Question 1

Firms react to unplanned inventory reductions by

Accepted Answer

A)  reducing output. 
B)  increasing output. 
C)  reducing planned investment. 
D)  increasing consumption. 
A)  reducing output. 
B)  increasing output. 
C)  reducing planned investment. 
D)  increasing consumption.

Question 2

If actual investment is greater than planned investment, unplanned inventories decline.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the information provided in Table 8.2 below to answer the questions that follow.
Table 8.2  
-Refer to Table 8.2. Society's MPC is

Accepted Answer

A)  0.1. 
B)  0.2. 
C)  0.8. 
D)  0.9. 
A)  0.1. 
B)  0.2. 
C)  0.8. 
D)  0.9.

Question 4

Refer to the information provided in Table 8.1 below to answer the questions that follow.
Table 8.1  
-Refer to Table 8.1. Assuming society's MPC is constant at an aggregate of income of $300, aggregate consumption would be

Accepted Answer

A)  $425. 
B)  $350. 
C)  $325. 
D)  $305. 
A)  $425. 
B)  $350. 
C)  $325. 
D)  $305.

Question 5

Consumption is

Accepted Answer

A)  positively related to household income and wealth and households' expectations about the future, but negatively related to interest rates. 
B)  negatively related to household income and wealth, interest rates, and households' expectations about the future. 
C)  determined only by income. 
D)  positively related to household income and wealth, interest rates, and households' expectations about the future. 
A)  positively related to household income and wealth and households' expectations about the future, but negatively related to interest rates. 
B)  negatively related to household income and wealth, interest rates, and households' expectations about the future. 
C)  determined only by income. 
D)  positively related to household income and wealth, interest rates, and households' expectations about the future.

Question 6

Assume there is no government or foreign sector. If the MPS is 0.25, the multiplier is

Accepted Answer

A)  0.75. 
B)  2.5. 
C)  4. 
D)  5. 
A)  0.75. 
B)  2.5. 
C)  4. 
D)  5.

Question 7

Refer to the information provided in Figure 8.3 below to answer the questions that follow.   Figure 8.3
-Refer to Figure 8.3. The equation for the aggregate saving function is

Accepted Answer

A)  S = -60 + 0.3Y. 
B)  S = -200 + 0.6Y. 
C)  S = -140 + 0.5Y. 
D)  S = -80 + 0.4Y. 
A)  S = -60 + 0.3Y. 
B)  S = -200 + 0.6Y. 
C)  S = -140 + 0.5Y. 
D)  S = -80 + 0.4Y.

Question 8

Refer to the information provided in Figure 8.2 below to answer the questions that follow.   Figure 8.2
-Refer to Figure 8.2. Jerry's consumption equals his income at Point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 9

Refer to the information provided in Figure 8.3 below to answer the questions that follow.   Figure 8.3
-Refer to Figure 8.3. In this economy, if income is $200 aggregate saving will be

Accepted Answer

A)  $0. 
B)  $130. 
C)  $200. 
D)  $270. 
A)  $0. 
B)  $130. 
C)  $200. 
D)  $270.

Question 10

If consumption is $10,000 when income is $10,000, and consumption increases to $11,000 when income increases to $12,000, the MPS is

Accepted Answer

A)  0.10. 
B)  0.25. 
C)  0.50. 
D)  0.90. 
A)  0.10. 
B)  0.25. 
C)  0.50. 
D)  0.90.

Question 11

Refer to the information provided in Figure 8.3 below to answer the questions that follow.   Figure 8.3
-Refer to Figure 8.3. Aggregate saving is $240 if aggregate income is

Accepted Answer

A)  $300. 
B)  $500. 
C)  $800. 
D)  $1,000. 
A)  $300. 
B)  $500. 
C)  $800. 
D)  $1,000.

Question 12

If Earl received an $800 bonus and his MPS is 0.25, his consumption rises by $________ and his saving rises by $________.

Accepted Answer

A)  825; 125 
B)  600; 200 
C)  400; 250 
D)  800; 250 
A)  825; 125 
B)  600; 200 
C)  400; 250 
D)  800; 250

Question 13

Firms' investments include inventories.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is considered investment?

Accepted Answer

A)  the acquisition of capital goods 
B)  the purchase of government bonds 
C)  the purchase of IBM stock 
D)  the sale of foreign currency 
A)  the acquisition of capital goods 
B)  the purchase of government bonds 
C)  the purchase of IBM stock 
D)  the sale of foreign currency

Question 15

Refer to the information provided in Table 8.3 below to answer the questions that follow.
Table 8.3  
-Refer to Table 8.3. Society's MPC is

Accepted Answer

A)  0.2. 
B)  0.3. 
C)  0.75. 
D)  0.8. 
A)  0.2. 
B)  0.3. 
C)  0.75. 
D)  0.8.

Question 16

Refer to the information provided in Table 8.3 below to answer the questions that follow.
Table 8.3  
-Refer to Table 8.3. The equation for the aggregate consumption function is

Accepted Answer

A)  C = 200 + 0.3Y. 
B)  C = 200 + 0.75Y. 
C)  C = 200 + 0.8Y. 
D)  C = -200 + 0.2Y. 
A)  C = 200 + 0.3Y. 
B)  C = 200 + 0.75Y. 
C)  C = 200 + 0.8Y. 
D)  C = -200 + 0.2Y.

Question 17

Refer to the information provided in Table 8.5 below to answer the questions that follow.
Table 8.5
A Hypothetical Investment Schedule  
-Refer to Table 8.5. If the interest rate dropped from 15% to 6%, planned investment would ________ by $________ billion.

Accepted Answer

A)  increase; 120 
B)  increase; 180 
C)  decrease; 120 
D)  decrease; 180 
A)  increase; 120 
B)  increase; 180 
C)  decrease; 120 
D)  decrease; 180

Question 18

Refer to the information provided in Figure 8.9 below to answer the questions that follow.   Figure 8.9
-Refer to Figure 8.9. There is a $75 million decrease in unplanned inventories at an aggregate output level of

Accepted Answer

A)  < $100 million. 
B)  $100 million. 
C)  $200 million. 
D)  $300 million. 
A)  < $100 million. 
B)  $100 million. 
C)  $200 million. 
D)  $300 million.

Question 19

Assuming no government or foreign sector, [1 / MPS] represents

Accepted Answer

A)  the multiplier. 
B)  negative saving. 
C)  autonomous income. 
D)  the consumption function. 
A)  the multiplier. 
B)  negative saving. 
C)  autonomous income. 
D)  the consumption function.

Question 20

Refer to the information provided in Figure 8.11 below to answer the questions that follow.   Figure 8.11
-Refer to Figure 8.11. [50 + 0.75Y] represents the

Accepted Answer

A)  autonomous consumption function. 
B)  MPC. 
C)  aggregate expenditures function. 
D)  MPS. 
A)  autonomous consumption function. 
B)  MPC. 
C)  aggregate expenditures function. 
D)  MPS.

Exam 8: Aggregate Expenditure and Equilibrium Output

Firms react to unplanned inventory reductions by

If actual investment is greater than planned investment, unplanned inventories decline.

Refer to the information provided in Table 8.2 below to answer the questions that follow. Table 8.2 -Refer to Table 8.2. Society's MPC is

Refer to the information provided in Table 8.1 below to answer the questions that follow. Table 8.1 -Refer to Table 8.1. Assuming society's MPC is constant at an aggregate of income of $300, aggregate consumption would be

Consumption is

Assume there is no government or foreign sector. If the MPS is 0.25, the multiplier is

Refer to the information provided in Figure 8.3 below to answer the questions that follow. Figure 8.3 -Refer to Figure 8.3. The equation for the aggregate saving function is

Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's consumption equals his income at Point

Refer to the information provided in Figure 8.3 below to answer the questions that follow. Figure 8.3 -Refer to Figure 8.3. In this economy, if income is $200 aggregate saving will be

If consumption is $10,000 when income is $10,000, and consumption increases to $11,000 when income increases to $12,000, the MPS is

Refer to the information provided in Figure 8.3 below to answer the questions that follow. Figure 8.3 -Refer to Figure 8.3. Aggregate saving is $240 if aggregate income is

If Earl received an $800 bonus and his MPS is 0.25, his consumption rises by $________ and his saving rises by $________.

Firms' investments include inventories.

Which of the following is considered investment?

Refer to the information provided in Table 8.3 below to answer the questions that follow. Table 8.3 -Refer to Table 8.3. Society's MPC is

Refer to the information provided in Table 8.3 below to answer the questions that follow. Table 8.3 -Refer to Table 8.3. The equation for the aggregate consumption function is

Refer to the information provided in Table 8.5 below to answer the questions that follow. Table 8.5 A Hypothetical Investment Schedule -Refer to Table 8.5. If the interest rate dropped from 15% to 6%, planned investment would ________ by $________ billion.

Refer to the information provided in Figure 8.9 below to answer the questions that follow. Figure 8.9 -Refer to Figure 8.9. There is a $75 million decrease in unplanned inventories at an aggregate output level of

Assuming no government or foreign sector, [1 / MPS] represents

Refer to the information provided in Figure 8.11 below to answer the questions that follow. Figure 8.11 -Refer to Figure 8.11. [50 + 0.75Y] represents the

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

Money, the Federal Reserve, and the Interest Rate

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

Policy Effects and Cost 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 Economies

Critical Thinking About Research

Filters

If Earl received an $800 bonus and his MPS is 0.25, his consumption rises by $ and his saving rises by $.

Refer to the information provided in Table 8.5 below to answer the questions that follow. Table 8.5 A Hypothetical Investment Schedule -Refer to Table 8.5. If the interest rate dropped from 15% to 6%, planned investment would by $ billion.