Question 1

For a closed economy with no government, we know that at every level of GDP actual investment equals

Accepted Answer

A)  planned investment. 
B)  planned saving. 
C)  the difference between planned saving and actual saving. 
D)  the difference between planned investment and actual saving. 
A)  planned investment. 
B)  planned saving. 
C)  the difference between planned saving and actual saving. 
D)  the difference between planned investment and actual saving.

Question 2

A decrease in the interest rate results in

Accepted Answer

A)  a smaller opportunity cost of investment and so planned investment spending increases. 
B)  a smaller opportunity cost of investment and so planned investment spending decreases. 
C)  a greater opportunity cost of investment and so planned investment spending decreases. 
D)  a greater opportunity cost of investment and so planned investment spending increases. 
A)  a smaller opportunity cost of investment and so planned investment spending increases. 
B)  a smaller opportunity cost of investment and so planned investment spending decreases. 
C)  a greater opportunity cost of investment and so planned investment spending decreases. 
D)  a greater opportunity cost of investment and so planned investment spending increases.

Question 3

The equation is the

Accepted Answer

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

Question 4

Marginal propensity to consume

Accepted Answer

A)  is the same as the break-even point. 
B)  gives the amount a person changes planned consumption for a change in real disposable income. 
C)  is the amount of consumption that is independent of the level of disposable income. 
D)  is the proportion of total disposable income that is consumed. 
A)  is the same as the break-even point. 
B)  gives the amount a person changes planned consumption for a change in real disposable income. 
C)  is the amount of consumption that is independent of the level of disposable income. 
D)  is the proportion of total disposable income that is consumed.

Question 5

Suppose the marginal propensity to consume (MPC) equals 0.80, an increase in autonomous investment of $200 will lead to an increase in real Gross Domestic Product (GDP) by

Accepted Answer

A)  $400. 
B)  $500. 
C)  $800. 
D)  $1,000. 
A)  $400. 
B)  $500. 
C)  $800. 
D)  $1,000.

Question 6

Where the consumption function intersects the 45-degree line

Accepted Answer

A)  savings will be negative. 
B)  consumption will equal only autonomous consumption. 
C)  the average propensity to consume is 0.5. 
D)  saving will be zero. 
A)  savings will be negative. 
B)  consumption will equal only autonomous consumption. 
C)  the average propensity to consume is 0.5. 
D)  saving will be zero.

Question 7

A decrease in the interest rate will cause

Accepted Answer

A)  planned investment spending to decrease. 
B)  planned investment spending to increase. 
C)  the investment function to shift out. 
D)  the investment function to shift in. 
A)  planned investment spending to decrease. 
B)  planned investment spending to increase. 
C)  the investment function to shift out. 
D)  the investment function to shift in.

Question 8

According to the above table, the marginal propensity to consume is
-According to the above table, if real Gross Domestic Product (GDP) equals $30,000, what is the average propensity to consume?

Accepted Answer

A)  0.67 
B)  0.75 
C)  0.8 
D)  0.87 
A)  0.67 
B)  0.75 
C)  0.8 
D)  0.87

Question 9

If the level of consumption is $120 billion and disposable income is $150 billion, then the

Accepted Answer

A)  APC = 0.75 and saving is positive. 
B)  APC = 0.8 and saving is negative. 
C)  APC = 0.8 and saving is positive. 
D)  APC = 0.75 and saving is negative. 
A)  APC = 0.75 and saving is positive. 
B)  APC = 0.8 and saving is negative. 
C)  APC = 0.8 and saving is positive. 
D)  APC = 0.75 and saving is negative.

Question 10

In the simple Keynesian model, why does actual investment spending have to equal saving in the absence of the government and foreign sectors? Is this TRUE only for the equilibrium? Explain.

Accepted Answer

Real Gross Domestic Product (GDP) equals

Question 11

-Consider the above figure. Autonomous consumption, in this scenario, is equal to

Accepted Answer

A)  $30. 
B)  $40. 
C)  $60. 
D)  $80. 
A)  $30. 
B)  $40. 
C)  $60. 
D)  $80.

Question 12

Saving is an example of

Accepted Answer

A)  a flow concept. 
B)  a stock concept. 
C)  a planned investment concept. 
D)  a physical capital concept. 
A)  a flow concept. 
B)  a stock concept. 
C)  a planned investment concept. 
D)  a physical capital concept.

Exam 12: Consumption, Real GDP, and the Multiplier

For a closed economy with no government, we know that at every level of GDP actual investment equals

A decrease in the interest rate results in

The equation is the

Marginal propensity to consume

Suppose the marginal propensity to consume (MPC) equals 0.80, an increase in autonomous investment of $200 will lead to an increase in real Gross Domestic Product (GDP) by

Where the consumption function intersects the 45-degree line

A decrease in the interest rate will cause

According to the above table, the marginal propensity to consume is -According to the above table, if real Gross Domestic Product (GDP) equals $30,000, what is the average propensity to consume?

If the level of consumption is $120 billion and disposable income is $150 billion, then the

In the simple Keynesian model, why does actual investment spending have to equal saving in the absence of the government and foreign sectors? Is this TRUE only for the equilibrium? Explain.

-Consider the above figure. Autonomous consumption, in this scenario, is equal to

Saving is an example of

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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