Question 1

Suppose an economy's consumption schedule shifts from C1 to C 2 as shown in the diagram below.We can say that its:

Accepted Answer

A)  MPC has increased but its APC at each income level is unchanged. 
B)  APC at each income level is increased but its MPC is unchanged. 
C)  MPC and APC at each income level have both increased. 
D)  MPC and APC at each income level have both decreased. 
A)  MPC has increased but its APC at each income level is unchanged. 
B)  APC at each income level is increased but its MPC is unchanged. 
C)  MPC and APC at each income level have both increased. 
D)  MPC and APC at each income level have both decreased.

Question 2

The saving schedule is drawn on the assumption that as income increases:

Accepted Answer

A)  saving will decline absolutely and as a percentage of income. 
B)  saving will increase absolutely,but remain constant as a percentage of income. 
C)  saving will increase absolutely,but decline as a percentage of income. 
D)  saving will increase absolutely and as a percentage of income. 
A)  saving will decline absolutely and as a percentage of income. 
B)  saving will increase absolutely,but remain constant as a percentage of income. 
C)  saving will increase absolutely,but decline as a percentage of income. 
D)  saving will increase absolutely and as a percentage of income.

Question 3

A rightward shift of the investment-demand curve might be caused by:

Accepted Answer

A)  an increase in the price level. 
B)  a decline in the real interest rate. 
C)  a decline in the acquisition,maintenance and operating costs. 
D)  an increase in business taxes. 
A)  an increase in the price level. 
B)  a decline in the real interest rate. 
C)  a decline in the acquisition,maintenance and operating costs. 
D)  an increase in business taxes.

Question 4

The consumption schedule relates:

Accepted Answer

A)  consumption to the level of disposable income. 
B)  saving to the level of disposable income. 
C)  disposable income to domestic income. 
D)  consumption to saving. 
A)  consumption to the level of disposable income. 
B)  saving to the level of disposable income. 
C)  disposable income to domestic income. 
D)  consumption to saving.

Question 5

Holly's break-even level of income is $10,000 and her MPC is 0.75.If her actual disposable income is $16,000,her level of:

Accepted Answer

A)  consumption spending will be $14,500. 
B)  consumption spending will be $4,500. 
C)  consumption spending will be $13,000. 
D)  saving will be $2,500. 
A)  consumption spending will be $14,500. 
B)  consumption spending will be $4,500. 
C)  consumption spending will be $13,000. 
D)  saving will be $2,500.

Question 6

The 45-degree line on a chart relating consumption and income shows:

Accepted Answer

A)  all points where the MPC is constant. 
B)  all points at which saving and income are equal. 
C)  all the points at which consumption and income are equal. 
D)  the amounts households will plan to save at each possible level of income. 
A)  all points where the MPC is constant. 
B)  all points at which saving and income are equal. 
C)  all the points at which consumption and income are equal. 
D)  the amounts households will plan to save at each possible level of income.

Question 7

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round,the multiplier in the economy is:

Accepted Answer

A)  4 
B)  5 
C)  3.33. 
D)  2.5. 
A)  4 
B)  5 
C)  3.33. 
D)  2.5.

Question 8

Economists disagree on the actual size of the multiplier.

Accepted Answer

A) True 
 B)False

Question 9

The initial costs of capital goods,and the estimated costs of operating and maintaining those goods,affect the expected rate of return on investment.

Accepted Answer

A) True 
 B)False

Question 10

-The above figure shows the saving schedules for economies 1,2,3,and 4.Which economy has the highest marginal propensity to consume?

Accepted Answer

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

Question 11

Which of the following is correct?

Accepted Answer

A)  MPC + MPS = APC + APS 
B)  APC + MPS = APS + MPC 
C)  APC + MPC = APS + MPS 
D)  APC - APS = MPC - MPS 
A)  MPC + MPS = APC + APS 
B)  APC + MPS = APS + MPC 
C)  APC + MPC = APS + MPS 
D)  APC - APS = MPC - MPS

Question 12

Dissaving occurs where:

Accepted Answer

A)  income exceeds consumption. 
B)  saving exceeds consumption. 
C)  consumption exceeds income. 
D)  saving exceeds income. 
A)  income exceeds consumption. 
B)  saving exceeds consumption. 
C)  consumption exceeds income. 
D)  saving exceeds income.

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.If the real interest rate is 5 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 14

Suppose the government finds it can increase equilibrium real GDP by $45 billion by increasing government purchases by $18 billion.On the basis of this information we can say that the:

Accepted Answer

A)  MPS in this economy is .4. 
B)  MPC in this economy is .4. 
C)  MPC in this economy is .3 
D)  multiplier is 3. 
A)  MPS in this economy is .4. 
B)  MPC in this economy is .4. 
C)  MPC in this economy is .3 
D)  multiplier is 3.

Question 15

The increase in income which results from an increase in investment spending would be greater the:

Accepted Answer

A)  smaller the MPS. 
B)  smaller the APC. 
C)  larger the MPS. 
D)  smaller the MPC. 
A)  smaller the MPS. 
B)  smaller the APC. 
C)  larger the MPS. 
D)  smaller the MPC.

Question 16

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 in economy (1):

Accepted Answer

A)  is .5. 
B)  is .3. 
C)  is .8. 
D)  is .7. 
A)  is .5. 
B)  is .3. 
C)  is .8. 
D)  is .7.

Question 17

As disposable income goes up the:

Accepted Answer

A)  APC falls. 
B)  APS falls. 
C)  volume of consumption declines absolutely. 
D)  volume of investment can be expected to diminish. 
A)  APC falls. 
B)  APS falls. 
C)  volume of consumption declines absolutely. 
D)  volume of investment can be expected to diminish.

Question 18

The reverse wealth effect will cause the consumption schedule to:

Accepted Answer

A)  shift upward. 
B)  shift downward. 
C)  not change at all. 
D)  shift in the same direction as would occur with the wealth effect. 
A)  shift upward. 
B)  shift downward. 
C)  not change at all. 
D)  shift in the same direction as would occur with the wealth effect.

Question 19

The investment-demand curve will shift to the left:

Accepted Answer

A)  if firms plan to increase their inventories. 
B)  if firms plan to decrease their inventories. 
C)  if firms expect an increase in their sales. 
D)  if firms expect no change in their sales. 
A)  if firms plan to increase their inventories. 
B)  if firms plan to decrease their inventories. 
C)  if firms expect an increase in their sales. 
D)  if firms expect no change in their sales.

Question 20

Which of the following will not cause the consumption schedule to shift?

Accepted Answer

A)  a sharp increase in the amount of wealth held by households 
B)  a change in consumer incomes 
C)  the expectation of a recession 
D)  a growing expectation that consumer durables will be in short supply 
A)  a sharp increase in the amount of wealth held by households 
B)  a change in consumer incomes 
C)  the expectation of a recession 
D)  a growing expectation that consumer durables will be in short supply

Suppose an economy's consumption schedule shifts from C₁ to C ₂ as shown in the diagram below.We can say that its:

The saving schedule is drawn on the assumption that as income increases:

A rightward shift of the investment-demand curve might be caused by:

The consumption schedule relates:

Holly's break-even level of income is $10,000 and her MPC is 0.75.If her actual disposable income is $16,000,her level of:

The 45-degree line on a chart relating consumption and income shows:

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round,the multiplier in the economy is:

Economists disagree on the actual size of the multiplier.

The initial costs of capital goods,and the estimated costs of operating and maintaining those goods,affect the expected rate of return on investment.

-The above figure shows the saving schedules for economies 1,2,3,and 4.Which economy has the highest marginal propensity to consume?

Which of the following is correct?

Dissaving occurs where:

Suppose the government finds it can increase equilibrium real GDP by $45 billion by increasing government purchases by $18 billion.On the basis of this information we can say that the:

The increase in income which results from an increase in investment spending would be greater 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 consume in economy (1):

As disposable income goes up the:

The reverse wealth effect will cause the consumption schedule to:

The investment-demand curve will shift to the left:

Which of the following will not cause the consumption schedule to shift?

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

Suppose an economy's consumption schedule shifts from C1 to C 2 as shown in the diagram below.We can say that its:

The saving schedule is drawn on the assumption that as income increases:

A rightward shift of the investment-demand curve might be caused by:

The consumption schedule relates:

Holly's break-even level of income is $10,000 and her MPC is 0.75.If her actual disposable income is $16,000,her level of:

The 45-degree line on a chart relating consumption and income shows:

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round,the multiplier in the economy is:

Economists disagree on the actual size of the multiplier.

The initial costs of capital goods,and the estimated costs of operating and maintaining those goods,affect the expected rate of return on investment.

-The above figure shows the saving schedules for economies 1,2,3,and 4.Which economy has the highest marginal propensity to consume?

Which of the following is correct?

Dissaving occurs where:

Suppose the government finds it can increase equilibrium real GDP by $45 billion by increasing government purchases by $18 billion.On the basis of this information we can say that the:

The increase in income which results from an increase in investment spending would be greater 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 consume in economy (1):

As disposable income goes up the:

The reverse wealth effect will cause the consumption schedule to:

The investment-demand curve will shift to the left:

Which of the following will not cause the consumption schedule to shift?

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

Suppose an economy's consumption schedule shifts from C₁ to C ₂ as shown in the diagram below.We can say that its: