Question 1

Expectations of a future general price increase will lead to a higher level of equilibrium expenditure.

Accepted Answer

A) True 
 B)False

Question 2

It does not matter whether injections into the economy come from investment alone or from investment and government spending together;the key is spending.

Accepted Answer

A) True 
 B)False

Question 3

When the consumption schedule lies above the 45-degree reference line,consumption spending is ________ than income and saving is ___________.

Accepted Answer

A)  greater;positive 
B)  less;positive 
C)  greater;negative 
D)  less;negative 
A)  greater;positive 
B)  less;positive 
C)  greater;negative 
D)  less;negative

Question 4

Aggregate expenditures are equal to:

Accepted Answer

A)  the total of consumption plus investment plus government expenditures plus exports minus imports. 
B)  the total of consumption plus investment plus government expenditures. 
C)  the total of consumption plus investment plus government expenditures plus imports minus exports. 
D)  consumption alone in a simplified Keynesian model. 
A)  the total of consumption plus investment plus government expenditures plus exports minus imports. 
B)  the total of consumption plus investment plus government expenditures. 
C)  the total of consumption plus investment plus government expenditures plus imports minus exports. 
D)  consumption alone in a simplified Keynesian model.

Question 5

The slope of the consumption function is equal to the multiplier.

Accepted Answer

A) True 
 B)False

Question 6

Personal consumption expenditures:

Accepted Answer

A)  constitute 30% of GDP. 
B)  can be found by subtracting saving from disposable income. 
C)  primarily depend on interest rates,according to Keynes. 
D)  are very unstable as a percentage of GDP over time. 
A)  constitute 30% of GDP. 
B)  can be found by subtracting saving from disposable income. 
C)  primarily depend on interest rates,according to Keynes. 
D)  are very unstable as a percentage of GDP over time.

Question 7

At equilibrium,when a tax is put in place,income falls more than the tax multiplied by the multiplier,since consumers pay for the tax in part by reducing their savings.

Accepted Answer

A) True 
 B)False

Question 8

The following table shows data on consumption at various levels of income.Investment spending is $500 for all levels of income. Income
Consumption
$0
$500
$1,000
$1,250
$2,000
$2,000
$3,000
$2,750
$4,000
$3,500
If there is no government spending or net exports,the equilibrium income level is:

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000. 
A)  $1,000. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000.

Question 9

Equilibrium in the Keynesian model requires that withdrawals be the same as:

Accepted Answer

A)  deposits. 
B)  debits. 
C)  credits. 
D)  injections. 
A)  deposits. 
B)  debits. 
C)  credits. 
D)  injections.

Question 10

If income grows from $3,000 per month to $3,500 per month and savings rise from $200 per month to $400 per month,what is the marginal propensity to save?

Accepted Answer

A)  1.25 
B)  0.8 
C)  2.5 
D)  0.4 
A)  1.25 
B)  0.8 
C)  2.5 
D)  0.4

Question 11

If you spend $35,000 and your income is $60,000,what is your average propensity to save?

Accepted Answer

A)  0.7 
B)  0.3 
C)  0.58 
D)  0.42 
A)  0.7 
B)  0.3 
C)  0.58 
D)  0.42

Question 12

The factors that would shift the savings and consumption schedule include all of the following EXCEPT:

Accepted Answer

A)  household debt. 
B)  tastes and preferences from durable goods to nondurable goods. 
C)  wealth. 
D)  taxes. 
A)  household debt. 
B)  tastes and preferences from durable goods to nondurable goods. 
C)  wealth. 
D)  taxes.

Question 13

The expenditure approach to calculating GDP includes measures of consumer spending,business investment spending,government spending,and net foreign spending.

Accepted Answer

A) True 
 B)False

Question 14

Suppose full employment real GDP is $12 trillion,current real GDP is $11 trillion,and the marginal propensity to consume is 0.8.The recessionary gap is:

Accepted Answer

A)  $1 trillion. 
B)  $0.8 trillion. 
C)  $0.2 trillion. 
D)  $0.5 trillion. 
A)  $1 trillion. 
B)  $0.8 trillion. 
C)  $0.2 trillion. 
D)  $0.5 trillion.

Question 15

If consumption increases from $500 billion to $575 billion and income increases from $600 billion to $700 billion,the marginal propensity to save is:

Accepted Answer

A)  0.2. 
B)  0.25. 
C)  0.75. 
D)  There is not enough information to answer this question. 
A)  0.2. 
B)  0.25. 
C)  0.75. 
D)  There is not enough information to answer this question.

Question 16

The average propensity to consume is calculated by dividing income by spending.

Accepted Answer

A) True 
 B)False

Question 17

Which group of economists believed that economic downturns were self-correcting,that is the forces of supply and demand would naturally bring the economy back to equilibrium?

Accepted Answer

A)  Keynesians 
B)  classical economists 
C)  interventionists 
D)  Marxists 
A)  Keynesians 
B)  classical economists 
C)  interventionists 
D)  Marxists

Question 18

In the Keynesian model,the principal determinant of saving is:

Accepted Answer

A)  interest rates. 
B)  income. 
C)  tax rates. 
D)  investment. 
A)  interest rates. 
B)  income. 
C)  tax rates. 
D)  investment.

Question 19

Which of the following is true of macroeconomic equilibrium in the simple Keynesian model?

Accepted Answer

A)  AE = Y 
B)  Y = C - S 
C)  AE + C = I 
D)  I = S + C 
A)  AE = Y 
B)  Y = C - S 
C)  AE + C = I 
D)  I = S + C

Question 20

A criticism of Keynesian policies is that they are the cause for significant growth in the size of the government.

Accepted Answer

A) True 
 B)False

Expectations of a future general price increase will lead to a higher level of equilibrium expenditure.

It does not matter whether injections into the economy come from investment alone or from investment and government spending together;the key is spending.

When the consumption schedule lies above the 45-degree reference line,consumption spending is than income and saving is ___.

Aggregate expenditures are equal to:

The slope of the consumption function is equal to the multiplier.

Personal consumption expenditures:

At equilibrium,when a tax is put in place,income falls more than the tax multiplied by the multiplier,since consumers pay for the tax in part by reducing their savings.

The following table shows data on consumption at various levels of income.Investment spending is $500 for all levels of income. Income Consumption $0 $500 $1,000 $1,250 $2,000 $2,000 $3,000 $2,750 $4,000 $3,500 If there is no government spending or net exports,the equilibrium income level is:

Equilibrium in the Keynesian model requires that withdrawals be the same as:

If income grows from $3,000 per month to $3,500 per month and savings rise from $200 per month to $400 per month,what is the marginal propensity to save?

If you spend $35,000 and your income is $60,000,what is your average propensity to save?

The factors that would shift the savings and consumption schedule include all of the following EXCEPT:

The expenditure approach to calculating GDP includes measures of consumer spending,business investment spending,government spending,and net foreign spending.

Suppose full employment real GDP is $12 trillion,current real GDP is $11 trillion,and the marginal propensity to consume is 0.8.The recessionary gap is:

If consumption increases from $500 billion to $575 billion and income increases from $600 billion to $700 billion,the marginal propensity to save is:

The average propensity to consume is calculated by dividing income by spending.

Which group of economists believed that economic downturns were self-correcting,that is the forces of supply and demand would naturally bring the economy back to equilibrium?

In the Keynesian model,the principal determinant of saving is:

Which of the following is true of macroeconomic equilibrium in the simple Keynesian model?

A criticism of Keynesian policies is that they are the cause for significant growth in the size of the government.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomic

Filters

Exam 8: Aggregate Expenditures

Expectations of a future general price increase will lead to a higher level of equilibrium expenditure.

It does not matter whether injections into the economy come from investment alone or from investment and government spending together;the key is spending.

When the consumption schedule lies above the 45-degree reference line,consumption spending is ________ than income and saving is ___________.

Aggregate expenditures are equal to:

The slope of the consumption function is equal to the multiplier.

Personal consumption expenditures:

At equilibrium,when a tax is put in place,income falls more than the tax multiplied by the multiplier,since consumers pay for the tax in part by reducing their savings.

The following table shows data on consumption at various levels of income.Investment spending is $500 for all levels of income. Income Consumption $0 $500 $1,000 $1,250 $2,000 $2,000 $3,000 $2,750 $4,000 $3,500 If there is no government spending or net exports,the equilibrium income level is:

Equilibrium in the Keynesian model requires that withdrawals be the same as:

If income grows from $3,000 per month to $3,500 per month and savings rise from $200 per month to $400 per month,what is the marginal propensity to save?

If you spend $35,000 and your income is $60,000,what is your average propensity to save?

The factors that would shift the savings and consumption schedule include all of the following EXCEPT:

The expenditure approach to calculating GDP includes measures of consumer spending,business investment spending,government spending,and net foreign spending.

Suppose full employment real GDP is $12 trillion,current real GDP is $11 trillion,and the marginal propensity to consume is 0.8.The recessionary gap is:

If consumption increases from $500 billion to $575 billion and income increases from $600 billion to $700 billion,the marginal propensity to save is:

The average propensity to consume is calculated by dividing income by spending.

Which group of economists believed that economic downturns were self-correcting,that is the forces of supply and demand would naturally bring the economy back to equilibrium?

In the Keynesian model,the principal determinant of saving is:

Which of the following is true of macroeconomic equilibrium in the simple Keynesian model?

A criticism of Keynesian policies is that they are the cause for significant growth in the size of the government.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomic

Filters

When the consumption schedule lies above the 45-degree reference line,consumption spending is than income and saving is ___.