macro exam 3 chapter 10 hmwk questions

which of the following would shift the saving schedule upward? a) a dec in wealth b) a dec in real interest rates c) consumer expectations of rising prices of products d) increased optimism about future incomes

a

if households do not spend any extra income they receive but instead save the entire extra amount, then the multiplier will be zero:

false

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935248990950/image058.png Which of the following would shift the investment demand curve from ID1 to ID2?

higher expected rates of return on investment

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935248990950/image031.png Refer to the given data. the marginal propensity to save:

is highest in economy (1)

the most important determinant of consumption and saving is the:

level of income

the practical significance of the multiplier is that it:

magnifies initial changes in spending into larger changes in GDP

one can determine the amount of the any level of total income that is consumed by:

multiplying total income by the APC

in contrast to investment, consumption is:

relatively stable

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935248990950/image040.png The break-even level of income is:

$150

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935248990950/image013.png refer to the given data. if DI was $325, we would expect consumption to be:

$305

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935658854984/image025.png Refer to the consumption schedule above. if DI is $42000, then saving is:

$6000

if DI increases from $912 to $927 billion and MPC=0.6, then consumption will increase by:

$9 billion

if real interest rate in the economy is 'i' & the expected rate of return from additional investment is 'r', then more investment will be forthcoming when:

'r' is greater than 'i'

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935248990950/image024.png If plotted on a graph, the slope of the saving schedule would be:

.20

with an MPS of 0.3, the MPC will be:

1-0.3

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935658854984/image002.png The break-even level of income would be at income level:

2

an $18 billion increase in spending creates $18 billion of new income in the first pound of the multiplier process & $13.5 billion in the 2nd round. the multiplier in economy is:

4

the fraction, or percentage, of total income which is saved is called the:

APS

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935658854984/image031.png Which consumption schedules correspond to each other across different levels of DI. if, in figure A, consumption shifts from A2 to A3 bc of a change in taxes, then in figure B line:

B2 will shift to B3

https://mycourses.msstate.edu/courses/1/EC-2113-02-201610/ppg/138935658854984/image004.png Disposable income equals consumption at point:

D

the multiplier effect indicates that:

a change in spending will change aggregate income by a larger amount

the consumption schedule shows:

amounts households intend to consume at various possible levels to aggregate increase

given the expected rate of return on all possible investment opportunities in the economy:

an increase in the real rate of interest will reduce the level of investment

as DI decreases, consumption:

and saving both decrease

the fraction, or percentage, of total income which is consumed is called the:

average propensity to consume

which of the following will not cause the consumption schedule to shift? a) a sharp inc in amount of wealth held by households. b) a change in consumer incomes. c) the expectation of a recession. d) a growing expectation that consumer durables will be in short supply.

b

which of the following will not tend to shift the consumption schedule upward? a) a currently small stock of durable goods in the possession of consumers. b) the expectation of a future decline in the CPI. c) a currently low level of household debt. d) the expectation of future shortages of essential consumer goods.

b

a rightward shift of the investment demand curve might be caused by:

businesses planning to increase their stock of inventories

the multiplier is defined as:

change in GDP/ initial change in spending

the MPC can be defined as the fraction of a:

change in income that is spent

if matts DI increases from $4000 to $4500 & his level of saving increases from $200 to $325, it may be concluded that his marginal propensity to:

consume is .75

dissaving occurs where:

consumption exceeds income

a decline in disposable income:

decreases consumption by moving downward along a specific consumption schedule

the amount of consumption in an economy correlates:

directly with the level of DI

personal saving is equal to:

disposable income minus consumption

1+ MPS=MPC:

false

the greater is the marginal propensity to consume, the:

smaller is the marginal propensity to save

if a families MPC is 0.7, it means that the family is:

spending seven-tenths of an increment to its income

if there is a decrease in disposable income in an economy, then:

the APC rises & the APS falls

the investment demand curve suggests:

there is an inverse relationship between the real rate of interest and the level of investment spending

if the real interest rate increases:

there will be a movement upward along the investment demand curve

the greater the MPC, the greater the multiplier:

true