Exam 10: Basic Macroeconomic Relationships

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.Suppose that consumption increased by $2 billion at each level of DI in each of the three countries.We can conclude that the:

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 save:

-The equation for the above saving schedule is:

If the MPC is .70 and gross investment increases by $3 billion,the equilibrium GDP will:

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

-Refer to the above data.The marginal propensity to consume is:

-Refer to the above diagram.The marginal propensity to save is:

Suppose that the level of GDP increased by $100 billion in an economy where the marginal propensity to consume is 0.5.The initial change in spending must have been:

-Refer to the above diagram.At disposable income level D,the average propensity to save is equal to:

If a $500 billion increase in investment spending increases income by $500 billion in the first round of the multiplier process and by $450 in the second round,income will eventually increase by:

Assume the saving schedule for a private closed economy is S = -20 + 0.2Y,where S is saving and Y is gross domestic product.The multiplier for this economy:

If the real interest rate in the economy is i and the expected rate of return from additional investment is r,then other things equal:

When we draw an investment demand curve we hold constant all of the following except:

The slope of the consumption schedule is equal to the marginal propensity to consume.

If the MPS is only half as large as the MPC,the multiplier:

The consumption schedule is such that:

If the real interest rate in the economy is i and the expected rate of return from additional investment is r,then more investment will be forthcoming when:

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.At an income level of $40 billion,the average propensity to consume:

If a $50 billion decrease in investment spending causes income to decline by $50 billion in the first round of the multiplier process and by $25 in the second round,the multiplier in the economy is:

In view of your answer to the previous question,if the real interest rate is 15 percent in this economy,the aggregate amount of investment will be: