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Refer to the information provided in Figure 8.3 below to answer the questions that follow. Refer to the information provided in Figure 8.3 below to answer the questions that follow. Figure 8.3 -Refer to Figure 8.3. Which of the following statements is false? A) Aggregate saving is negative for all income levels below $400 billion. B) For all aggregate income levels above $200 billion, aggregate consumption is less than aggregate income. C) If consumption is the only expenditure, this economy would be in equilibrium at an aggregate income level of $200 billion. D) Saving is negative at all income levels below $200 billion. Figure 8.3 -Refer to Figure 8.3. Which of the following statements is false?


A) Aggregate saving is negative for all income levels below $400 billion.
B) For all aggregate income levels above $200 billion, aggregate consumption is less than aggregate income.
C) If consumption is the only expenditure, this economy would be in equilibrium at an aggregate income level of $200 billion.
D) Saving is negative at all income levels below $200 billion.

E) C) and D)
F) A) and C)

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Refer to the information provided in Figure 8.12 below to answer the questions that follow. Refer to the information provided in Figure 8.12 below to answer the questions that follow. Figure 8.12 -Refer to Figure 8.12. What is the equation for aggregate expenditure AE<sub>1</sub>? A) AE<sub>1</sub> = 1,000 + 0.5Y. B) AE<sub>1</sub> = 600 + 0.4Y. C) AE<sub>1</sub> = 1,000 + 0.6Y. D) AE<sub>1</sub> = 400 + 0.4Y. Figure 8.12 -Refer to Figure 8.12. What is the equation for aggregate expenditure AE1?


A) AE1 = 1,000 + 0.5Y.
B) AE1 = 600 + 0.4Y.
C) AE1 = 1,000 + 0.6Y.
D) AE1 = 400 + 0.4Y.

E) C) and D)
F) A) and C)

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Refer to the information provided in Figure 8.6 below to answer the questions that follow. Refer to the information provided in Figure 8.6 below to answer the questions that follow. Figure 8.6 -Refer to Figure 8.6. On this graph, 0.1 represents this society's A) MPC. B) MPS. C) saving function. D) consumption function. Figure 8.6 -Refer to Figure 8.6. On this graph, 0.1 represents this society's


A) MPC.
B) MPS.
C) saving function.
D) consumption function.

E) A) and B)
F) C) and D)

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Refer to the information provided in Figure 8.6 below to answer the questions that follow. Refer to the information provided in Figure 8.6 below to answer the questions that follow. Figure 8.6 -Refer to Figure 8.6. The MPS for this saving function is A) 0.4. B) 0.25. C) 0.2. D) 0.1. Figure 8.6 -Refer to Figure 8.6. The MPS for this saving function is


A) 0.4.
B) 0.25.
C) 0.2.
D) 0.1.

E) B) and C)
F) B) and D)

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If you earn additional $500 in disposable income one week for painting your neighbor's house,


A) the total of your consumption and saving will increase by more than $500.
B) the total of your consumption and saving will increase by $500.
C) the total of your consumption and saving will increase by less than $500.
D) your consumption will increase by more than $500, even if your MPS is 0.1.

E) C) and D)
F) B) and D)

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Refer to the information provided in Table 8.2 below to answer the questions that follow. Table 8.2 Refer to the information provided in Table 8.2 below to answer the questions that follow. Table 8.2 -Refer to Table 8.2. Assuming society's MPC is constant, at an aggregate income level of $900, aggregate consumption would be A) $665. B) $910. C) $1,200. D) $1,750. -Refer to Table 8.2. Assuming society's MPC is constant, at an aggregate income level of $900, aggregate consumption would be


A) $665.
B) $910.
C) $1,200.
D) $1,750.

E) B) and C)
F) A) and D)

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Refer to the information provided in Figure 8.12 below to answer the questions that follow. Refer to the information provided in Figure 8.12 below to answer the questions that follow. Figure 8.12 -Refer to Figure 8.12. Suppose the economy's aggregate expenditure line is AE<sub>2</sub>. A $10 million increase in planned investment causes aggregate equilibrium output to increase to A) $1,440.5 million. B) $1,510 million. C) $1,516.7 million. D) $1,525 million. Figure 8.12 -Refer to Figure 8.12. Suppose the economy's aggregate expenditure line is AE2. A $10 million increase in planned investment causes aggregate equilibrium output to increase to


A) $1,440.5 million.
B) $1,510 million.
C) $1,516.7 million.
D) $1,525 million.

E) A) and B)
F) None of the above

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C

Refer to the information provided in Figure 8.9 below to answer the questions that follow. Refer to the information provided in Figure 8.9 below to answer the questions that follow. Figure 8.9 -Refer to Figure 8.9. At aggregate output level $300 million, there is a A) $75 million unplanned increase in inventories. B) $75 million unplanned decrease in inventories. C) $100 million decrease in inventories. D) $100 million increase in inventories. Figure 8.9 -Refer to Figure 8.9. At aggregate output level $300 million, there is a


A) $75 million unplanned increase in inventories.
B) $75 million unplanned decrease in inventories.
C) $100 million decrease in inventories.
D) $100 million increase in inventories.

E) B) and C)
F) None of the above

Correct Answer

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A

Refer to the information provided in Figure 8.1 below to answer the questions that follow. Refer to the information provided in Figure 8.1 below to answer the questions that follow. Figure 8.1 -Refer to Figure 8.1. The MPS for this household is ________ and the MPC is ________. A) 0.4; 0.6 B) 0.5; 0.5 C) 0.2; 0.8 D) 0.3; 0.7 Figure 8.1 -Refer to Figure 8.1. The MPS for this household is ________ and the MPC is ________.


A) 0.4; 0.6
B) 0.5; 0.5
C) 0.2; 0.8
D) 0.3; 0.7

E) A) and B)
F) A) and C)

Correct Answer

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Negative saving is represented by the area A) DBCY<sub>2</sub>. B) DBAY<sub>1</sub>. C) DBAD. D) ACY<sub>2</sub>Y<sub>1</sub>. Figure 8.2 -Refer to Figure 8.2. Negative saving is represented by the area


A) DBCY2.
B) DBAY1.
C) DBAD.
D) ACY2Y1.

E) B) and C)
F) B) and D)

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In macroeconomics, the point at which planned aggregate expenditures equals aggregate output


A) is the equilibrium point.
B) is where saving is negative.
C) is only achieved if net exports are zero.
D) only occurs when the MPC is equal to the MPS.

E) B) and D)
F) B) and C)

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Refer to the information provided in Figure 8.9 below to answer the questions that follow. Refer to the information provided in Figure 8.9 below to answer the questions that follow. Figure 8.9 -Refer to Figure 8.9. At aggregate output level $100 million, there is a A) $75 million unplanned increase in inventories. B) $75 million unplanned decrease in inventories. C) $100 million decrease in inventories. D) $100 million increase in inventories. Figure 8.9 -Refer to Figure 8.9. At aggregate output level $100 million, there is a


A) $75 million unplanned increase in inventories.
B) $75 million unplanned decrease in inventories.
C) $100 million decrease in inventories.
D) $100 million increase in inventories.

E) B) and C)
F) A) and C)

Correct Answer

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


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

E) B) and C)
F) All of the above

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Refer to the information provided in Figure 8.10 below to answer the questions that follow. Refer to the information provided in Figure 8.10 below to answer the questions that follow. Figure 8.10 -Refer to Figure 8.10. There is a $100 million unplanned decrease in inventories at an aggregate output level of A) $500 million. B) $1,000 million. C) $1,200 million. D) > $1,200 million. Figure 8.10 -Refer to Figure 8.10. There is a $100 million unplanned decrease in inventories at an aggregate output level of


A) $500 million.
B) $1,000 million.
C) $1,200 million.
D) > $1,200 million.

E) A) and D)
F) None of the above

Correct Answer

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If the MPS is 0.20, the MPC is


A) -0.20.
B) 0.40.
C) 0.80.
D) 1.20.

E) None of the above
F) C) and D)

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Suppose Jerry's MPC increases, and the vertical intercept of the consumption function does not change. At income Y<sub>1</sub>, Jerry's A) consumption will be greater than his income. B) consumption will be less than his income. C) saving will be zero. D) all of the above Figure 8.2 -Refer to Figure 8.2. Suppose Jerry's MPC increases, and the vertical intercept of the consumption function does not change. At income Y1, Jerry's


A) consumption will be greater than his income.
B) consumption will be less than his income.
C) saving will be zero.
D) all of the above

E) B) and C)
F) A) and B)

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Actual investment includes unplanned changes in inventory.

A) True
B) False

Correct Answer

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Refer to the information provided in Table 8.8 below to answer the questions that follow. Table 8.8 Refer to the information provided in Table 8.8 below to answer the questions that follow. Table 8.8 -Refer to Table 8.8. Which of the following statements is false? A) At an output level $4,000 million, there is a $400 million unplanned inventory decrease. B) If aggregate output equals $4,000 million, then aggregate saving equals $1000 million. C) The MPC for this economy is 0.8. D) At an output level of $3,000 million, there is a $600 million unplanned inventory decrease. -Refer to Table 8.8. Which of the following statements is false?


A) At an output level $4,000 million, there is a $400 million unplanned inventory decrease.
B) If aggregate output equals $4,000 million, then aggregate saving equals $1000 million.
C) The MPC for this economy is 0.8.
D) At an output level of $3,000 million, there is a $600 million unplanned inventory decrease.

E) B) and C)
F) A) and B)

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Assume that in Jabara, planned investment is $30 billion, but actual investment is $45 billion. Unplanned inventory investment is


A) -$75 billion.
B) -$15 billion.
C) $15 billion.
D) $75 billion.

E) A) and D)
F) None of the above

Correct Answer

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Refer to the information provided in Figure 8.10 below to answer the questions that follow. Refer to the information provided in Figure 8.10 below to answer the questions that follow. Figure 8.10 -Refer to Figure 8.10. At an aggregate output level of $500 million, there is a A) $100 million unplanned increase in inventories. B) $175 million unplanned decrease in inventories. C) $0 change in unplanned inventories. D) $100 million unplanned decrease in inventories. Figure 8.10 -Refer to Figure 8.10. At an aggregate output level of $500 million, there is a


A) $100 million unplanned increase in inventories.
B) $175 million unplanned decrease in inventories.
C) $0 change in unplanned inventories.
D) $100 million unplanned decrease in inventories.

E) B) and D)
F) None of the above

Correct Answer

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D

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