Question 1

Keynes thought that the key to determining the broader economic effects of investment fluctuations

Accepted Answer

A) was to examine how businesses react to flexible prices and wages. 
B) was to closely regulate the real interest rate. 
C) was to understand the relationship between how much people earn and their willingness to engage in personal consumption spending. 
D) was to understand how changes in the money supply influences consumption decisions. 
A) was to examine how businesses react to flexible prices and wages. 
B) was to closely regulate the real interest rate. 
C) was to understand the relationship between how much people earn and their willingness to engage in personal consumption spending. 
D) was to understand how changes in the money supply influences consumption decisions.

Question 2

How much people plan to consume at various levels of disposable income is known as

Accepted Answer

A) dissaving. 
B) investment. 
C) the consumption function. 
D) inventory investment. 
A) dissaving. 
B) investment. 
C) the consumption function. 
D) inventory investment.

Question 3

What effect would taxation have on real consumption spending when government spending is autonomous?

Accepted Answer

A) Taxation reduces real consumption spending. 
B) Taxation increases real consumption spending. 
C) Taxation causes both real consumption spending and planned real saving to increase. 
D) None of the above is correct. 
A) Taxation reduces real consumption spending. 
B) Taxation increases real consumption spending. 
C) Taxation causes both real consumption spending and planned real saving to increase. 
D) None of the above is correct.

Question 4

Which of the following is a true statement?

Accepted Answer

A) The C + I + G + X curve has no relationship to the aggregate demand curve other than some of the variables that affect one curve also affect the other. 
B) The C + I + G + X curve is used to derive the aggregate demand curve,but the C + I + G + X curve is drawn for one price level while price levels vary along the aggregate demand curve. 
C) The C + I + G + X curve is used to derive the aggregate demand curve,but the aggregate demand curve is drawn for one price level. 
D) Both the C + I + G + X curve and the aggregate demand curve are drawn for one price level. 
A) The C + I + G + X curve has no relationship to the aggregate demand curve other than some of the variables that affect one curve also affect the other. 
B) The C + I + G + X curve is used to derive the aggregate demand curve,but the C + I + G + X curve is drawn for one price level while price levels vary along the aggregate demand curve. 
C) The C + I + G + X curve is used to derive the aggregate demand curve,but the aggregate demand curve is drawn for one price level. 
D) Both the C + I + G + X curve and the aggregate demand curve are drawn for one price level.

Question 5

-In the above table,the average propensity to save when disposable income is $5,000 is

Accepted Answer

A) 0.2. 
B) 0.1. 
C) 0.0. 
D) -0.1. 
A) 0.2. 
B) 0.1. 
C) 0.0. 
D) -0.1.

Question 6

Suppose that there is no government and no international trade.When C + I is less than the level of real GDP,

Accepted Answer

A) unplanned inventories decrease,and real GDP expands. 
B) unplanned inventories increase,and real GDP contracts. 
C) unplanned inventories equal zero,and there is no change in the level of real GDP. 
D) real planned investment spending equals real planned saving. 
A) unplanned inventories decrease,and real GDP expands. 
B) unplanned inventories increase,and real GDP contracts. 
C) unplanned inventories equal zero,and there is no change in the level of real GDP. 
D) real planned investment spending equals real planned saving.

Question 7

The relationship between planned consumption and real disposable income is referred to as

Accepted Answer

A) the wealth function. 
B) the saving function. 
C) the multiplier. 
D) the consumption function. 
A) the wealth function. 
B) the saving function. 
C) the multiplier. 
D) the consumption function.

Question 8

The investment function would shift inward to the left if

Accepted Answer

A) real disposable income decreased. 
B) interest rates increased. 
C) there was an increase in business taxes. 
D) there was a positive change in productive technology. 
A) real disposable income decreased. 
B) interest rates increased. 
C) there was an increase in business taxes. 
D) there was a positive change in productive technology.

Question 9

If the average propensity to consume is 0.8,then the average propensity to save is

Accepted Answer

A) 0. 
B) 0.2. 
C) 0.8. 
D) 1. 
A) 0. 
B) 0.2. 
C) 0.8. 
D) 1.

Question 10

-Refer to the above figure.Point B

Accepted Answer

A) equals autonomous consumption. 
B) equals autonomous consumption plus autonomous consumption plus planned investment plus autonomous government spending plus autonomous net exports. 
C) has no special significance. 
D) equals government expenditures. 
A) equals autonomous consumption. 
B) equals autonomous consumption plus autonomous consumption plus planned investment plus autonomous government spending plus autonomous net exports. 
C) has no special significance. 
D) equals government expenditures.

Question 11

-Consider the above figure.At income level   = $110,the APS is equal to

Accepted Answer

A) 0.64. 
B) 0.32 
C) 1.10. 
D) -0.36. 
A) 0.64. 
B) 0.32 
C) 1.10. 
D) -0.36.

Question 12

-According to the above figure,planned consumption and income are equal at an income level of

Accepted Answer

A) Y2. 
B) Y3. 
C) Y1. 
D) Y0. 
A) Y2. 
B) Y3. 
C) Y1. 
D) Y0.

Question 13

-Use the above table.When real disposable income is $125,

Accepted Answer

A) APC = 0.96. 
B) APC = 0.80. 
C) APS = 0.20. 
D) MPS = 0.96. 
A) APC = 0.96. 
B) APC = 0.80. 
C) APS = 0.20. 
D) MPS = 0.96.

Question 14

According to Keynes,an individual's level of saving is primarily determined by

Accepted Answer

A) the interest rate. 
B) the individual's current level of disposable real income. 
C) the individual's assessment of the future direction of the stock market. 
D) real Gross Domestic Product (GDP)for the economy. 
A) the interest rate. 
B) the individual's current level of disposable real income. 
C) the individual's assessment of the future direction of the stock market. 
D) real Gross Domestic Product (GDP)for the economy.

Question 15

Real planned investment spending is inversely related to

Accepted Answer

A) real disposable income. 
B) wealth. 
C) the interest rate. 
D) producer expectations of future profit. 
A) real disposable income. 
B) wealth. 
C) the interest rate. 
D) producer expectations of future profit.

Question 16

The difference between "saving" and "savings" is that

Accepted Answer

A) saving is done by households and savings by businesses. 
B) saving is undertaken as a precaution against unemployment and savings are undertaken to increase investment spending. 
C) savings are the result of past and current saving. 
D) saving is placed in financial institutions such as banks,while savings are kept at home by people. 
A) saving is done by households and savings by businesses. 
B) saving is undertaken as a precaution against unemployment and savings are undertaken to increase investment spending. 
C) savings are the result of past and current saving. 
D) saving is placed in financial institutions such as banks,while savings are kept at home by people.

Question 17

-Refer to the above figure.At real GDP of $1 trillion,actual investment equals

Accepted Answer

A) planned investment of $1 trillion. 
B) planned saving of $1 trillion. 
C) actual saving of 0. 
D) unanticipated inventory adjustments of $1 trillion. 
A) planned investment of $1 trillion. 
B) planned saving of $1 trillion. 
C) actual saving of 0. 
D) unanticipated inventory adjustments of $1 trillion.

Question 18

Investment is

Accepted Answer

A) a positive function of real GDP. 
B) a negative function of real GDP. 
C) autonomous with respect to real GDP. 
D) a positive function of interest rates. 
A) a positive function of real GDP. 
B) a negative function of real GDP. 
C) autonomous with respect to real GDP. 
D) a positive function of interest rates.

Question 19

-Refer to the above table.When real GDP equals $16 trillion,

Accepted Answer

A) government expenditures will increase. 
B) the economy is in equilibrium. 
C) unplanned inventories will increase. 
D) unplanned inventories will decrease. 
A) government expenditures will increase. 
B) the economy is in equilibrium. 
C) unplanned inventories will increase. 
D) unplanned inventories will decrease.

Question 20

A permanent reduction in net exports leads to

Accepted Answer

A) a more than proportional decrease in real Gross Domestic Product (GDP). 
B) a less than proportional decrease in real Gross Domestic Product (GDP). 
C) a proportional increase in real Gross Domestic Product (GDP). 
D) a reduction in taxes,autonomous government spending,and a fall in real Gross Domestic Product (GDP). 
A) a more than proportional decrease in real Gross Domestic Product (GDP). 
B) a less than proportional decrease in real Gross Domestic Product (GDP). 
C) a proportional increase in real Gross Domestic Product (GDP). 
D) a reduction in taxes,autonomous government spending,and a fall in real Gross Domestic Product (GDP).

Keynes thought that the key to determining the broader economic effects of investment fluctuations

How much people plan to consume at various levels of disposable income is known as

What effect would taxation have on real consumption spending when government spending is autonomous?

Which of the following is a true statement?

-In the above table,the average propensity to save when disposable income is $5,000 is

Suppose that there is no government and no international trade.When C + I is less than the level of real GDP,

The relationship between planned consumption and real disposable income is referred to as

The investment function would shift inward to the left if

If the average propensity to consume is 0.8,then the average propensity to save is

-Refer to the above figure.Point B

-Consider the above figure.At income level = $110,the APS is equal to

-According to the above figure,planned consumption and income are equal at an income level of

-Use the above table.When real disposable income is $125,

According to Keynes,an individual's level of saving is primarily determined by

Real planned investment spending is inversely related to

The difference between "saving" and "savings" is that

-Refer to the above figure.At real GDP of $1 trillion,actual investment equals

Investment is

-Refer to the above table.When real GDP equals $16 trillion,

A permanent reduction in net exports leads to

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

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Exam 12: Consumption, real GDP, and the Multiplier

Keynes thought that the key to determining the broader economic effects of investment fluctuations

How much people plan to consume at various levels of disposable income is known as

What effect would taxation have on real consumption spending when government spending is autonomous?

Which of the following is a true statement?

-In the above table,the average propensity to save when disposable income is $5,000 is

Suppose that there is no government and no international trade.When C + I is less than the level of real GDP,

The relationship between planned consumption and real disposable income is referred to as

The investment function would shift inward to the left if

If the average propensity to consume is 0.8,then the average propensity to save is

-Refer to the above figure.Point B

-Consider the above figure.At income level = $110,the APS is equal to

-According to the above figure,planned consumption and income are equal at an income level of

-Use the above table.When real disposable income is $125,

According to Keynes,an individual's level of saving is primarily determined by

Real planned investment spending is inversely related to

The difference between "saving" and "savings" is that

-Refer to the above figure.At real GDP of $1 trillion,actual investment equals

Investment is

-Refer to the above table.When real GDP equals $16 trillion,

A permanent reduction in net exports leads to

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