Question 1

-Consider Figure 11-10 above.If the full employment level of output is $9 trillion,which of the following is true?

Accepted Answer

A)  The economy is currently operating at the full employment level 
B)  The economy is currently operating below than the full employment level 
C)  The economy is currently operating above the full employment level 
D)  The economy is operating neither at equilibrium nor full employment 
E)  Prices are rising 
A)  The economy is currently operating at the full employment level 
B)  The economy is currently operating below than the full employment level 
C)  The economy is currently operating above the full employment level 
D)  The economy is operating neither at equilibrium nor full employment 
E)  Prices are rising

Question 2

If the marginal propensity to consumer is 0.9,what is the value of the expenditure multiplier?

Accepted Answer

A)  1.0 
B)  1.9 
C)  10 
D)  0.1 
E)  0.9 
A)  1.0 
B)  1.9 
C)  10 
D)  0.1 
E)  0.9

Question 3

A movement along the consumption-function line would most likely be caused by a(n)

Accepted Answer

A)  increase in net taxes 
B)  decrease in net taxes 
C)  increase in income 
D)  decrease in productivity 
E)  change in autonomous consumption 
A)  increase in net taxes 
B)  decrease in net taxes 
C)  increase in income 
D)  decrease in productivity 
E)  change in autonomous consumption

Question 4

Use the table below to find the marginal propensity to save.

Accepted Answer

A)  0 
B)  0.25 
C)  0.5 
D)  0.75 
E)  0.80 
A)  0 
B)  0.25 
C)  0.5 
D)  0.75 
E)  0.80

Question 5

From the perspective of the classical model,many economists would say that the most important automatic stabilizer is

Accepted Answer

A)  taxes 
B)  imports 
C)  interest rates 
D)  transfer payments 
E)  passage of time 
A)  taxes 
B)  imports 
C)  interest rates 
D)  transfer payments 
E)  passage of time

Question 6

Fiscal policy

Accepted Answer

A)  is dangerous in the short run because it crowds out investment spending 
B)  can change equilibrium GDP in the short run 
C)  can change equilibrium GDP in the long run 
D)  can change equilibrium GDP in both the long and the short run 
E)  is dangerous in the long run because it triggers a multiplier effect 
A)  is dangerous in the short run because it crowds out investment spending 
B)  can change equilibrium GDP in the short run 
C)  can change equilibrium GDP in the long run 
D)  can change equilibrium GDP in both the long and the short run 
E)  is dangerous in the long run because it triggers a multiplier effect

Question 7

-Refer to Figure 11-2.Use the graph to determine the marginal propensity to consume.

Accepted Answer

A)  0.50 
B)  0.60 
C)  0.75 
D)  0.80 
E)  0.90 
A)  0.50 
B)  0.60 
C)  0.75 
D)  0.80 
E)  0.90

Question 8

The larger the multiplier,the more stable the economy.

Accepted Answer

A) True 
 B)False

Question 9

A rise in aggregate expenditure is always

Accepted Answer

A)  smaller than the rise in income that causes it 
B)  larger than the rise in income that causes it 
C)  the same as the rise in income that causes it 
D)  smaller than the increase in consumer spending that causes it 
E)  smaller than investment spending 
A)  smaller than the rise in income that causes it 
B)  larger than the rise in income that causes it 
C)  the same as the rise in income that causes it 
D)  smaller than the increase in consumer spending that causes it 
E)  smaller than investment spending

Question 10

For any value of the MPC (marginal propensity to consume),the formula for the expenditure multiplier is

Accepted Answer

A)  1/(1 - MP
C)  
B)  1/MPC 
C)  1/(MPC - 1) 
D)  (1 + MP
C) /MPC 
E)  1/(1 + MP
C)  
A)  1/(1 - MP
C)  
B)  1/MPC 
C)  1/(MPC - 1) 
D)  (1 + MP
C) /MPC 
E)  1/(1 + MP
C)

Question 11

Roughly what fraction of total spending is consumption spending?

Accepted Answer

A)  One-half 
B)  One-eighth 
C)  Two-fifths 
D)  One-quarter 
E)  Two-thirds 
A)  One-half 
B)  One-eighth 
C)  Two-fifths 
D)  One-quarter 
E)  Two-thirds

Question 12

Use the table below to determine the marginal propensity to consume (MPC).

Accepted Answer

A)  0.7 
B)  0.8 
C)  0.9 
D)  1.0 
E)  1.8 
A)  0.7 
B)  0.8 
C)  0.9 
D)  1.0 
E)  1.8

Question 13

Another expression for disposable income would be

Accepted Answer

A)  income left over after subtracting deductions such as 401Ks and health insurance 
B)  income left over after subtracting taxes 
C)  income left over after subtracting fixed payments like rent or car payments 
D)  income left over after subtracting all required spending items such as food,utilities,etc. 
E)  income left over after subtracting transfer payments 
A)  income left over after subtracting deductions such as 401Ks and health insurance 
B)  income left over after subtracting taxes 
C)  income left over after subtracting fixed payments like rent or car payments 
D)  income left over after subtracting all required spending items such as food,utilities,etc. 
E)  income left over after subtracting transfer payments

Question 14

Net exports

Accepted Answer

A)  are the second largest component of total spending 
B)  are already included in measures on consumption,investment,and government spending 
C)  are a source of total spending on U.S.output 
D)  are always positive;i.e. ,total exports always exceed total imports 
E)  are always positive;i.e. ,total imports always exceed total exports 
A)  are the second largest component of total spending 
B)  are already included in measures on consumption,investment,and government spending 
C)  are a source of total spending on U.S.output 
D)  are always positive;i.e. ,total exports always exceed total imports 
E)  are always positive;i.e. ,total imports always exceed total exports

Question 15

The most recent recession in the United States began in December 2007.

Accepted Answer

A) True 
 B)False

Question 16

When real consumption expenditure is plotted against real disposable income the resulting relationship is

Accepted Answer

A)  very weak. 
B)  positive and very curvi-linear. 
C)  positive and very close to linear. 
D)  negative and very close to linear. 
E)  virtually flat. 
A)  very weak. 
B)  positive and very curvi-linear. 
C)  positive and very close to linear. 
D)  negative and very close to linear. 
E)  virtually flat.

Question 17

An upward shift of the consumption function could be caused by a(n)

Accepted Answer

A)  increase in the interest rate 
B)  decrease in the interest rate 
C)  decrease in wealth 
D)  increase in the autonomous production 
E)  increase in disposable income 
A)  increase in the interest rate 
B)  decrease in the interest rate 
C)  decrease in wealth 
D)  increase in the autonomous production 
E)  increase in disposable income

Question 18

If the marginal propensity to consume is 0.75 and government spending decreases by $2,000 billion,what is the change in GDP?

Accepted Answer

A)  -$2,000 billion 
B)  -$8,000 billion 
C)  $2,000 billion 
D)  $1,500 billion 
E)  $8,000 billion 
A)  -$2,000 billion 
B)  -$8,000 billion 
C)  $2,000 billion 
D)  $1,500 billion 
E)  $8,000 billion

Question 19

Which of the following is not considered an automatic stabilizer?

Accepted Answer

A)  Food stamp program for people with low incomes 
B)  Welfare program for families with dependent children 
C)  Medicaid,a health program for the poor 
D)  Financial assistance for disabled people 
E)  Unemployment programs that pay benefits to those who lose their jobs 
A)  Food stamp program for people with low incomes 
B)  Welfare program for families with dependent children 
C)  Medicaid,a health program for the poor 
D)  Financial assistance for disabled people 
E)  Unemployment programs that pay benefits to those who lose their jobs

Question 20

Which of the following is not another way of describing the marginal propensity to consume?

Accepted Answer

A)  MPC 
B)  The slope of the consumption function 
C)  The change in real consumption spending divided by the change in real disposable income 
D)  The amount by which real consumption spending rises when real disposable income increases by one dollar 
E)  Autonomous consumption spending 
A)  MPC 
B)  The slope of the consumption function 
C)  The change in real consumption spending divided by the change in real disposable income 
D)  The amount by which real consumption spending rises when real disposable income increases by one dollar 
E)  Autonomous consumption spending

Exam 23: The Short-Run Macro Model

-Consider Figure 11-10 above.If the full employment level of output is $9 trillion,which of the following is true?

If the marginal propensity to consumer is 0.9,what is the value of the expenditure multiplier?

A movement along the consumption-function line would most likely be caused by a(n)

Use the table below to find the marginal propensity to save.

From the perspective of the classical model,many economists would say that the most important automatic stabilizer is

Fiscal policy

-Refer to Figure 11-2.Use the graph to determine the marginal propensity to consume.

The larger the multiplier,the more stable the economy.

A rise in aggregate expenditure is always

For any value of the MPC (marginal propensity to consume),the formula for the expenditure multiplier is

Roughly what fraction of total spending is consumption spending?

Use the table below to determine the marginal propensity to consume (MPC).

Another expression for disposable income would be

Net exports

The most recent recession in the United States began in December 2007.

When real consumption expenditure is plotted against real disposable income the resulting relationship is

An upward shift of the consumption function could be caused by a(n)

If the marginal propensity to consume is 0.75 and government spending decreases by $2,000 billion,what is the change in GDP?

Which of the following is not considered an automatic stabilizer?

Which of the following is not another way of describing the marginal propensity to consume?

What Is Economics

Scarcity,choice,and Economic Systems

Scarcity, choice, and Economic Systems: Part A

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

Perfect Competition: Part A

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

labor Markets: Part A

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

What Macroeconomics Tries to Explain

Production, income, and Employment

The Price Level and Inflation

The Classical Long-Run Model

Part A: The Classical Model in an Open Economy

Economic Growth and Rising Living Standards

Economic Fluctuations

Fiscal Policy

Money,banks,and the Federal Reserve

The Money Market and Monetary Policy

Feedback Effects From GDP to the Money Market

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Appendix-finding Equilibrium GDP Algebraically

Appendix: Capital and Leverage

Filters