Question 1

The slope of the saving schedule is:

Accepted Answer

A)  the marginal propensity to consume. 
B)  1 minus the marginal propensity to consume. 
C)  the average propensity to consume. 
D)  the average propensity to save. 
A)  the marginal propensity to consume. 
B)  1 minus the marginal propensity to consume. 
C)  the average propensity to consume. 
D)  the average propensity to save.

Question 2

Keynes believed that the economy is self-correcting.

Accepted Answer

A) True 
 B)False

Question 3

The spending reduction necessary to bring an overheated economy back to full employment is called the:

Accepted Answer

A)  recessionary gap. 
B)  GDP gap. 
C)  inflationary gap. 
D)  gap analysis. 
A)  recessionary gap. 
B)  GDP gap. 
C)  inflationary gap. 
D)  gap analysis.

Question 4

Keynes's insight during the Great Depression was that:

Accepted Answer

A)  investment spending was too great to support high employment. 
B)  consumption spending is detrimental to the economy. 
C)  the economy can be in both equilibrium and high unemployment. 
D)  the unemployment rate is not a good indicator of the true state of the economy. 
A)  investment spending was too great to support high employment. 
B)  consumption spending is detrimental to the economy. 
C)  the economy can be in both equilibrium and high unemployment. 
D)  the unemployment rate is not a good indicator of the true state of the economy.

Question 5

If income is $22,150 and taxes are $11,000,then disposable income is $11,150.

Accepted Answer

A) True 
 B)False

Question 6

Injections in the simple Keynesian model are made up of business investments in the economy.

Accepted Answer

A) True 
 B)False

Question 7

Activities that remove spending from the economy are called:

Accepted Answer

A)  negative spending. 
B)  withdrawals. 
C)  injections. 
D)  reverse spending. 
A)  negative spending. 
B)  withdrawals. 
C)  injections. 
D)  reverse spending.

Question 8

Saving is equal to:

Accepted Answer

A)  disposable income minus consumption. 
B)  consumption minus disposable income. 
C)  investment minus government taxes. 
D)  government taxes minus investment. 
A)  disposable income minus consumption. 
B)  consumption minus disposable income. 
C)  investment minus government taxes. 
D)  government taxes minus investment.

Question 9

The marginal propensity to save is equal to the change in consumption divided by the change in income.

Accepted Answer

A) True 
 B)False

Question 10

Use the following to answer questions 
Figure: Savings,Investment,and Aggregate Expenditures  
-(Figure: Savings,Investment,and Aggregate Expenditures)Savings and investment are at equilibrium at point:

Accepted Answer

A)  b. 
B)  c. 
C)  d. 
D)  e. 
A)  b. 
B)  c. 
C)  d. 
D)  e.

Question 11

If $1,000 of additional spending occurs (from investment,say)and the marginal propensity to consume is 0.8,the total effect on the economy is an increase of _____ in income or output.

Accepted Answer

A)  $800 
B)  $1,000 
C)  $5,000 
D)  $8,000 
A)  $800 
B)  $1,000 
C)  $5,000 
D)  $8,000

Question 12

(Table)The following table provides partial information on an economy with a government sector and net exports.
Spending Component
Amount (billions)
G
$5
X
3
S
4
T
7
M
7
If the economy is in equilibrium,what is the amount of investment?

Accepted Answer

In equilibrium,the sum of injections (G

Question 13

As income increases,consumption ______

Accepted Answer

A)  increases at a slower rate 
B)  increases faster 
C)  decreases at a slower rate 
D)  decreases faster 
A)  increases at a slower rate 
B)  increases faster 
C)  decreases at a slower rate 
D)  decreases faster

Question 14

Which country has changed from being a high-saving country to a low-saving one?

Accepted Answer

A)  China 
B)  Germany 
C)  India 
D)  Japan 
A)  China 
B)  Germany 
C)  India 
D)  Japan

Question 15

If income is $50,000,consumption is $47,500,and saving is $2,500,then the marginal propensity to consume is:

Accepted Answer

A)  0.95. 
B)  0.50. 
C)  0.05. 
D)  There is not enough information to answer this question. 
A)  0.95. 
B)  0.50. 
C)  0.05. 
D)  There is not enough information to answer this question.

Question 16

Investment levels depend mainly on:

Accepted Answer

A)  high levels of consumption in the economy. 
B)  strong government demand. 
C)  the rate of return on capital. 
D)  tax incentives. 
A)  high levels of consumption in the economy. 
B)  strong government demand. 
C)  the rate of return on capital. 
D)  tax incentives.

Question 17

If income is $50,000,consumption is $47,500,and saving is $2,500,then the average propensity to consume is:

Accepted Answer

A)  0.95. 
B)  0.50. 
C)  0.05. 
D)  There is not enough information to answer this question. 
A)  0.95. 
B)  0.50. 
C)  0.05. 
D)  There is not enough information to answer this question.

Question 18

When the costs of operating machinery rise,new investment will rise.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about the multiplier is CORRECT?

Accepted Answer

A)  The spending multiplier can work to increase or to decrease equilibrium GDP. 
B)  The spending multiplier exists only during economic expansions. 
C)  The size of the spending multiplier is dictated by the amount of government spending. 
D)  The value of the spending multiplier is the inverse of the marginal propensity to consume. 
A)  The spending multiplier can work to increase or to decrease equilibrium GDP. 
B)  The spending multiplier exists only during economic expansions. 
C)  The size of the spending multiplier is dictated by the amount of government spending. 
D)  The value of the spending multiplier is the inverse of the marginal propensity to consume.

Question 20

Which is TRUE about differences in savings rates across groups of people?

Accepted Answer

A)  Older people and higher-income people tend to save less. 
B)  Older people and lower-income people tend to save less. 
C)  Younger people and higher-income people tend to save less. 
D)  Younger people and lower-income people tend to save less. 
A)  Older people and higher-income people tend to save less. 
B)  Older people and lower-income people tend to save less. 
C)  Younger people and higher-income people tend to save less. 
D)  Younger people and lower-income people tend to save less.

The slope of the saving schedule is:

Keynes believed that the economy is self-correcting.

The spending reduction necessary to bring an overheated economy back to full employment is called the:

Keynes's insight during the Great Depression was that:

If income is $22,150 and taxes are $11,000,then disposable income is $11,150.

Injections in the simple Keynesian model are made up of business investments in the economy.

Activities that remove spending from the economy are called:

Saving is equal to:

The marginal propensity to save is equal to the change in consumption divided by the change in income.

Use the following to answer questions Figure: Savings,Investment,and Aggregate Expenditures -(Figure: Savings,Investment,and Aggregate Expenditures)Savings and investment are at equilibrium at point:

If $1,000 of additional spending occurs (from investment,say)and the marginal propensity to consume is 0.8,the total effect on the economy is an increase of _____ in income or output.

(Table)The following table provides partial information on an economy with a government sector and net exports. Spending Component Amount (billions) G $5 X 3 S 4 T 7 M 7 If the economy is in equilibrium,what is the amount of investment?

As income increases,consumption ______

Which country has changed from being a high-saving country to a low-saving one?

If income is $50,000,consumption is $47,500,and saving is $2,500,then the marginal propensity to consume is:

Investment levels depend mainly on:

If income is $50,000,consumption is $47,500,and saving is $2,500,then the average propensity to consume is:

When the costs of operating machinery rise,new investment will rise.

Which of the following statements about the multiplier is CORRECT?

Which is TRUE about differences in savings rates across groups of people?

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

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Exam 8: Aggregate Expenditures

The slope of the saving schedule is:

Keynes believed that the economy is self-correcting.

The spending reduction necessary to bring an overheated economy back to full employment is called the:

Keynes's insight during the Great Depression was that:

If income is $22,150 and taxes are $11,000,then disposable income is $11,150.

Injections in the simple Keynesian model are made up of business investments in the economy.

Activities that remove spending from the economy are called:

Saving is equal to:

The marginal propensity to save is equal to the change in consumption divided by the change in income.

Use the following to answer questions Figure: Savings,Investment,and Aggregate Expenditures -(Figure: Savings,Investment,and Aggregate Expenditures)Savings and investment are at equilibrium at point:

If $1,000 of additional spending occurs (from investment,say)and the marginal propensity to consume is 0.8,the total effect on the economy is an increase of _____ in income or output.

(Table)The following table provides partial information on an economy with a government sector and net exports. Spending Component Amount (billions) G $5 X 3 S 4 T 7 M 7 If the economy is in equilibrium,what is the amount of investment?

As income increases,consumption ______

Which country has changed from being a high-saving country to a low-saving one?

If income is $50,000,consumption is $47,500,and saving is $2,500,then the marginal propensity to consume is:

Investment levels depend mainly on:

If income is $50,000,consumption is $47,500,and saving is $2,500,then the average propensity to consume is:

When the costs of operating machinery rise,new investment will rise.

Which of the following statements about the multiplier is CORRECT?

Which is TRUE about differences in savings rates across groups of people?

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