Question 1

Which one of the following would shift your consumption function in an upward direction?

Accepted Answer

A) an increase in your wealth 
B) a decrease in your wealth 
C) an increase in your real disposable income 
D) a decrease in your real disposable income 
A) an increase in your wealth 
B) a decrease in your wealth 
C) an increase in your real disposable income 
D) a decrease in your real disposable income

Question 2

Ignoring the government and foreign sectors,there is an unplanned decrease in inventories of $200 billion at the current level of real national income of $12 trillion.From this information,we know that

Accepted Answer

A) saving equals $200 billion. 
B) consumption expenditures equal $12 trillion less saving less $200 billion. 
C) planned investment is $200 billion more than planned saving. 
D) planned investment is $200 billion less than planned saving. 
A) saving equals $200 billion. 
B) consumption expenditures equal $12 trillion less saving less $200 billion. 
C) planned investment is $200 billion more than planned saving. 
D) planned investment is $200 billion less than planned saving.

Question 3

How is investment defined as an economic concept?

Accepted Answer

A) Investment is primarily the market value of all shares of stock held by the public. 
B) Investment is primarily the market value of all equipment,buildings,and inventories held by corporations,partnerships,and proprietorships. 
C) Investment is primarily the sum of expenditures by businesses on new capital goods that will yield a future stream of income. 
D) Investment is primarily the portion of your savings held in an interest-earning account. 
A) Investment is primarily the market value of all shares of stock held by the public. 
B) Investment is primarily the market value of all equipment,buildings,and inventories held by corporations,partnerships,and proprietorships. 
C) Investment is primarily the sum of expenditures by businesses on new capital goods that will yield a future stream of income. 
D) Investment is primarily the portion of your savings held in an interest-earning account.

Question 4

Which of the following would be expected to shift the consumption function up?

Accepted Answer

A) Decreases in wealth 
B) Expectations of harder times ahead 
C) Increases in the nation's population 
D) Changes in real disposable income 
A) Decreases in wealth 
B) Expectations of harder times ahead 
C) Increases in the nation's population 
D) Changes in real disposable income

Question 5

-Refer to the above figure.The marginal propensity to consume and the marginal propensity to save

Accepted Answer

A) are 0.90 and 0.10,respectively. 
B) are 0.83 and 0.17,respectively. 
C) are 0.75 and 0.25,respectively. 
D) depend on the level of income. 
A) are 0.90 and 0.10,respectively. 
B) are 0.83 and 0.17,respectively. 
C) are 0.75 and 0.25,respectively. 
D) depend on the level of income.

Question 6

An increase 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 7

For an investment to be considered autonomous,it must

Accepted Answer

A) be negatively related to the interest rate. 
B) increase as the level of income increases. 
C) include fixed components. 
D) be independent of the level of real disposable income. 
A) be negatively related to the interest rate. 
B) increase as the level of income increases. 
C) include fixed components. 
D) be independent of the level of real disposable income.

Question 8

The consumption function shows the relationship between

Accepted Answer

A) interest rates and planned real consumption. 
B) employment and planned real consumption. 
C) the price level and planned real consumption. 
D) real disposable income and planned real consumption. 
A) interest rates and planned real consumption. 
B) employment and planned real consumption. 
C) the price level and planned real consumption. 
D) real disposable income and planned real consumption.

Question 9

Investment spending is

Accepted Answer

A) directly related to the interest rate. 
B) inversely related to the interest rate. 
C) directly related to real disposable income. 
D) inversely related to real disposable income. 
A) directly related to the interest rate. 
B) inversely related to the interest rate. 
C) directly related to real disposable income. 
D) inversely related to real disposable income.

Question 10

At a level of real disposable income of $0,suppose consumption is $2,000.Given this information,we know with certainty that saving equals

Accepted Answer

A) $0. 
B) $2,000. 
C) -$2,000. 
D) -$1,000. 
A) $0. 
B) $2,000. 
C) -$2,000. 
D) -$1,000.

Question 11

Which of the following is false?

Accepted Answer

A) 1 - MPC = MPS 
B) 1 + MPC = MPS 
C) 1 - APS = APC 
D) APC + APS = 1 
A) 1 - MPC = MPS 
B) 1 + MPC = MPS 
C) 1 - APS = APC 
D) APC + APS = 1

Question 12

Which formula is correct?

Accepted Answer

A) S =   - C 
B)    + S = C 
C) 2(   )- S = C 
D)    + C = S 
A) S =   - C 
B)    + S = C 
C) 2(   )- S = C 
D)    + C = S

Question 13

What would happen to the planned investment function if business taxes were increased?

Accepted Answer

A) It would shift to the right. 
B) It would shift to the left. 
C) It would shift upward. 
D) There would be no change. 
A) It would shift to the right. 
B) It would shift to the left. 
C) It would shift upward. 
D) There would be no change.

Question 14

-Refer to the above figure.The equilibrium level of real Gross Domestic Product (GDP)is

Accepted Answer

A) $6 trillion. 
B) $7 trillion. 
C) $12 trillion. 
D) $20 trillion. 
A) $6 trillion. 
B) $7 trillion. 
C) $12 trillion. 
D) $20 trillion.

Question 15

Based on historical data,which of the following tended to be most variable over time?

Accepted Answer

A) real consumption spending 
B) real saving 
C) real investment spending 
D) the average propensity to consume 
A) real consumption spending 
B) real saving 
C) real investment spending 
D) the average propensity to consume

Question 16

Dissaving occurs when

Accepted Answer

A) disposable income exceeds consumption. 
B) disposable income is less than consumption. 
C) the marginal propensity to save is less than .5. 
D) the marginal propensity to consume is less than .5. 
A) disposable income exceeds consumption. 
B) disposable income is less than consumption. 
C) the marginal propensity to save is less than .5. 
D) the marginal propensity to consume is less than .5.

Question 17

The multiplier tells us the relationship between

Accepted Answer

A) the interest rate and the level of investment expenditure. 
B) the exchange rate and the level of exports. 
C) the exchange rate and the level of imports. 
D) a change in autonomous spending and the resulting change in equilibrium real GDP. 
A) the interest rate and the level of investment expenditure. 
B) the exchange rate and the level of exports. 
C) the exchange rate and the level of imports. 
D) a change in autonomous spending and the resulting change in equilibrium real GDP.

Question 18

When an individual spends more than her/his disposable income,this person is

Accepted Answer

A) saving. 
B) investing. 
C) dissaving. 
D) unemployed. 
A) saving. 
B) investing. 
C) dissaving. 
D) unemployed.

Question 19

Which of the following statements is true?

Accepted Answer

A) APC + APS = 1 
B) APC + APS < 1 
C) APC + MPS = 1 
D) APC + APS + MPC + MPS = 1 
A) APC + APS = 1 
B) APC + APS < 1 
C) APC + MPS = 1 
D) APC + APS + MPC + MPS = 1

Question 20

The average propensity to save is

Accepted Answer

A) real consumption/real disposable income. 
B) real saving/real disposable income. 
C) change in real consumption/change in real disposable income. 
D) change in real saving/change in real disposable income. 
A) real consumption/real disposable income. 
B) real saving/real disposable income. 
C) change in real consumption/change in real disposable income. 
D) change in real saving/change in real disposable income.

Which one of the following would shift your consumption function in an upward direction?

Ignoring the government and foreign sectors,there is an unplanned decrease in inventories of $200 billion at the current level of real national income of $12 trillion.From this information,we know that

How is investment defined as an economic concept?

Which of the following would be expected to shift the consumption function up?

-Refer to the above figure.The marginal propensity to consume and the marginal propensity to save

An increase in the interest rate results in

For an investment to be considered autonomous,it must

The consumption function shows the relationship between

Investment spending is

At a level of real disposable income of $0,suppose consumption is $2,000.Given this information,we know with certainty that saving equals

Which of the following is false?

Which formula is correct?

What would happen to the planned investment function if business taxes were increased?

-Refer to the above figure.The equilibrium level of real Gross Domestic Product (GDP)is

Based on historical data,which of the following tended to be most variable over time?

Dissaving occurs when

The multiplier tells us the relationship between

When an individual spends more than her/his disposable income,this person is

Which of the following statements is true?

The average propensity to save is

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

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 12: Consumption, real GDP, and the Multiplier

Which one of the following would shift your consumption function in an upward direction?

Ignoring the government and foreign sectors,there is an unplanned decrease in inventories of $200 billion at the current level of real national income of $12 trillion.From this information,we know that

How is investment defined as an economic concept?

Which of the following would be expected to shift the consumption function up?

-Refer to the above figure.The marginal propensity to consume and the marginal propensity to save

An increase in the interest rate results in

For an investment to be considered autonomous,it must

The consumption function shows the relationship between

Investment spending is

At a level of real disposable income of $0,suppose consumption is $2,000.Given this information,we know with certainty that saving equals

Which of the following is false?

Which formula is correct?

What would happen to the planned investment function if business taxes were increased?

-Refer to the above figure.The equilibrium level of real Gross Domestic Product (GDP)is

Based on historical data,which of the following tended to be most variable over time?

Dissaving occurs when

The multiplier tells us the relationship between

When an individual spends more than her/his disposable income,this person is

Which of the following statements is true?

The average propensity to save is

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

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters