Question 1

The fraction of a change in income that is consumed or spent is called

Accepted Answer

A) the marginal propensity of income. 
B) the marginal propensity to save. 
C) the marginal propensity to consume. 
D) average consumption. 
A) the marginal propensity of income. 
B) the marginal propensity to save. 
C) the marginal propensity to consume. 
D) average consumption.

Question 2

The MPC is

Accepted Answer

A) the change in consumption divided by the change in income. 
B) consumption divided by income. 
C) the change in consumption divided by the change in saving. 
D) the change in saving divided by the change in income. 
A) the change in consumption divided by the change in income. 
B) consumption divided by income. 
C) the change in consumption divided by the change in saving. 
D) the change in saving divided by the change in income.

Question 3

Uncertainty about the future is likely to

Accepted Answer

A) increase current spending. 
B) have no impact on current spending. 
C) decrease current spending. 
D) either increase or decrease current spending. 
A) increase current spending. 
B) have no impact on current spending. 
C) decrease current spending. 
D) either increase or decrease current spending.

Question 4

If planned investment is perfectly responsive to changes in the interest rate,the planned investment schedule

Accepted Answer

A) has a negative slope. 
B) is horizontal. 
C) is vertical. 
D) has a positive slope. 
A) has a negative slope. 
B) is horizontal. 
C) is vertical. 
D) has a positive slope.

Question 5

Refer to the information provided in Figure 8.9 below to answer the questions that follow.   Figure 8.9
-Refer to Figure 8.9.What is the equation for the aggregate expenditure function (AE)?

Accepted Answer

A) AE = 200 + 0.5Y. 
B) AE = 150 + 0.25Y. 
C) AE = 200 + 0.8Y. 
D) AE = 350 + 0.6Y. 
A) AE = 200 + 0.5Y. 
B) AE = 150 + 0.25Y. 
C) AE = 200 + 0.8Y. 
D) AE = 350 + 0.6Y.

Question 6

Refer to the information provided in Figure 8.4 below to answer the questions that follow.   Figure 8.4
-Refer to Figure 8.4.The aggregate consumption functions C1 and C2

Accepted Answer

A) have the same MPC values. 
B) imply different MPS values. 
C) have the same autonomous consumption values. 
D) have the same break-even values. 
A) have the same MPC values. 
B) imply different MPS values. 
C) have the same autonomous consumption values. 
D) have the same break-even values.

Question 7

Refer to the information provided in Figure 8.2 below to answer the questions that follow.   Figure 8.2
-Refer to Figure 8.2.The line segment BD represents Jerry's

Accepted Answer

A) consumption when income equals Y1. 
B) saving when income equals zero. 
C) saving when income is Y1. 
D) consumption when income equals zero. 
A) consumption when income equals Y1. 
B) saving when income equals zero. 
C) saving when income is Y1. 
D) consumption when income equals zero.

Question 8

Refer to the information provided in Figure 8.3 below to answer the questions that follow.   Figure 8.3
-Refer to Figure 8.3.For this society,aggregate saving is positive if aggregate income is

Accepted Answer

A) above zero. 
B) between $0 and $150 billion. 
C) equal to $200 billion. 
D) above $200 billion. 
A) above zero. 
B) between $0 and $150 billion. 
C) equal to $200 billion. 
D) above $200 billion.

Question 9

Assume there is no government or foreign sector.If the MPS is 0.05,the multiplier is

Accepted Answer

A) 0.95. 
B) 10. 
C) 20. 
D) 50. 
A) 0.95. 
B) 10. 
C) 20. 
D) 50.

Question 10

Refer to the information provided in Table 8.4 below to answer the questions that follow.
Table 8.4  
-Refer to Table 8.4.Which of the following statements is FALSE?

Accepted Answer

A) At output levels greater than $800 billion,there is a positive unplanned inventory change. 
B) If aggregate output equals $1000 billion,then aggregate saving equals $100. 
C) The MPC for this economy is 0.75. 
D) At an output level of $400 billion,there is a $150 billion unplanned inventory decrease. 
A) At output levels greater than $800 billion,there is a positive unplanned inventory change. 
B) If aggregate output equals $1000 billion,then aggregate saving equals $100. 
C) The MPC for this economy is 0.75. 
D) At an output level of $400 billion,there is a $150 billion unplanned inventory decrease.

Question 11

If you save $80 when you experience a $400 rise in your income,

Accepted Answer

A) your MPS is 0.25. 
B) your MPC is 0.80. 
C) your MPC is 0.85. 
D) your MPS is 0.40. 
A) your MPS is 0.25. 
B) your MPC is 0.80. 
C) your MPC is 0.85. 
D) your MPS is 0.40.

Question 12

Refer to the information provided in Table 8.1 below to answer the questions that follow.
Table 8.1  
-Refer to Table 8.1.At an aggregate income level of $100,aggregate saving would be

Accepted Answer

A) -$70. 
B) -$30. 
C) $50. 
D) $70. 
A) -$70. 
B) -$30. 
C) $50. 
D) $70.

Question 13

Related to the Economics in Practice on p.472: According to the "paradox of thrift," as individuals increase their saving,

Accepted Answer

A) income in the economy increases because there is more money available for firms to invest. 
B) income in the economy increases because interest rates will fall and the economy will expand. 
C) income in the economy will remain constant because the change in consumption equals the change in saving. 
D) income in the economy will fall because the decreased consumption that results from increased saving causes the economy to contract. 
A) income in the economy increases because there is more money available for firms to invest. 
B) income in the economy increases because interest rates will fall and the economy will expand. 
C) income in the economy will remain constant because the change in consumption equals the change in saving. 
D) income in the economy will fall because the decreased consumption that results from increased saving causes the economy to contract.

Question 14

The larger the MPC,the smaller the multiplier.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the information provided in Table 8.5 below to answer the questions that follow.
Table 8.5  
-Refer to Table 8.5.If aggregate output equals ________,there will be a $200 million unplanned decrease in inventories.

Accepted Answer

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

Question 16

Actual investment equals planned investment plus unplanned changes in inventories.

Accepted Answer

A) True 
 B)False

The fraction of a change in income that is consumed or spent is called

The MPC is

Uncertainty about the future is likely to

If planned investment is perfectly responsive to changes in the interest rate,the planned investment schedule

Refer to the information provided in Figure 8.9 below to answer the questions that follow. Figure 8.9 -Refer to Figure 8.9.What is the equation for the aggregate expenditure function (AE)?

Refer to the information provided in Figure 8.4 below to answer the questions that follow. Figure 8.4 -Refer to Figure 8.4.The aggregate consumption functions C1 and C2

Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2.The line segment BD represents Jerry's

Refer to the information provided in Figure 8.3 below to answer the questions that follow. Figure 8.3 -Refer to Figure 8.3.For this society,aggregate saving is positive if aggregate income is

Assume there is no government or foreign sector.If the MPS is 0.05,the multiplier is

Refer to the information provided in Table 8.4 below to answer the questions that follow. Table 8.4 -Refer to Table 8.4.Which of the following statements is FALSE?

If you save $80 when you experience a $400 rise in your income,

Refer to the information provided in Table 8.1 below to answer the questions that follow. Table 8.1 -Refer to Table 8.1.At an aggregate income level of $100,aggregate saving would be

Related to the Economics in Practice on p.472: According to the "paradox of thrift," as individuals increase their saving,

The larger the MPC,the smaller the multiplier.

Refer to the information provided in Table 8.5 below to answer the questions that follow. Table 8.5 -Refer to Table 8.5.If aggregate output equals ________,there will be a $200 million unplanned decrease in inventories.

Actual investment equals planned investment plus unplanned changes in inventories.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

Exam 8: Aggregate Expenditure and Equilibrium Output

The fraction of a change in income that is consumed or spent is called

The MPC is

Uncertainty about the future is likely to

If planned investment is perfectly responsive to changes in the interest rate,the planned investment schedule

Refer to the information provided in Figure 8.9 below to answer the questions that follow. Figure 8.9 -Refer to Figure 8.9.What is the equation for the aggregate expenditure function (AE)?

Refer to the information provided in Figure 8.4 below to answer the questions that follow. Figure 8.4 -Refer to Figure 8.4.The aggregate consumption functions C1 and C2

Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2.The line segment BD represents Jerry's

Refer to the information provided in Figure 8.3 below to answer the questions that follow. Figure 8.3 -Refer to Figure 8.3.For this society,aggregate saving is positive if aggregate income is

Assume there is no government or foreign sector.If the MPS is 0.05,the multiplier is

Refer to the information provided in Table 8.4 below to answer the questions that follow. Table 8.4 -Refer to Table 8.4.Which of the following statements is FALSE?

If you save $80 when you experience a $400 rise in your income,

Refer to the information provided in Table 8.1 below to answer the questions that follow. Table 8.1 -Refer to Table 8.1.At an aggregate income level of $100,aggregate saving would be

Related to the Economics in Practice on p.472: According to the "paradox of thrift," as individuals increase their saving,

The larger the MPC,the smaller the multiplier.

Refer to the information provided in Table 8.5 below to answer the questions that follow. Table 8.5 -Refer to Table 8.5.If aggregate output equals ________,there will be a $200 million unplanned decrease in inventories.

Actual investment equals planned investment plus unplanned changes in inventories.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters