. 
B) Demand-pull inflation. 
C) The need for autonomous consumption. 
D) Net exports. 
A) Cyclical unemployment. 
B) Demand-pull inflation. 
C) The need for autonomous consumption. 
D) Net exports.

Question 4

The investment demand curve would shift to the left because of

Accepted Answer

A) The discovery of more efficient production methods. 
B) Expectations of a recession. 
C) Higher interest rates. 
D) A lower current income level for the economy. 
A) The discovery of more efficient production methods. 
B) Expectations of a recession. 
C) Higher interest rates. 
D) A lower current income level for the economy.

Question 5

If the full-employment level of income in Figure 9.7 is $300 billion,there is

Accepted Answer

A) A recessionary gap of $50 billion per year. 
B) A recessionary gap of $100 billion per year. 
C) An inflationary gap of $500 billion per year. 
D) Achievement of macro equilibrium. 
A) A recessionary gap of $50 billion per year. 
B) A recessionary gap of $100 billion per year. 
C) An inflationary gap of $500 billion per year. 
D) Achievement of macro equilibrium.

Question 6

If we assume that government expenditure,investment,and net exports are not affected by income,the slope of the consumption function equals

Accepted Answer

A) APC. 
B) The change in income divided by the change in consumption. 
C) The slope of the aggregate expenditure curve. 
D) APS. 
A) APC. 
B) The change in income divided by the change in consumption. 
C) The slope of the aggregate expenditure curve. 
D) APS.

Question 7

Which of the following most likely occurs when an inflationary gap exists?

Accepted Answer

A) A bidding war for available goods and services. 
B) More layoffs. 
C) Rising inventories. 
D) Excessive saving. 
A) A bidding war for available goods and services. 
B) More layoffs. 
C) Rising inventories. 
D) Excessive saving.

Question 8

The economy will not reach and maintain its goals of full employment and price stability unless the economy is

Accepted Answer

A) At full employment and the price level is stable. 
B) Above full employment and the price level is stable. 
C) Below full employment and the price level is stable. 
D) None of the choices are correct. 
A) At full employment and the price level is stable. 
B) Above full employment and the price level is stable. 
C) Below full employment and the price level is stable. 
D) None of the choices are correct.

Question 9

The combination of price level and real output that is compatible with both aggregate demand and aggregate supply is the definition of

Accepted Answer

A) Full-employment GDP. 
B) Disposable income. 
C) Macro equilibrium. 
D) Real expenditures. 
A) Full-employment GDP. 
B) Disposable income. 
C) Macro equilibrium. 
D) Real expenditures.

Question 10

Which of the following is not considered to be an important determinant of investment?

Accepted Answer

A) Current disposable income. 
B) Expectations. 
C) Interest rates. 
D) Technological change. 
A) Current disposable income. 
B) Expectations. 
C) Interest rates. 
D) Technological change.

Question 11

Given that C = $1,000 + 0.60YD,if the level of disposable income is $1,000,the level of saving is

Accepted Answer

A) $600. 
B) $400. 
C) -$600. 
D) -$300. 
A) $600. 
B) $400. 
C) -$600. 
D) -$300.

Question 12

Given a consumption function of C = $25 + 0.75YD,the average propensity to consume equals 1 when disposable income equals

Accepted Answer

A) $25. 
B) $75. 
C) $100. 
D) -$300. 
A) $25. 
B) $75. 
C) $100. 
D) -$300.

Question 13

According to Keynes,cyclical unemployment is caused by too

Accepted Answer

A) Much aggregate demand. 
B) Little aggregate demand. 
C) Much aggregate supply. 
D) Little aggregate supply. 
A) Much aggregate demand. 
B) Little aggregate demand. 
C) Much aggregate supply. 
D) Little aggregate supply.

Question 14

A rise in interest rates will cause

Accepted Answer

A) A decline in investment spending. 
B) A rise in investment spending. 
C) Investment spending to remain constant. 
D) Investment spending to be eliminated from the economy. 
A) A decline in investment spending. 
B) A rise in investment spending. 
C) Investment spending to remain constant. 
D) Investment spending to be eliminated from the economy.

Question 15

Full-employment income is the same as the potential GDP of the economy.
At full employment,the economy will be operating at a point along its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a determinant of autonomous consumption?

Accepted Answer

A) The disposable income level. 
B) Taxes. 
C) The availability of credit. 
D) The price level. 
A) The disposable income level. 
B) Taxes. 
C) The availability of credit. 
D) The price level.

Question 17

Federal government spending has a countercyclical impact that helps to stabilize the economy.
Automatic stabilizers such as transfer payments will rise during a recession,preventing a large drop in consumption.

Accepted Answer

A) True 
 B)False

Question 18

According to an In the News article titled "Cuomo to Cut New York State Spending by $8.86 Billion,Fire 9,800 Workers," the governor did this because

Accepted Answer

A) Increased federal funding cannot keep up with decreased state gasoline taxes. 
B) New York State taxes cannot keep up with the loss of federal aid. 
C) State law requires the governor shrink the budget by 5 percent per year through 2015. 
D) None of the choices are correct. 
A) Increased federal funding cannot keep up with decreased state gasoline taxes. 
B) New York State taxes cannot keep up with the loss of federal aid. 
C) State law requires the governor shrink the budget by 5 percent per year through 2015. 
D) None of the choices are correct.

Question 19

How does an improvement in consumer confidence affect the consumption function and the aggregate demand curve?

Accepted Answer

Consumer confidence is affected by expec

Question 20

Which of the following causes a movement along the investment demand curve?

Accepted Answer

A) A change in expenditures. 
B) A change in technology. 
C) A change in the rate of interest. 
D) The current level of income. 
A) A change in expenditures. 
B) A change in technology. 
C) A change in the rate of interest. 
D) The current level of income.

Exam 9: Aggregate Demand

How can autonomous consumption be greater than zero when income is zero?

The change in total spending from additional income is

Which of the following is eliminated when output equals full-employment GDP?

The investment demand curve would shift to the left because of

If the full-employment level of income in Figure 9.7 is $300 billion,there is

If we assume that government expenditure,investment,and net exports are not affected by income,the slope of the consumption function equals

Which of the following most likely occurs when an inflationary gap exists?

The economy will not reach and maintain its goals of full employment and price stability unless the economy is

The combination of price level and real output that is compatible with both aggregate demand and aggregate supply is the definition of

Which of the following is not considered to be an important determinant of investment?

Given that C = $1,000 + 0.60YD,if the level of disposable income is $1,000,the level of saving is

Given a consumption function of C = $25 + 0.75YD,the average propensity to consume equals 1 when disposable income equals

According to Keynes,cyclical unemployment is caused by too

A rise in interest rates will cause

Full-employment income is the same as the potential GDP of the economy. At full employment,the economy will be operating at a point along its production possibilities curve.

Which of the following is not a determinant of autonomous consumption?

Federal government spending has a countercyclical impact that helps to stabilize the economy. Automatic stabilizers such as transfer payments will rise during a recession,preventing a large drop in consumption.

According to an In the News article titled "Cuomo to Cut New York State Spending by $8.86 Billion,Fire 9,800 Workers," the governor did this because

How does an improvement in consumer confidence affect the consumption function and the aggregate demand curve?

Which of the following causes a movement along the investment demand curve?

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 = $1,000 + 0.60Y_D,if the level of disposable income is $1,000,the level of saving is

Given a consumption function of C = $25 + 0.75Y_D,the average propensity to consume equals 1 when disposable income equals