Question 1

The size of the simple multiplier is equal to the:

Accepted Answer

A)  slope of the consumption schedule. 
B)  reciprocal of the slope of the consumption schedule. 
C)  slope of the saving schedule. 
D)  reciprocal of the slope of the saving schedule. 
A)  slope of the consumption schedule. 
B)  reciprocal of the slope of the consumption schedule. 
C)  slope of the saving schedule. 
D)  reciprocal of the slope of the saving schedule.

Question 2

The multiplier:

Accepted Answer

A)  varies directly with the slope of the investment-demand schedule. 
B)  is unrelated to the slope of the saving schedule. 
C)  will be greater,the smaller the slope of the saving schedule. 
D)  will be greater,the steeper the slope of the saving schedule. 
A)  varies directly with the slope of the investment-demand schedule. 
B)  is unrelated to the slope of the saving schedule. 
C)  will be greater,the smaller the slope of the saving schedule. 
D)  will be greater,the steeper the slope of the saving schedule.

Question 3

-Refer to the above diagram.The break-even level of disposable income:

Accepted Answer

A)  is zero. 
B)  is minus $10. 
C)  is $100. 
D)  cannot be determined from the information given. 
A)  is zero. 
B)  is minus $10. 
C)  is $100. 
D)  cannot be determined from the information given.

Question 4

An upward shift of the saving schedule suggests:

Accepted Answer

A)  nothing with respect to changes in the APC and APS. 
B)  that the APC and APS have both decreased at each GDP level. 
C)  that the APC and APS have both increased at each GDP level. 
D)  that the APC has decreased and the APS has increased at each GDP level. 
A)  nothing with respect to changes in the APC and APS. 
B)  that the APC and APS have both decreased at each GDP level. 
C)  that the APC and APS have both increased at each GDP level. 
D)  that the APC has decreased and the APS has increased at each GDP level.

Question 5

-Refer to the above diagram.The MPC is constant as income rises for:

Accepted Answer

A)  none of the consumption schedules shown. 
B)  C3 only. 
C)  C1,C2,and C3 only. 
D)  C4 only. 
A)  none of the consumption schedules shown. 
B)  C3 only. 
C)  C1,C2,and C3 only. 
D)  C4 only.

Question 6

The slope of the saving schedule measures the size of the multiplier.

Accepted Answer

A) True 
 B)False

Question 7

If a consumption schedule shifts upward,this means that the:

Accepted Answer

A)  MPC has increased. 
B)  MPS has decreased. 
C)  APC is now higher at each level of disposable income. 
D)  APC is now lower at each level of disposable income. 
A)  MPC has increased. 
B)  MPS has decreased. 
C)  APC is now higher at each level of disposable income. 
D)  APC is now lower at each level of disposable income.

Question 8

-Refer to the above diagram.The average propensity to consume:

Accepted Answer

A)  is greater than 1 at all levels of disposable income above $100. 
B)  is greater than 1 at all levels of disposable income below $100. 
C)  is equal to the average propensity to save. 
D)  cannot be determined from the information given. 
A)  is greater than 1 at all levels of disposable income above $100. 
B)  is greater than 1 at all levels of disposable income below $100. 
C)  is equal to the average propensity to save. 
D)  cannot be determined from the information given.

Question 9

Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.Other things equal,which economy embodies the greatest degree of macroeconomic stability?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 10

Assume that for the entire business sector of the economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent;another $15 with an expected rate of return of 15-20 percent;and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.
-Refer to the above information.If the real interest rate is 15 percent,what amount of investment will be undertaken?

Accepted Answer

A)  $15 
B)  $30 
C)  $45 
D)  $60 
A)  $15 
B)  $30 
C)  $45 
D)  $60

Question 11

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.
  
-Refer to the above data.The marginal propensity to consume:

Accepted Answer

A)  is highest in economy (1). 
B)  is highest in economy (3). 
C)  is highest in economy (2). 
D)  cannot be calculated from the data given. 
A)  is highest in economy (1). 
B)  is highest in economy (3). 
C)  is highest in economy (2). 
D)  cannot be calculated from the data given.

Question 12

If the MPS is 1,the multiplier will be 1.

Accepted Answer

A) True 
 B)False

Question 13

Assume that for the entire business sector of the economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent;another $15 with an expected rate of return of 15-20 percent;and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.
-Refer to the above information.The expected rate of return curve:

Accepted Answer

A)  shows a direct relationship between the interest rate and investment. 
B)  is also the investment-demand curve. 
C)  is indeterminate. 
D)  cannot be calculated without knowing the level of saving. 
A)  shows a direct relationship between the interest rate and investment. 
B)  is also the investment-demand curve. 
C)  is indeterminate. 
D)  cannot be calculated without knowing the level of saving.

Question 14

The business investment is not based on the expected returns.

Accepted Answer

A) True 
 B)False

Question 15

A $1 billion increase in investment will cause a:

Accepted Answer

A)  (1/MPS)billion increase in equilibrium GDP. 
B)  (MPS)billion increase in equilibrium GDP. 
C)  (1 - MP
C) billion increase in equilibrium GDP. 
D)  (MPC - MPS)billion increase in equilibrium GDP. 
A)  (1/MPS)billion increase in equilibrium GDP. 
B)  (MPS)billion increase in equilibrium GDP. 
C)  (1 - MP
C) billion increase in equilibrium GDP. 
D)  (MPC - MPS)billion increase in equilibrium GDP.

Question 16

-Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.The MPC is greatest in economy:

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 17

The MPC can be defined as the fraction of a:

Accepted Answer

A)  change in income which is not spent. 
B)  change in income which is spent. 
C)  given total income which is not consumed. 
D)  given total income which is consumed. 
A)  change in income which is not spent. 
B)  change in income which is spent. 
C)  given total income which is not consumed. 
D)  given total income which is consumed.

Question 18

In comparison with the consumption schedule,the investment schedule is:

Accepted Answer

A)  relatively stable. 
B)  relatively unstable. 
C)  upsloping. 
D)  independent of the price level. 
A)  relatively stable. 
B)  relatively unstable. 
C)  upsloping. 
D)  independent of the price level.

Question 19

The investment-demand curve will shift to the right as the result of:

Accepted Answer

A)  the availability of excess productive capacity. 
B)  an increase in business taxes. 
C)  businesses becoming more optimistic with respect to future business conditions. 
D)  an increase in the real interest rate. 
A)  the availability of excess productive capacity. 
B)  an increase in business taxes. 
C)  businesses becoming more optimistic with respect to future business conditions. 
D)  an increase in the real interest rate.

Question 20

Assume there are no prospective investment projects (I)which will yield an expected rate of return (r)of 25 percent or more,but that there are $5 billion of investment opportunities with an expected rate of return between 20 and 25 percent,an additional $5 billion between 15 and 20 percent,and so on.The investment-demand curve for this economy is:

Accepted Answer

A)  Column A 
B)  Column B 
C)  Column C 
D)  Column D 
A)  Column A 
B)  Column B 
C)  Column C 
D)  Column D

The size of the simple multiplier is equal to the:

The multiplier:

-Refer to the above diagram.The break-even level of disposable income:

An upward shift of the saving schedule suggests:

-Refer to the above diagram.The MPC is constant as income rises for:

The slope of the saving schedule measures the size of the multiplier.

If a consumption schedule shifts upward,this means that the:

-Refer to the above diagram.The average propensity to consume:

Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.Other things equal,which economy embodies the greatest degree of macroeconomic stability?

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. -Refer to the above data.The marginal propensity to consume:

If the MPS is 1,the multiplier will be 1.

The business investment is not based on the expected returns.

A $1 billion increase in investment will cause a:

-Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.The MPC is greatest in economy:

The MPC can be defined as the fraction of a:

In comparison with the consumption schedule,the investment schedule is:

The investment-demand curve will shift to the right as the result of:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 10: Basic Macroeconomic Relationships

The size of the simple multiplier is equal to the:

The multiplier:

-Refer to the above diagram.The break-even level of disposable income:

An upward shift of the saving schedule suggests:

-Refer to the above diagram.The MPC is constant as income rises for:

The slope of the saving schedule measures the size of the multiplier.

If a consumption schedule shifts upward,this means that the:

-Refer to the above diagram.The average propensity to consume:

Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.Other things equal,which economy embodies the greatest degree of macroeconomic stability?

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. -Refer to the above data.The marginal propensity to consume:

If the MPS is 1,the multiplier will be 1.

The business investment is not based on the expected returns.

A $1 billion increase in investment will cause a:

-Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.The MPC is greatest in economy:

The MPC can be defined as the fraction of a:

In comparison with the consumption schedule,the investment schedule is:

The investment-demand curve will shift to the right as the result of:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters