Question 1

Suppose a consumption function is given as C = $150 + 0.75YD.The marginal propensity to save is

Accepted Answer

A) 150. 
B) 0.75. 
C) 0.25. 
D) -0.75. 
A) 150. 
B) 0.75. 
C) 0.25. 
D) -0.75.

Question 2

In Figure 9.5,a movement from Point A to Point B would result from

Accepted Answer

A) A decrease in wage costs. 
B) An increase in the interest rate. 
C) An increase in disposable income. 
D) An improvement in expectations for future sales. 
A) A decrease in wage costs. 
B) An increase in the interest rate. 
C) An increase in disposable income. 
D) An improvement in expectations for future sales.

Question 3

If the full-employment level of income in Figure 9.7 is $200 billion,there is

Accepted Answer

A) A recessionary gap of $100 billion per year. 
B) A recessionary gap of $200 billion per year. 
C) An inflationary gap of $100 billion per year. 
D) Achievement of macro equilibrium. 
A) A recessionary gap of $100 billion per year. 
B) A recessionary gap of $200 billion per year. 
C) An inflationary gap of $100 billion per year. 
D) Achievement of macro equilibrium.

Question 4

If the economy depicted in Figure 9.9 produced at a full-employment output level of $50 billion instead of the equilibrium output level,inventory levels would

Accepted Answer

A) Increase by $50 billion. 
B) Increase by $25 billion. 
C) Decrease by $25 billion. 
D) Decrease by $50 billion. 
A) Increase by $50 billion. 
B) Increase by $25 billion. 
C) Decrease by $25 billion. 
D) Decrease by $50 billion.

Question 5

Suppose a consumption function is given as C = $175 + 0.85YD.The marginal propensity to save is

Accepted Answer

A) 200. 
B) 0.15. 
C) -0.15. 
D) 0.85. 
A) 200. 
B) 0.15. 
C) -0.15. 
D) 0.85.

Question 6

$$\begin{array}{l}
\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Disposable Income } \
\text { (Billions of dollars per year) }
\end{array} & \begin{array} { c } 
\text { Total Consumption } \
\text { (Billions of dollars per year) }
\end{array} \
\hline \$ 0 & \$ 50 \
\hline 200 & 210 \
\hline
\end{array}\
\text { Table } 9.1
\end{array}$$ What is the rate of saving when income equals $1,000 billion in Table 9.1?

Accepted Answer

A) $100 billion. 
B) $150 billion. 
C) $250 billion. 
D) Zero. 
A) $100 billion. 
B) $150 billion. 
C) $250 billion. 
D) Zero.

Question 7

One In the News article titled,"News Release: Personal Income and Outlays" says that personal income increased $20 billion,or 0.17 percent,and consumers are likely to spend more if

Accepted Answer

A) Income increases. 
B) Saving increases. 
C) Interest rates increase. 
D) Taxes increase. 
A) Income increases. 
B) Saving increases. 
C) Interest rates increase. 
D) Taxes increase.

Question 8

Investment spending includes expenditures on all of the following except

Accepted Answer

A) Stocks and bonds. 
B) Equipment. 
C) Inventory. 
D) Plants or office buildings. 
A) Stocks and bonds. 
B) Equipment. 
C) Inventory. 
D) Plants or office buildings.

Question 9

In Figure 9.8,if full-employment income is produced at $400 billion,we can expect inventories to

Accepted Answer

A) Rise as a result of undesired inventory investment. 
B) Rise as a result of undesired saving. 
C) Fall as a result of undesired inventory investment. 
D) Fall as a result of undesired saving. 
A) Rise as a result of undesired inventory investment. 
B) Rise as a result of undesired saving. 
C) Fall as a result of undesired inventory investment. 
D) Fall as a result of undesired saving.

Suppose a consumption function is given as C = $150 + 0.75Y_D.The marginal propensity to save is

In Figure 9.5,a movement from Point A to Point B would result from

If the full-employment level of income in Figure 9.7 is $200 billion,there is

If the economy depicted in Figure 9.9 produced at a full-employment output level of $50 billion instead of the equilibrium output level,inventory levels would

Suppose a consumption function is given as C = $175 + 0.85Y_D.The marginal propensity to save is

Disposable Income (Billions of dollars per year) Total Consumption (Billions of dollars per year) \ 0 \ 50 200 210 Table 9.1 What is the rate of saving when income equals $1,000 billion in Table 9.1?

One In the News article titled,"News Release: Personal Income and Outlays" says that personal income increased $20 billion,or 0.17 percent,and consumers are likely to spend more if

Investment spending includes expenditures on all of the following except

In Figure 9.8,if full-employment income is produced at $400 billion,we can expect inventories to

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

Suppose a consumption function is given as C = $150 + 0.75YD.The marginal propensity to save is

In Figure 9.5,a movement from Point A to Point B would result from

If the full-employment level of income in Figure 9.7 is $200 billion,there is

If the economy depicted in Figure 9.9 produced at a full-employment output level of $50 billion instead of the equilibrium output level,inventory levels would

Suppose a consumption function is given as C = $175 + 0.85YD.The marginal propensity to save is

Disposable Income (Billions of dollars per year) Total Consumption (Billions of dollars per year) \ 0 \ 50 200 210 Table 9.1 What is the rate of saving when income equals $1,000 billion in Table 9.1?

One In the News article titled,"News Release: Personal Income and Outlays" says that personal income increased $20 billion,or 0.17 percent,and consumers are likely to spend more if

Investment spending includes expenditures on all of the following except

In Figure 9.8,if full-employment income is produced at $400 billion,we can expect inventories to

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

Suppose a consumption function is given as C = $150 + 0.75Y_D.The marginal propensity to save is

Suppose a consumption function is given as C = $175 + 0.85Y_D.The marginal propensity to save is