Exam 10: Basic Macroeconomic Relationships

Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by:

If households consume less at each level of disposable income, they are:

The Great Recession of 2007-2009 altered the prior behavior of consumers in the economy by:

The disposable income (DI) and consumption (C) schedules are for a private, closed economy. All figures are in billions of dollars. Refer to the data above. If consumption increases by $10 billion at each level of disposable income, the marginal propensity to consume will:

An investment demand curve shows the varying amounts of investment that would be undertaken at various levels of:

Refer to the saving schedule above. The break-even income would be level:

Dissaving occurs when:

Refer to the consumption schedule above. The marginal propensity to consume is:

Which of the following would shift the consumption schedule downward?

The so-called wealth effect will result in households:

Given the expected rate of return on all possible investment opportunities in the economy, a(n):

The nominal rate of interest is 8.5 percent and the real rate is 5 percent. The expected rate of return on an investment is 8 percent. The firm should:

Art Buchwald's article in the Last Word section of the chapter, "Squaring the Economic Circle," is a humorous description of:

Refer to the consumption schedule above. The marginal propensity to consume is represented by:

An increase in disposable income:

The so-called Paradox of Thrift that became quite obvious in the Great Recession of 2007-2009 refers to all of the following, except:

The saving schedule shows the relationship of saving of households to the level of:

A firm invests in a new machine that costs $5,000 a year but which is expected to produce an increase in total revenue of $5,200 a year. The current real rate of interest is 7 percent. The firm should:

Refer to the consumption schedule above. As income falls from level 3 to level 2, the amount of:

Saving equals disposable income plus consumption.