Question 1

Refer to the above diagram.The marginal propensity to save is equal to:

Accepted Answer

A)  CD/0D.
B)  0B/0A.
C)  0D/0D.
D)  CD/BD.E) A) and B)
F) A) and D)

Question 2

Which of the following is likely to be an effect of an increase in planned inventory on the investment demand curve of an economy?

Accepted Answer

A)  A leftward shift of the curve
B)  A rightward shift of the curve
C)  An upward movement along the curve
D)  A downward movement along the curveE) B) and C)
F) A) and D)

Question 3

Suppose a family's consumption exceeds its disposable income.This means that its:

Accepted Answer

A)  MPC is greater than 1.
B)  MPS is negative.
C)  APC is greater than 1.
D)  APS is positive.E) A) and C)
F) B) and C)

Question 4

If a consumption schedule shifts upward, this means that the:

Accepted Answer

A)  MPC has increased.
B)  MPS has decreased.
C)  APC is now higher at each level of disposable income.
D)  APC is now lower at each level of disposable income.E) All of the above
F) C) and D)

Question 5

The consumption schedule is such that:

Accepted Answer

A)  both the APC and the MPC increase as income rises.
B)  the APC is constant and the MPC declines as income rises.
C)  the MPC is constant and the APC declines as income rises.
D)  the MPC and APC must be equal at all levels of income.E) None of the above
F) C) and D)

Question 6

The numerical value of the multiplier will be smaller the:

Accepted Answer

A)  larger the average propensity to consume.
B)  larger the slope of the saving schedule.
C)  larger the slope of the consumption schedule.
D)  smaller the slope of the saving schedule.E) A) and D)
F) B) and C)

Question 7

The MPC can be defined as the fraction of a:

Accepted Answer

A)  change in income which is not spent.
B)  change in income which is spent.
C)  given total income which is not consumed.
D)  given total income which is consumed.E) A) and D)
F) B) and C)

Question 8

If the consumption schedule shifts upward and the shift was not caused by a tax change, the saving schedule:

Accepted Answer

A)  will not shift.
B)  may shift either upward or downward.
C)  will shift downward.
D)  will also shift upward.E) A) and B)
F) A) and C)

Question 9

As aggregate income decreases, the APC:

Accepted Answer

A)  and APS will both increase.
B)  will decrease, but the APS will increase.
C)  will increase, but the APS will decrease.
D)  and APS will both decrease.E) A) and B)
F) All of the above

Question 10

Assume there are no prospective investment projects (I)  which will yield an expected rate of return (r)  of 25 percent or more, but that there are $5 billion of investment opportunities with an expected rate of return between 20 and 25 percent, an additional $5 billion between 15 and 20 percent, and so on.The investment-demand curve for this economy is:

Accepted Answer

A)  Column A
B)  Column B
C)  Column C
D)  Column DE) A) and B)
F) B) and D)

Question 11

The slope of the saving schedule measures the size of the multiplier.

Accepted Answer

A) True 
 B)False

Question 12

Assume the saving schedule for a private closed economy is S = -20 + 0.2Y, where S is saving and Y is gross domestic product.The multiplier for this economy:

Accepted Answer

A)  is 3.
B)  is 4.
C)  is 5.
D)  cannot be determined from the information given.E) A) and B)
F) A) and D)

Question 13

If the MPC is.6, the simple multiplier will be:

Accepted Answer

A)  4.0.
B)  6.0.
C)  2.5.
D)  1.67.E) None of the above
F) C) and D)

Question 14

Assume that for the entire business sector of a private closed economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent; another $15 with an expected rate of return of 15-20 percent; and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.  Which of the lines on the above diagram represents these data?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and B)
F) None of the above

Question 15

The 45-degree line on a chart relating consumption and income shows:

Accepted Answer

A)  all points where the MPC is constant.
B)  all points at which saving and income are equal.
C)  all the points at which consumption and income are equal.
D)  the amounts households will plan to save at each possible level of income.E) A) and D)
F) A) and C)

Question 16

The practical significance of the multiplier is that it:

Accepted Answer

A)  brings about an equality of planned investment and saving.
B)  magnifies relatively small initial changes in spending into larger changes in GDP.
C)  keeps inflation within tolerable limits.
D)  helps to stabilize the economy.E) None of the above
F) A) and D)

Question 17

1 + MPS = MPC.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the above data.The slope of the saving schedule is:

Accepted Answer

A)  .80.
B)  .10.
C)  .20.
D)  .15.E) A) and B)
F) A) and C)

Question 19

The following table illustrates the multiplier process in a private closed economy:  Refer to the above table.The multiplier in this economy is:

Accepted Answer

A)  2
B)  4
C)  5
D)  10E) B) and C)
F) A) and D)

Question 20

The above table reflects a(n) :

Accepted Answer

A)  interest rate schedule.
B)  demand-for-money schedule.
C)  investment-demand schedule.
D)  profit schedule.E) A) and B)
F) A) and C)

Exam 10: B: Basic Macroeconomic Relationships

The above table reflects a(n) :

Correct Answer
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1 + MPS = MPC.

Correct Answer
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The consumption schedule is such that:

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The MPC can be defined as the fraction of a:

Correct Answer
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If the consumption schedule shifts upward and the shift was not caused by a tax change, the saving schedule:

Correct Answer
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Refer to the above diagram.The marginal propensity to save is equal to:

Correct Answer
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The slope of the saving schedule measures the size of the multiplier.

Correct Answer
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Refer to the above data.The slope of the saving schedule is:

Correct Answer
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The 45-degree line on a chart relating consumption and income shows:

Correct Answer
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The following table illustrates the multiplier process in a private closed economy: Refer to the above table.The multiplier in this economy is:

Correct Answer
verified

If a consumption schedule shifts upward, this means that the:

Correct Answer
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If the MPC is.6, the simple multiplier will be:

Correct Answer
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Assume the saving schedule for a private closed economy is S = -20 + 0.2Y, where S is saving and Y is gross domestic product.The multiplier for this economy:

Correct Answer
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The numerical value of the multiplier will be smaller the:

Correct Answer
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Suppose a family's consumption exceeds its disposable income.This means that its:

Correct Answer
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The practical significance of the multiplier is that it:

Correct Answer
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As aggregate income decreases, the APC:

Correct Answer
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Which of the following is likely to be an effect of an increase in planned inventory on the investment demand curve of an economy?

Correct Answer
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Exam 10: B: Basic Macroeconomic Relationships

The above table reflects a(n) :

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1 + MPS = MPC.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The consumption schedule is such that:

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The MPC can be defined as the fraction of a:

Correct AnswerverifiedShow Answer

If the consumption schedule shifts upward and the shift was not caused by a tax change, the saving schedule:

Correct AnswerverifiedShow Answer

Refer to the above diagram.The marginal propensity to save is equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The slope of the saving schedule measures the size of the multiplier.

Correct AnswerverifiedShow Answer

Refer to the above data.The slope of the saving schedule is:

Correct AnswerverifiedShow Answer

The 45-degree line on a chart relating consumption and income shows:

Correct AnswerverifiedShow Answer

The following table illustrates the multiplier process in a private closed economy: Refer to the above table.The multiplier in this economy is:

Correct AnswerverifiedShow Answer

If a consumption schedule shifts upward, this means that the:

Correct AnswerverifiedShow Answer

If the MPC is.6, the simple multiplier will be:

Correct AnswerverifiedShow Answer

Assume the saving schedule for a private closed economy is S = -20 + 0.2Y, where S is saving and Y is gross domestic product.The multiplier for this economy:

Correct AnswerverifiedShow Answer

The numerical value of the multiplier will be smaller the:

Correct AnswerverifiedShow Answer

Suppose a family's consumption exceeds its disposable income.This means that its:

Correct AnswerverifiedShow Answer

The practical significance of the multiplier is that it:

Correct AnswerverifiedShow Answer

As aggregate income decreases, the APC:

Correct AnswerverifiedShow Answer

Which of the following is likely to be an effect of an increase in planned inventory on the investment demand curve of an economy?

Correct AnswerverifiedShow Answer

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