Question 1

According to the permanet income hypothesis,a person's consumption increases only when

Accepted Answer

A) the person's average lifetime income increases. 
B) the person saves more. 
C) the person's income increases unexpectedly. 
D) the person's current income increases. 
A) the person's average lifetime income increases. 
B) the person saves more. 
C) the person's income increases unexpectedly. 
D) the person's current income increases.

Question 2

Dissaving occurs when

Accepted Answer

A) households deposit unusually large amounts of money into their savings account. 
B) households reduce their planned monthly saving. 
C) consumption spending exceeds real disposable income. 
D) the average saving rate for the nation unexpectedly falls. 
A) households deposit unusually large amounts of money into their savings account. 
B) households reduce their planned monthly saving. 
C) consumption spending exceeds real disposable income. 
D) the average saving rate for the nation unexpectedly falls.

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.The break-even level of real disposable income is

Accepted Answer

A) 0 
B) 6,000 
C) 10,000 
D) 14,000 
A) 0 
B) 6,000 
C) 10,000 
D) 14,000

Question 4

All of the following would cause the investment function relating investment to the interest rate to shift EXCEPT

Accepted Answer

A) a change in the real interest rate. 
B) a change in producer expectations of future profit. 
C) a change in planned capital goods expenditure. 
D) a change in productive technology. 
A) a change in the real interest rate. 
B) a change in producer expectations of future profit. 
C) a change in planned capital goods expenditure. 
D) a change in productive technology.

Question 5

Suppose when real disposable income is $5000,planned real consumption is $4000.When real disposable income increases to $6000,planned real saving increases by $500.The new planned real consumption expenditures is

Accepted Answer

A) $5,000. 
B) $4,500. 
C) $6,000. 
D) $3,500. 
A) $5,000. 
B) $4,500. 
C) $6,000. 
D) $3,500.

Question 6

-In the above figure,when real disposable income is less than 600,then

Accepted Answer

A) consumption is less than disposable income. 
B) consumption is more than disposable income. 
C) consumption is the same as disposable income. 
D) the MPC will fall. 
A) consumption is less than disposable income. 
B) consumption is more than disposable income. 
C) consumption is the same as disposable income. 
D) the MPC will fall.

Question 7

Assuming that   = $20,000 and C = $22,000,we would find that the average propensity to save equals

Accepted Answer

A) 0.9. 
B) 1.1. 
C) -0.1. 
D) -0.8. 
A) 0.9. 
B) 1.1. 
C) -0.1. 
D) -0.8.

Question 8

If saving equals $200 when real disposable income equals $1,000,the break-even income is

Accepted Answer

A) less than $1,000. 
B) greater than $1,000. 
C) equal to $1,000. 
D) equal to $1,200. 
A) less than $1,000. 
B) greater than $1,000. 
C) equal to $1,000. 
D) equal to $1,200.

Question 9

Suppose autonomous consumption is $1 trillion,investment spending is $1.5 trillion,and the marginal propensity to consume is 0.75.Show the graph for the C + I curve.What is the equilibrium level of real GDP? Explain its meaning.

Accepted Answer

In the below figure,the C curve has a ve

Question 10

-Refer to the above figure.At an income of $10,000,saving is

Accepted Answer

A) 0. 
B) $13,000. 
C) $3,000. 
D) -$3,000. 
A) 0. 
B) $13,000. 
C) $3,000. 
D) -$3,000.

Question 11

-Refer to the above figure.Line ACE is called

Accepted Answer

A) the saving function. 
B) the savings function. 
C) the 45-degree line. 
D) the consumption function. 
A) the saving function. 
B) the savings function. 
C) the 45-degree line. 
D) the consumption function.

Question 12

Consumption goods

Accepted Answer

A) include goods such as DVDs that firms hold in inventory. 
B) are only the goods bought by households for immediate satisfaction. 
C) include spending on machines and buildings so that goods can be produced in the future. 
D) are goods that are used to make other goods. 
A) include goods such as DVDs that firms hold in inventory. 
B) are only the goods bought by households for immediate satisfaction. 
C) include spending on machines and buildings so that goods can be produced in the future. 
D) are goods that are used to make other goods.

Question 13

Which would increase real planned investment demand?

Accepted Answer

A) a decrease in new technologies available 
B) a decline in profit expectations 
C) a decrease in business taxes 
D) an increase in nominal interest rates 
A) a decrease in new technologies available 
B) a decline in profit expectations 
C) a decrease in business taxes 
D) an increase in nominal interest rates

Question 14

Average 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 15

Spending by businesses on things such as machines and buildings which can be used to produce goods and services in the future is

Accepted Answer

A) investment. 
B) consumption. 
C) consumption goods. 
D) savings. 
A) investment. 
B) consumption. 
C) consumption goods. 
D) savings.

Question 16

-Refer to the above figure.Which variable is autonomous with respect to real GDP?

Accepted Answer

A) Real saving 
B) Real investment spending 
C) Real consumption spending 
D) The sum of real consumption and real saving 
A) Real saving 
B) Real investment spending 
C) Real consumption spending 
D) The sum of real consumption and real saving

Question 17

If an increase of $5 billion in investment is associated with an increase of $25 billion in real Gross Domestic Product (GDP),the multiplier is

Accepted Answer

A) 1. 
B) 3. 
C) 5. 
D) 7. 
A) 1. 
B) 3. 
C) 5. 
D) 7.

Question 18

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 19

Which of the following is false?

Accepted Answer

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

Question 20

The planned investment function shows that

Accepted Answer

A) real gross investment falls as real NNP increases. 
B) a negative relationship exists between the level of planned investment and the interest rate. 
C) a positive relationship exists between planned consumption and planned investment. 
D) at higher levels of planned saving,planned investment increases. 
A) real gross investment falls as real NNP increases. 
B) a negative relationship exists between the level of planned investment and the interest rate. 
C) a positive relationship exists between planned consumption and planned investment. 
D) at higher levels of planned saving,planned investment increases.

According to the permanet income hypothesis,a person's consumption increases only when

Dissaving occurs when

-Refer to the above table.The table gives the combinations of real disposable income and real consumption for a college student for a year.The break-even level of real disposable income is

All of the following would cause the investment function relating investment to the interest rate to shift EXCEPT

Suppose when real disposable income is $5000,planned real consumption is $4000.When real disposable income increases to $6000,planned real saving increases by $500.The new planned real consumption expenditures is

-In the above figure,when real disposable income is less than 600,then

Assuming that = $20,000 and C = $22,000,we would find that the average propensity to save equals

If saving equals $200 when real disposable income equals $1,000,the break-even income is

Suppose autonomous consumption is $1 trillion,investment spending is $1.5 trillion,and the marginal propensity to consume is 0.75.Show the graph for the C + I curve.What is the equilibrium level of real GDP? Explain its meaning.

-Refer to the above figure.At an income of $10,000,saving is

-Refer to the above figure.Line ACE is called

Consumption goods

Which would increase real planned investment demand?

Average propensity to consume

Spending by businesses on things such as machines and buildings which can be used to produce goods and services in the future is

-Refer to the above figure.Which variable is autonomous with respect to real GDP?

If an increase of $5 billion in investment is associated with an increase of $25 billion in real Gross Domestic Product (GDP),the multiplier is

The equation is the

Which of the following is false?

The planned investment function shows that

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

According to the permanet income hypothesis,a person's consumption increases only when

Dissaving occurs when

-Refer to the above table.The table gives the combinations of real disposable income and real consumption for a college student for a year.The break-even level of real disposable income is

All of the following would cause the investment function relating investment to the interest rate to shift EXCEPT

Suppose when real disposable income is $5000,planned real consumption is $4000.When real disposable income increases to $6000,planned real saving increases by $500.The new planned real consumption expenditures is

-In the above figure,when real disposable income is less than 600,then

Assuming that = $20,000 and C = $22,000,we would find that the average propensity to save equals

If saving equals $200 when real disposable income equals $1,000,the break-even income is

Suppose autonomous consumption is $1 trillion,investment spending is $1.5 trillion,and the marginal propensity to consume is 0.75.Show the graph for the C + I curve.What is the equilibrium level of real GDP? Explain its meaning.

-Refer to the above figure.At an income of $10,000,saving is

-Refer to the above figure.Line ACE is called

Consumption goods

Which would increase real planned investment demand?

Average propensity to consume

Spending by businesses on things such as machines and buildings which can be used to produce goods and services in the future is

-Refer to the above figure.Which variable is autonomous with respect to real GDP?

If an increase of $5 billion in investment is associated with an increase of $25 billion in real Gross Domestic Product (GDP),the multiplier is

The equation is the

Which of the following is false?

The planned investment function shows that

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