Question 1

The part of consumption that does not depend upon the level of disposable income is

Accepted Answer

A) autonomous consumption. 
B) saving. 
C) savings. 
D) average propensity to consume. 
A) autonomous consumption. 
B) saving. 
C) savings. 
D) average propensity to consume.

Question 2

If the multiplier is 10 and income increases by $100,then saving will increase by

Accepted Answer

A) $90. 
B) $9. 
C) $10. 
D) $100. 
A) $90. 
B) $9. 
C) $10. 
D) $100.

Question 3

-Refer to the above table.The table gives the combinations of real disposable income and real consumption for a college student for a year.What is the value of the average propensity to save when real disposable income equals $4,000?

Accepted Answer

A) -0.45 
B) 0.69 
C) 0.7 
D) 1.45 
A) -0.45 
B) 0.69 
C) 0.7 
D) 1.45

Question 4

Which one of the following is true in an open economy with a government sector?

Accepted Answer

A) The equilibrium level of real GDP occurs when real net export spending equals zero. 
B) The equilibrium level of real GDP occurs when planned real saving equals government spending. 
C) The equilibrium level of real GDP occurs when total planned real expenditures equal real GDP. 
D) The equilibrium level of real GDP occurs when planned real investment spending is zero. 
A) The equilibrium level of real GDP occurs when real net export spending equals zero. 
B) The equilibrium level of real GDP occurs when planned real saving equals government spending. 
C) The equilibrium level of real GDP occurs when total planned real expenditures equal real GDP. 
D) The equilibrium level of real GDP occurs when planned real investment spending is zero.

Question 5

The Keynesian model is based on the idea that

Accepted Answer

A) saving depends only on the interest rate. 
B) both consumption and saving are directly related to disposable income. 
C) consumption is unrelated to the level of real Gross Domestic Product (GDP). 
D) both consumption and saving are unrelated to the level of real Gross Domestic Product (GDP). 
A) saving depends only on the interest rate. 
B) both consumption and saving are directly related to disposable income. 
C) consumption is unrelated to the level of real Gross Domestic Product (GDP). 
D) both consumption and saving are unrelated to the level of real Gross Domestic Product (GDP).

Question 6

When disposable income equals consumption expenditures,then

Accepted Answer

A) saving is zero. 
B) saving equals 10 percent of income. 
C) both saving and savings are zero. 
D) we can't tell what saving is without more information. 
A) saving is zero. 
B) saving equals 10 percent of income. 
C) both saving and savings are zero. 
D) we can't tell what saving is without more information.

Question 7

The fraction of a change in real disposable income that is spent is referred to as the

Accepted Answer

A) APC. 
B) MPC. 
C) MPS. 
D) APS. 
A) APC. 
B) MPC. 
C) MPS. 
D) APS.

Question 8

In the Keynesian model with government and the foreign sector added,what are the components of spending? Which of these components are autonomous and which are not? How is the equilibrium found? When the economy is not at an equilibrium,what adjustments are made?

Accepted Answer

There are four components to spending-co

Question 9

Saving is

Accepted Answer

A) the amount one does not consume in a given period of time while savings is the accumulation of past periods of saving. 
B) the accumulation of past periods of savings while savings is the amount of disposable income that is not consumed in a given period of time. 
C) the difference between real GDP and disposable income while savings is the difference between disposable income and consumption spending. 
D) the difference between disposable income and spending on goods and services while savings is the difference between real GDP and disposable income. 
A) the amount one does not consume in a given period of time while savings is the accumulation of past periods of saving. 
B) the accumulation of past periods of savings while savings is the amount of disposable income that is not consumed in a given period of time. 
C) the difference between real GDP and disposable income while savings is the difference between disposable income and consumption spending. 
D) the difference between disposable income and spending on goods and services while savings is the difference between real GDP and disposable income.

Question 10

-In the above figure,point E represents the level of real GDP at which planned saving equals planned investment.At point A,

Accepted Answer

A) unplanned inventories increase. 
B) changes in inventories cannot be determined. 
C) unused industrial capacity exists in the economy. 
D) unplanned inventories decrease. 
A) unplanned inventories increase. 
B) changes in inventories cannot be determined. 
C) unused industrial capacity exists in the economy. 
D) unplanned inventories decrease.

Question 11

When graphing the consumption function,what purpose is served by the 45-degree line?

Accepted Answer

A) It identifies all the points at which saving and consumption spending are equal. 
B) It identifies all the points at which real disposable income and planned real consumption spending are equal. 
C) It identifies all the points at which real planned investment expenditure and real autonomous consumption spending are equal. 
D) It identifies all the points where real dissaving and saving are equal. 
A) It identifies all the points at which saving and consumption spending are equal. 
B) It identifies all the points at which real disposable income and planned real consumption spending are equal. 
C) It identifies all the points at which real planned investment expenditure and real autonomous consumption spending are equal. 
D) It identifies all the points where real dissaving and saving are equal.

Question 12

-Refer to the above figure.The figure represents the consumption function for a consumer.The distance between C and D represents

Accepted Answer

A) the amount of autonomous consumption. 
B) the amount of saving. 
C) the amount of dissaving. 
D) the point where saving equals zero. 
A) the amount of autonomous consumption. 
B) the amount of saving. 
C) the amount of dissaving. 
D) the point where saving equals zero.

Question 13

Consumption goods are

Accepted Answer

A) a form of investment. 
B) goods purchased from savings. 
C) a form of capital goods. 
D) goods purchased by households to be used immediately. 
A) a form of investment. 
B) goods purchased from savings. 
C) a form of capital goods. 
D) goods purchased by households to be used immediately.

Question 14

The consumption function relates

Accepted Answer

A) a household's consumption to its wealth. 
B) planned household consumption to real disposable income. 
C) planned household consumption and real interest rates. 
D) real disposable incomes earned by households with the level of consumption credit desired in the economy. 
A) a household's consumption to its wealth. 
B) planned household consumption to real disposable income. 
C) planned household consumption and real interest rates. 
D) real disposable incomes earned by households with the level of consumption credit desired in the economy.

Question 15

-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 16

Investment includes spending on

Accepted Answer

A) capital goods,buildings,and consumer durable goods. 
B) capital goods,buildings,and changes in business inventories. 
C) capital goods,consumer durable goods,and changes in business inventories. 
D) capital goods,buildings,and changes in business savings. 
A) capital goods,buildings,and consumer durable goods. 
B) capital goods,buildings,and changes in business inventories. 
C) capital goods,consumer durable goods,and changes in business inventories. 
D) capital goods,buildings,and changes in business savings.

Question 17

-Refer to the above figure.The figure represents the consumption function for a consumer.The distance between A and B represents

Accepted Answer

A) the amount of autonomous consumption. 
B) the amount of autonomous saving. 
C) the amount of total consumption. 
D) none of the above. 
A) the amount of autonomous consumption. 
B) the amount of autonomous saving. 
C) the amount of total consumption. 
D) none of the above.

Question 18

The relationship between planned real investment spending and the interest rate is

Accepted Answer

A) inverse. 
B) direct. 
C) constant. 
D) highly volatile. 
A) inverse. 
B) direct. 
C) constant. 
D) highly volatile.

Question 19

Autonomous real investment spending is

Accepted Answer

A) the level of investment expenditure required to keep the economy expanding at its current growth rate. 
B) the level of investment expenditure that is independent of real GDP. 
C) the level of investment expenditure required to replace capital lost to depreciation. 
D) the level of investment expenditure that would prevail if interest rates were zero. 
A) the level of investment expenditure required to keep the economy expanding at its current growth rate. 
B) the level of investment expenditure that is independent of real GDP. 
C) the level of investment expenditure required to replace capital lost to depreciation. 
D) the level of investment expenditure that would prevail if interest rates were zero.

Question 20

If real disposable income increases,the average propensity to save will

Accepted Answer

A) initially increase,and then decrease. 
B) remain constant. 
C) increase. 
D) decrease. 
A) initially increase,and then decrease. 
B) remain constant. 
C) increase. 
D) decrease.

The part of consumption that does not depend upon the level of disposable income is

If the multiplier is 10 and income increases by $100,then saving will increase by

-Refer to the above table.The table gives the combinations of real disposable income and real consumption for a college student for a year.What is the value of the average propensity to save when real disposable income equals $4,000?

Which one of the following is true in an open economy with a government sector?

The Keynesian model is based on the idea that

When disposable income equals consumption expenditures,then

The fraction of a change in real disposable income that is spent is referred to as the

In the Keynesian model with government and the foreign sector added,what are the components of spending? Which of these components are autonomous and which are not? How is the equilibrium found? When the economy is not at an equilibrium,what adjustments are made?

Saving is

-In the above figure,point E represents the level of real GDP at which planned saving equals planned investment.At point A,

When graphing the consumption function,what purpose is served by the 45-degree line?

-Refer to the above figure.The figure represents the consumption function for a consumer.The distance between C and D represents

Consumption goods are

The consumption function relates

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

Investment includes spending on

-Refer to the above figure.The figure represents the consumption function for a consumer.The distance between A and B represents

The relationship between planned real investment spending and the interest rate is

Autonomous real investment spending is

If real disposable income increases,the average propensity to save will

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

The part of consumption that does not depend upon the level of disposable income is

If the multiplier is 10 and income increases by $100,then saving will increase by

-Refer to the above table.The table gives the combinations of real disposable income and real consumption for a college student for a year.What is the value of the average propensity to save when real disposable income equals $4,000?

Which one of the following is true in an open economy with a government sector?

The Keynesian model is based on the idea that

When disposable income equals consumption expenditures,then

The fraction of a change in real disposable income that is spent is referred to as the

In the Keynesian model with government and the foreign sector added,what are the components of spending? Which of these components are autonomous and which are not? How is the equilibrium found? When the economy is not at an equilibrium,what adjustments are made?

Saving is

-In the above figure,point E represents the level of real GDP at which planned saving equals planned investment.At point A,

When graphing the consumption function,what purpose is served by the 45-degree line?

-Refer to the above figure.The figure represents the consumption function for a consumer.The distance between C and D represents

Consumption goods are

The consumption function relates

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

Investment includes spending on

-Refer to the above figure.The figure represents the consumption function for a consumer.The distance between A and B represents

The relationship between planned real investment spending and the interest rate is

Autonomous real investment spending is

If real disposable income increases,the average propensity to save will

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