Question 1

The average propensity to save (APS)is

Accepted Answer

A) the rate at which real savings changes over time. 
B) the percentage of real disposable income saved. 
C) the difference between the amounts of real disposable income consumed and saved. 
D) the percentage of additional real disposable income that will go toward real saving. 
A) the rate at which real savings changes over time. 
B) the percentage of real disposable income saved. 
C) the difference between the amounts of real disposable income consumed and saved. 
D) the percentage of additional real disposable income that will go toward real saving.

Question 2

One divided by the marginal propensity to save (MPS)is the formula for

Accepted Answer

A) one minus the multiplier. 
B) the inverse of the multiplier. 
C) the multiplier. 
D) autonomous consumption. 
A) one minus the multiplier. 
B) the inverse of the multiplier. 
C) the multiplier. 
D) autonomous consumption.

Question 3

Spending on new goods and services out of a household's current income is

Accepted Answer

A) consumption. 
B) the capital consumption allowance. 
C) savings. 
D) investment. 
A) consumption. 
B) the capital consumption allowance. 
C) savings. 
D) investment.

Question 4

-In the above table,the marginal propensity to save when disposable income changes from $1,000 to $2,000 is

Accepted Answer

A) 0.1. 
B) 0.2. 
C) 0.8. 
D) -0.2. 
A) 0.1. 
B) 0.2. 
C) 0.8. 
D) -0.2.

Question 5

-Refer to the above figure.If real GDP is $4 trillion,then

Accepted Answer

A) consumption expenditures are too low. 
B) unplanned inventories will decrease. 
C) unplanned inventories will increase. 
D) actual investment spending equals $1 trillion as planned investment spending plus unplanned inventory increases equal $1 trillion. 
A) consumption expenditures are too low. 
B) unplanned inventories will decrease. 
C) unplanned inventories will increase. 
D) actual investment spending equals $1 trillion as planned investment spending plus unplanned inventory increases equal $1 trillion.

Question 6

Which of the following correctly defines the average propensity to consume (APC)?

Accepted Answer

A) Change in planned consumption divided by change in real disposable income 
B) Planned consumption divided by real disposable income 
C) Real disposable income divided by planned consumption 
D) Change in real disposable income divided by change in planned consumption 
A) Change in planned consumption divided by change in real disposable income 
B) Planned consumption divided by real disposable income 
C) Real disposable income divided by planned consumption 
D) Change in real disposable income divided by change in planned consumption

Question 7

When a family's income is low and it is spending more on consumption than it is receiving in income,

Accepted Answer

A) the APC must be increasing. 
B) the APC must be equal to the ratio of planned consumption expenditure to total saving. 
C) the MPC must be zero. 
D) some segment of the consumption function curve lies above the 45-degree line,indicating dissaving. 
A) the APC must be increasing. 
B) the APC must be equal to the ratio of planned consumption expenditure to total saving. 
C) the MPC must be zero. 
D) some segment of the consumption function curve lies above the 45-degree line,indicating dissaving.

Question 8

Technological progress should lead to

Accepted Answer

A) an outward (rightward)shift in the investment function. 
B) a downward movement of the investment function. 
C) an unchanged investment function. 
D) less saving. 
A) an outward (rightward)shift in the investment function. 
B) a downward movement of the investment function. 
C) an unchanged investment function. 
D) less saving.

Question 9

If your real disposable income goes up by $1,000 per week,and your real consumption spending goes up by $800 per week,you have a marginal propensity to consume of

Accepted Answer

A) 0.2. 
B) 0.8. 
C) 1.2. 
D) 1.0. 
A) 0.2. 
B) 0.8. 
C) 1.2. 
D) 1.0.

Question 10

The income-expenditure model of real GDP determination is due to the work of

Accepted Answer

A) Adam Smith. 
B) J.B.Say. 
C) John Maynard Keynes. 
D) Roger Miller. 
A) Adam Smith. 
B) J.B.Say. 
C) John Maynard Keynes. 
D) Roger Miller.

Question 11

-Refer to the above figure.The figure represents the saving function for the consumer.Point A represents

Accepted Answer

A) the amount of autonomous consumption. 
B) a situation in which saving is positive. 
C) a situation in which saving is negative. 
D) the point at which saving equals zero. 
A) the amount of autonomous consumption. 
B) a situation in which saving is positive. 
C) a situation in which saving is negative. 
D) the point at which saving equals zero.

Question 12

Suppose equilibrium for an economy occurs when C + I + G + X = $14 trillion.If the real Gross Domestic Product (GDP)is $13 trillion,then unplanned inventories are

Accepted Answer

A) increasing,and real Gross Domestic Product (GDP)will expand. 
B) increasing,and real Gross Domestic Product (GDP)will contract. 
C) decreasing,and real Gross Domestic Product (GDP)will expand. 
D) decreasing,and real Gross Domestic Product (GDP)will contract. 
A) increasing,and real Gross Domestic Product (GDP)will expand. 
B) increasing,and real Gross Domestic Product (GDP)will contract. 
C) decreasing,and real Gross Domestic Product (GDP)will expand. 
D) decreasing,and real Gross Domestic Product (GDP)will contract.

Question 13

The non-income determinants of consumption include all of the following EXCEPT

Accepted Answer

A) stock of assets owned by household. 
B) innovation. 
C) the interest rate. 
D) real wealth. 
A) stock of assets owned by household. 
B) innovation. 
C) the interest rate. 
D) real wealth.

Question 14

Suppose government spending decreases by $100 billion and the marginal propensity to consume (MPC)is 0.8.Given this information,this decrease in government spending will cause a(n)

Accepted Answer

A) increase in equilibrium real GDP equal to $500 billion. 
B) increase in equilibrium real GDP equal to $800 billion. 
C) decrease in equilibrium real GDP equal to $500 billion. 
D) decrease in equilibrium real GDP equal to $800 billion. 
A) increase in equilibrium real GDP equal to $500 billion. 
B) increase in equilibrium real GDP equal to $800 billion. 
C) decrease in equilibrium real GDP equal to $500 billion. 
D) decrease in equilibrium real GDP equal to $800 billion.

Question 15

If the average propensity to save (APS)is 0.60,then this means

Accepted Answer

A) people are saving 60 percent of their disposable income. 
B) people are spending 60 percent of their disposable income. 
C) the marginal tax rate is 60. 
D) the government spends 60 percent of its revenues. 
A) people are saving 60 percent of their disposable income. 
B) people are spending 60 percent of their disposable income. 
C) the marginal tax rate is 60. 
D) the government spends 60 percent of its revenues.

Question 16

The investment function intersects the saving schedule at an interest rate of 8 percent and a level of investment of $1.2 trillion a year.If the consumption curve intersects the 45-degree reference line at $3 trillion,then

Accepted Answer

A) the C + I curve will intersect the 45-degree reference line at $1.2 trillion. 
B) the C + I curve will intersect the 45-degree line at $1.8 trillion. 
C) the equilibrium level of real GDP is $1.8 trillion. 
D) the equilibrium level of real GDP is $4.2 trillion. 
A) the C + I curve will intersect the 45-degree reference line at $1.2 trillion. 
B) the C + I curve will intersect the 45-degree line at $1.8 trillion. 
C) the equilibrium level of real GDP is $1.8 trillion. 
D) the equilibrium level of real GDP is $4.2 trillion.

Question 17

-In the above figure,the sum of real planned investment spending,government expenditures,and net export spending is equal to

Accepted Answer

A) $0.5 trillion. 
B) $1.0 trillion. 
C) $1.5 trillion. 
D) $2.0 trillion. 
A) $0.5 trillion. 
B) $1.0 trillion. 
C) $1.5 trillion. 
D) $2.0 trillion.

Question 18

According to Keynes,the primary determinant of a person's saving is

Accepted Answer

A) the nominal interest rate. 
B) the real interest rate. 
C) the level of the person's consumption spending. 
D) the level of the person's real current income. 
A) the nominal interest rate. 
B) the real interest rate. 
C) the level of the person's consumption spending. 
D) the level of the person's real current income.

Question 19

The relationship that tells us how much a person intends to spend at various levels of income is

Accepted Answer

A) the spending function. 
B) the expenditure function. 
C) the consumption function. 
D) the buying function. 
A) the spending function. 
B) the expenditure function. 
C) the consumption function. 
D) the buying function.

Question 20

According to Keynesian theory,the most important determinant of saving and consumption is

Accepted Answer

A) the level of real disposable income. 
B) the stock of liquid assets. 
C) the stock of durable goods in the consumer's possession. 
D) the level of consumer indebtedness. 
A) the level of real disposable income. 
B) the stock of liquid assets. 
C) the stock of durable goods in the consumer's possession. 
D) the level of consumer indebtedness.

The average propensity to save (APS)is

One divided by the marginal propensity to save (MPS)is the formula for

Spending on new goods and services out of a household's current income is

-In the above table,the marginal propensity to save when disposable income changes from $1,000 to $2,000 is

-Refer to the above figure.If real GDP is $4 trillion,then

Which of the following correctly defines the average propensity to consume (APC)?

When a family's income is low and it is spending more on consumption than it is receiving in income,

Technological progress should lead to

If your real disposable income goes up by $1,000 per week,and your real consumption spending goes up by $800 per week,you have a marginal propensity to consume of

The income-expenditure model of real GDP determination is due to the work of

-Refer to the above figure.The figure represents the saving function for the consumer.Point A represents

Suppose equilibrium for an economy occurs when C + I + G + X = $14 trillion.If the real Gross Domestic Product (GDP)is $13 trillion,then unplanned inventories are

The non-income determinants of consumption include all of the following EXCEPT

Suppose government spending decreases by $100 billion and the marginal propensity to consume (MPC)is 0.8.Given this information,this decrease in government spending will cause a(n)

If the average propensity to save (APS)is 0.60,then this means

The investment function intersects the saving schedule at an interest rate of 8 percent and a level of investment of $1.2 trillion a year.If the consumption curve intersects the 45-degree reference line at $3 trillion,then

-In the above figure,the sum of real planned investment spending,government expenditures,and net export spending is equal to

According to Keynes,the primary determinant of a person's saving is

The relationship that tells us how much a person intends to spend at various levels of income is

According to Keynesian theory,the most important determinant of saving and consumption 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

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Exam 12: Consumption, real GDP, and the Multiplier

The average propensity to save (APS)is

One divided by the marginal propensity to save (MPS)is the formula for

Spending on new goods and services out of a household's current income is

-In the above table,the marginal propensity to save when disposable income changes from $1,000 to $2,000 is

-Refer to the above figure.If real GDP is $4 trillion,then

Which of the following correctly defines the average propensity to consume (APC)?

When a family's income is low and it is spending more on consumption than it is receiving in income,

Technological progress should lead to

If your real disposable income goes up by $1,000 per week,and your real consumption spending goes up by $800 per week,you have a marginal propensity to consume of

The income-expenditure model of real GDP determination is due to the work of

-Refer to the above figure.The figure represents the saving function for the consumer.Point A represents

Suppose equilibrium for an economy occurs when C + I + G + X = $14 trillion.If the real Gross Domestic Product (GDP)is $13 trillion,then unplanned inventories are

The non-income determinants of consumption include all of the following EXCEPT

Suppose government spending decreases by $100 billion and the marginal propensity to consume (MPC)is 0.8.Given this information,this decrease in government spending will cause a(n)

If the average propensity to save (APS)is 0.60,then this means

The investment function intersects the saving schedule at an interest rate of 8 percent and a level of investment of $1.2 trillion a year.If the consumption curve intersects the 45-degree reference line at $3 trillion,then

-In the above figure,the sum of real planned investment spending,government expenditures,and net export spending is equal to

According to Keynes,the primary determinant of a person's saving is

The relationship that tells us how much a person intends to spend at various levels of income is

According to Keynesian theory,the most important determinant of saving and consumption 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