Question 1

Use the following to answer questions: 
-(Figure: Planned Aggregate Expenditures Curve II) Use Figure: Planned Aggregate Expenditures Curve II.Suppose that the consumption function rises by $100.The equilibrium level of real GDP would rise by:

Accepted Answer

A)   $100.
B)   $200.
C)   $250.
D)   $50.E) A) and D)
F) All of the above

Question 2

Use the following to answer questions: 
-(Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure) Use Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure.If expected disposable income increases,then the:

Accepted Answer

A)   planned aggregate expenditure curve will shift up.
B)   planned aggregate expenditure curve will shift down.
C)   economy will move upwards along the planned aggregate expenditure curve.
D)   economy will move downwards along the planned aggregate expenditure curve.E) None of the above
F) A) and C)

Question 3

In an economy with no taxes or imports,if disposable income decreases by $2 000 and consumption decreases by $1 400,the marginal propensity to save is 0.3.

Accepted Answer

A) True 
 B)False

Question 4

In an economy with no taxes or imports,if disposable income decreases by $2 000 and consumption decreases by $1 500,the multiplier is -4.

Accepted Answer

A) True 
 B)False

Question 5

In a simple,closed economy (no government or foreign sector),if disposable income increases by $500 and $450 is consumed,$50 is saved.

Accepted Answer

A) True 
 B)False

Question 6

If the marginal propensity to save is 0.25 in an economy with no taxes and no imports,the marginal propensity to consume is 0.75.

Accepted Answer

A) True 
 B)False

Question 7

In an economy with no taxes or imports,if disposable income increases by $2 000 and consumption increases by $1 400,the marginal propensity to save is 0.21.

Accepted Answer

A) True 
 B)False

Question 8

The marginal propensity to save plus the marginal propensity to consume must equal:

Accepted Answer

A)   zero.
B)   one.
C)   income.
D)   savings.E) A) and B)
F) A) and C)

Question 9

The decline in the Finnish economy of 2016 is primarily an example of how:

Accepted Answer

A)   too much government regulation is harmful to the economy.
B)   changes in consumer spending can be multiplied through the entire economy.
C)   immigration affects local economies.
D)   high tax rates can decrease the economic activity in an area.E) A) and B)
F) A) and C)

Question 10

Use the following to answer questions: 
-(Figure: Planned Aggregate Expenditures Curve II) Use Figure: Planned Aggregate Expenditures Curve II.The equilibrium level of real GDP in the planned aggregate expenditure model shown in this figure is:

Accepted Answer

A)   $800.
B)   $1 000.
C)   $2 000.
D)   $4 000.E) B) and C)
F) B) and D)

Question 11

If the marginal propensity to save decreases,the multiplier will increase.

Accepted Answer

A) True 
 B)False

Question 12

The multiplier is:

Accepted Answer

A)   1 / (1 - MP
C)  .
B)   MPS / MPC.
C)   1 / (MP
C)  .
D)   1 (1 + MP
C)  .E) A) and B)
F) B) and D)

Question 13

Planned investment spending is inversely related to the interest rate,because fewer projects are profitable at higher interest rates.

Accepted Answer

A) True 
 B)False

Question 14

In a simple,closed economy (no government or foreign sector) ,if the marginal propensity to save decreases,the marginal propensity to consume will:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   fluctuate randomly.E) B) and D)
F) All of the above

Question 15

In the income-expenditure model,inventories are:

Accepted Answer

A)   fixed and therefore provide little insight into the direction of the economy.
B)   a long-run event that aids forecasters in understanding where long-run real GDP is.
C)   constantly changing and provide insight into the future of the economy.
D)   often positive,suggesting that additions to inventory stocks are a long-run goal.E) B) and D)
F) B) and C)

Question 16

In a simple,closed economy (no government or foreign sector) ,if disposable income increases by $1000 and consumption increases by $600,the marginal propensity to save is:

Accepted Answer

A)   $600.
B)   $400.
C)   2.5.
D)   0.40.E) B) and C)
F) None of the above

Question 17

Use the following to answer questions: 
-The digital revolution led to a decline in Finnish paper exports.

Accepted Answer

A) True 
 B)False

Question 18

Planned investment spending is:

Accepted Answer

A)   investment that firms intend to make during a given period.
B)   inventory investment changes.
C)   not considered part of GDP.
D)   dependent only on interest rates.E) B) and D)
F) None of the above

Question 19

A country is closed.It has no government sector,and its aggregate price levels and interest rates are fixed.Furthermore,the marginal propensity to consume is constant and the country's consumption function is as follows: C = 200 + 0.75YD,where YD is disposable income and C is consumption.Assume that planned investment equals 75.What is the income-expenditure equilibrium for this country?

Accepted Answer

A)   $900
B)   $1 100
C)   $275
D)   $200E) A) and D)
F) C) and D)

Question 20

In an economy with no taxes or imports,if the marginal propensity to consume increases,the marginal propensity to save will decrease.

Accepted Answer

A) True 
 B)False

Exam 11: Income and Expenditure

Correct Answer
verified

In a simple,closed economy (no government or foreign sector) ,if the marginal propensity to save decreases,the marginal propensity to consume will:

Correct Answer
verified

The marginal propensity to save plus the marginal propensity to consume must equal:

Correct Answer
verified

If the marginal propensity to save is 0.25 in an economy with no taxes and no imports,the marginal propensity to consume is 0.75.

Correct Answer
verified

In an economy with no taxes or imports,if the marginal propensity to consume increases,the marginal propensity to save will decrease.

Correct Answer
verified

The decline in the Finnish economy of 2016 is primarily an example of how:

Correct Answer
verified

If the marginal propensity to save decreases,the multiplier will increase.

Correct Answer
verified

Use the following to answer questions: -(Figure: Planned Aggregate Expenditures Curve II) Use Figure: Planned Aggregate Expenditures Curve II.Suppose that the consumption function rises by $100.The equilibrium level of real GDP would rise by:

Correct Answer
verified

In an economy with no taxes or imports,if disposable income increases by $2 000 and consumption increases by $1 400,the marginal propensity to save is 0.21.

Correct Answer
verified

Use the following to answer questions: -(Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure) Use Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure.If expected disposable income increases,then the:

Correct Answer
verified

Planned investment spending is inversely related to the interest rate,because fewer projects are profitable at higher interest rates.

Correct Answer
verified

Use the following to answer questions: -(Figure: Planned Aggregate Expenditures Curve II) Use Figure: Planned Aggregate Expenditures Curve II.The equilibrium level of real GDP in the planned aggregate expenditure model shown in this figure is:

Correct Answer
verified

In an economy with no taxes or imports,if disposable income decreases by $2 000 and consumption decreases by $1 500,the multiplier is -4.

Correct Answer
verified

Planned investment spending is:

Correct Answer
verified

Use the following to answer questions: -The digital revolution led to a decline in Finnish paper exports.

Correct Answer
verified

In an economy with no taxes or imports,if disposable income decreases by $2 000 and consumption decreases by $1 400,the marginal propensity to save is 0.3.

Correct Answer
verified

In a simple,closed economy (no government or foreign sector) ,if disposable income increases by $1000 and consumption increases by $600,the marginal propensity to save is:

Correct Answer
verified

The multiplier is:

Correct Answer
verified

In a simple,closed economy (no government or foreign sector),if disposable income increases by $500 and $450 is consumed,$50 is saved.

Correct Answer
verified

In the income-expenditure model,inventories are:

Correct Answer
verified

Exam 11: Income and Expenditure

Correct AnswerverifiedShow Answer

In a simple,closed economy (no government or foreign sector) ,if the marginal propensity to save decreases,the marginal propensity to consume will:

Correct AnswerverifiedShow Answer

The marginal propensity to save plus the marginal propensity to consume must equal:

Correct AnswerverifiedShow Answer

If the marginal propensity to save is 0.25 in an economy with no taxes and no imports,the marginal propensity to consume is 0.75.

Correct AnswerverifiedShow Answer

In an economy with no taxes or imports,if the marginal propensity to consume increases,the marginal propensity to save will decrease.

Correct AnswerverifiedShow Answer

The decline in the Finnish economy of 2016 is primarily an example of how:

Correct AnswerverifiedShow Answer

If the marginal propensity to save decreases,the multiplier will increase.

Correct AnswerverifiedShow Answer

Use the following to answer questions: -(Figure: Planned Aggregate Expenditures Curve II) Use Figure: Planned Aggregate Expenditures Curve II.Suppose that the consumption function rises by $100.The equilibrium level of real GDP would rise by:

Correct AnswerverifiedShow Answer

In an economy with no taxes or imports,if disposable income increases by $2 000 and consumption increases by $1 400,the marginal propensity to save is 0.21.

Correct AnswerverifiedShow Answer

Use the following to answer questions: -(Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure) Use Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure.If expected disposable income increases,then the:

Correct AnswerverifiedShow Answer

Planned investment spending is inversely related to the interest rate,because fewer projects are profitable at higher interest rates.

Correct AnswerverifiedShow Answer

Use the following to answer questions: -(Figure: Planned Aggregate Expenditures Curve II) Use Figure: Planned Aggregate Expenditures Curve II.The equilibrium level of real GDP in the planned aggregate expenditure model shown in this figure is:

Correct AnswerverifiedShow Answer

In an economy with no taxes or imports,if disposable income decreases by $2 000 and consumption decreases by $1 500,the multiplier is -4.

Correct AnswerverifiedShow Answer

Planned investment spending is:

Correct AnswerverifiedShow Answer

Use the following to answer questions: -The digital revolution led to a decline in Finnish paper exports.

Correct AnswerverifiedShow Answer

In an economy with no taxes or imports,if disposable income decreases by $2 000 and consumption decreases by $1 400,the marginal propensity to save is 0.3.

Correct AnswerverifiedShow Answer

In a simple,closed economy (no government or foreign sector) ,if disposable income increases by $1000 and consumption increases by $600,the marginal propensity to save is:

Correct AnswerverifiedShow Answer

The multiplier is:

Correct AnswerverifiedShow Answer

In a simple,closed economy (no government or foreign sector),if disposable income increases by $500 and $450 is consumed,$50 is saved.

Correct AnswerverifiedShow Answer

In the income-expenditure model,inventories are:

Correct AnswerverifiedShow Answer

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