Question 1

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.  Refer to the above data.At an income level of $40 billion, the average propensity to consume:

Accepted Answer

A)  is highest in economy (1) .
B)  is highest in economy (2) .
C)  is highest in economy (3) .
D)  cannot be determined from the data given.E) All of the above
F) None of the above

Question 2

Which of the following is likely to be an effect of an increase in acquisition, maintenance, and operating costs 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) A) and B)
F) A) and C)

Question 3

If the consumption schedule is linear, then the:

Accepted Answer

A)  saving schedule will also be linear.
B)  MPS will decline as income rises.
C)  MPC will decline as income rises.
D)  APC will be constant at all levels of income.E) A) and B)
F) A) and C)

Question 4

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the largest multiplier?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) A) and D)
F) A) and C)

Question 5

The business investment is not based on the expected returns.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is likely to be an effect of lower business taxes 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) C) and D)

Question 7

Other things equal, a 10 percent decrease in corporate income taxes will:

Accepted Answer

A)  decrease the market price of real capital goods.
B)  have no effect on the location of the investment-demand curve.
C)  shift the investment-demand curve to the right.
D)  shift the investment-demand curve to the left.E) A) and B)
F) A) and C)

Question 8

Refer to the data below.When plotted on a graph, the vertical intercept of the consumption schedule in this economy is _____ and the slope is _____.

Accepted Answer

A)  -2; 1
B)  $2; .18
C)  $100; .5
D)  $2; .9E) C) and D)
F) None of the above

Question 9

The immediate determinants of investment spending are the:

Accepted Answer

A)  expected rate of return on capital goods and the real interest rate.
B)  level of saving and the real interest rate.
C)  marginal propensity to consume and the real interest rate.
D)  interest rate and the expected price level.E) A) and D)
F) None of the above

Question 10

The MPC for an economy is:

Accepted Answer

A)  the slope of the consumption schedule or line.
B)  the slope of the savings schedule or line.
C)  1 divided by the slope of the consumption schedule or line.
D)  1 divided by the slope of the savings schedule or line.E) A) and C)
F) None of the above

Question 11

A specific investment will be undertaken if the expected rate of returns, r, exceeds the interest rate, i.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the consumption schedules shown in the above diagram for economies 1, 2, 3, and 4.The MPC is greatest in economy:

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) B) and C)
F) A) and B)

Question 13

The initial costs of capital goods, and the estimated costs of operating and maintaining those goods, affect the expected rate of return on investment.

Accepted Answer

A) True 
 B)False

Question 14

At the point where the consumption schedule intersects the 45-degree line:

Accepted Answer

A)  the MPC is 1.00.
B)  the APC is 1.00.
C)  saving is equal to consumption.
D)  the economy is in equilibrium.E) B) and C)
F) A) and C)

Question 15

Which of the following will not tend to shift the consumption schedule upward?

Accepted Answer

A)  a currently small stock of durable goods in the possession of consumers
B)  the expectation of a future decline in the consumer price index
C)  a currently low level of household debt.
D)  the expectation of future shortages of essential consumer goods.E) A) and B)
F) None of the above

Question 16

Which of the following is a non-income factor affecting consumption?

Accepted Answer

A)  Wealth
B)  Real interest rates
C)  Borrowing
D)  All the answer choices are correct.E) A) and C)
F) A) and B)

Question 17

The ________ of the late 1990s was an example of the wealth effect, while _______ of 2008 was an example of the reverse wealth effect.

Accepted Answer

A)  declining stock values; skyrocketing market prices.
B)  skyrocketing stock values; plunging market prices.
C)  declining market prices; plunging market prices.
D)  tech bust; real estate boom.E) A) and B)
F) A) and C)

Question 18

Which of the following is likely to happen as disposable income increases?

Accepted Answer

A)  Savings and consumption both increase.
B)  Savings increases, and consumption decreases.
C)  Savings decreases, and consumption increases.
D)  Savings and consumption both decrease.E) All of the above
F) C) and D)

Question 19

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the highest marginal propensity to consume?

Accepted Answer

A)  1
B)  2
C)  3
D)  4E) B) and C)
F) B) and D)

Question 20

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) All of the above

Exam 10: Part B: Basic Macroeconomic Relationships

Which of the following will not tend to shift the consumption schedule upward?

Correct Answer
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Refer to the data below.When plotted on a graph, the vertical intercept of the consumption schedule in this economy is _ and the slope is _.

Correct Answer
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Which of the following is a non-income factor affecting consumption?

Correct Answer
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The immediate determinants of investment spending are the:

Correct Answer
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Correct Answer
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The __ of the late 1990s was an example of the wealth effect, while _ of 2008 was an example of the reverse wealth effect.

Correct Answer
verified

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the largest multiplier?

Correct Answer
verified

Other things equal, a 10 percent decrease in corporate income taxes will:

Correct Answer
verified

Which of the following is likely to be an effect of an increase in acquisition, maintenance, and operating costs on the investment demand curve of an economy?

Correct Answer
verified

The business investment is not based on the expected returns.

Correct Answer
verified

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the highest marginal propensity to consume?

Correct Answer
verified

A specific investment will be undertaken if the expected rate of returns, r, exceeds the interest rate, i.

Correct Answer
verified

If the consumption schedule is linear, then the:

Correct Answer
verified

Refer to the consumption schedules shown in the above diagram for economies 1, 2, 3, and 4.The MPC is greatest in economy:

Correct Answer
verified

The initial costs of capital goods, and the estimated costs of operating and maintaining those goods, affect the expected rate of return on investment.

Correct Answer
verified

Which of the following is likely to happen as disposable income increases?

Correct Answer
verified

Which of the following is likely to be an effect of lower business taxes on the investment demand curve of an economy?

Correct Answer
verified

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.At an income level of $40 billion, the average propensity to consume:

Correct Answer
verified

At the point where the consumption schedule intersects the 45-degree line:

Correct Answer
verified

The MPC for an economy is:

Correct Answer
verified

Exam 10: Part B: Basic Macroeconomic Relationships

Which of the following will not tend to shift the consumption schedule upward?

Correct AnswerverifiedShow Answer

Refer to the data below.When plotted on a graph, the vertical intercept of the consumption schedule in this economy is _____ and the slope is _____.

Correct AnswerverifiedShow Answer

Which of the following is a non-income factor affecting consumption?

Correct AnswerverifiedShow Answer

The immediate determinants of investment spending are the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The ________ of the late 1990s was an example of the wealth effect, while _______ of 2008 was an example of the reverse wealth effect.

Correct AnswerverifiedShow Answer

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the largest multiplier?

Correct AnswerverifiedShow Answer

Other things equal, a 10 percent decrease in corporate income taxes will:

Correct AnswerverifiedShow Answer

Which of the following is likely to be an effect of an increase in acquisition, maintenance, and operating costs on the investment demand curve of an economy?

Correct AnswerverifiedShow Answer

The business investment is not based on the expected returns.

Correct AnswerverifiedShow Answer

The above figure shows the saving schedules for economies 1, 2, 3, and 4.Which economy has the highest marginal propensity to consume?

Correct AnswerverifiedShow Answer

A specific investment will be undertaken if the expected rate of returns, r, exceeds the interest rate, i.

Correct AnswerverifiedShow Answer

If the consumption schedule is linear, then the:

Correct AnswerverifiedShow Answer

Refer to the consumption schedules shown in the above diagram for economies 1, 2, 3, and 4.The MPC is greatest in economy:

Correct AnswerverifiedShow Answer

The initial costs of capital goods, and the estimated costs of operating and maintaining those goods, affect the expected rate of return on investment.

Correct AnswerverifiedShow Answer

Which of the following is likely to happen as disposable income increases?

Correct AnswerverifiedShow Answer

Which of the following is likely to be an effect of lower business taxes on the investment demand curve of an economy?

Correct AnswerverifiedShow Answer

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.At an income level of $40 billion, the average propensity to consume:

Correct AnswerverifiedShow Answer

At the point where the consumption schedule intersects the 45-degree line:

Correct AnswerverifiedShow Answer

The MPC for an economy is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Refer to the data below.When plotted on a graph, the vertical intercept of the consumption schedule in this economy is _ and the slope is _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The __ of the late 1990s was an example of the wealth effect, while _ of 2008 was an example of the reverse wealth effect.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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