Exam 10: Basic Macroeconomic Relationships

A business firm will purchase additional capital goods if the real rate of interest it must pay is less than the expected rate of return from the investment.

In contrast to the investment schedule,the consumption schedule is:

-The above figure shows the saving schedules for economies 1,2,3,and 4.Which economy has the largest multiplier?

Assume the MPC is 2/3.If investment spending increases by $2 billion,the level of GDP will increase by:

As aggregate income increases,the APC:

The APC can be defined as:

Other things equal,a 10 percent decrease in corporate income taxes will:

The simple multiplier is defined as:

Which one of the following will cause a movement down along an economy's consumption schedule?

For all levels of income to the left of the intersection of the 45-degree line and the consumption schedule,the APC is:

As disposable income increases,consumption:

Other things equal,if the real interest rate falls and business taxes rise:

The simple multiplier:

The ________ of the late 1990s was an example of the wealth effect,while _______ of 2008 was an example of the reverse wealth effect.

The use of 1/MPS formula as the size of the multiplier in the economy,overstates the actual size of it because:

Assume the consumption schedule for a private closed economy is C = 40 + 0.75Y,where C is consumption and Y is gross domestic product.The multiplier for this economy:

Firms make planned changes to their inventories:

Given the consumption schedule,it is possible to graph the relevant saving schedule by:

If for some reason households become increasingly thrifty,we could show this by:

The saving schedule is such that as aggregate income increases by a certain amount,saving: