Exam 10: Basic Macroeconomic Relationships

If the equation C = 20 + .6Y,where C is consumption and Y is disposable income,were graphed:

With an MPS of .4,the MPC will be:

The practical significance of the multiplier is that it:

If Ben's MPC is .80,this means that he will:

The wealth effect will tend to decrease consumption and increase saving.

If the inflation rate is 10 percent and the real interest rate is 12 percent,the nominal interest rate is:

Assume the economy's consumption and saving schedules simultaneously shift downward.This must be the result of:

If business taxes are reduced and the real interest rate increases:

If Smith's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100,it may be concluded that her marginal propensity to:

The following table illustrates the multiplier process in a private closed economy: -Refer to the above table.The marginal propensity to consume is:

If the MPC is .8 and the disposable income is $200,then

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

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

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

Given the expected rate of return on all possible investment opportunities in the economy:

The consumption schedule shows:

Suppose the economy's saving schedule shifts from S₁ to S ₂ as shown in the below diagram.We can say that its:

Which of the following is the primary explanation for most of the fluctuations in output and employment over the course of the business cycle?

The simple multiplier is:

The following table illustrates the multiplier process in a private closed economy: -Refer to the above table.The multiplier in this economy is: