macro unit 3 quiz

Which of the following will result in a rightward shift of the aggregate demand curve? A. An increase in the income tax rate B. An increase in exports C. A decrease in the price level D. A decrease in household income E. A decrease in government spending

B An increase in exports

Assume the marginal propensity to consume is 0.8. How will a decrease in taxes of $100 billion and a decrease in government spending of $100 billion affect aggregate demand? A. Aggregate demand will decrease by $900 billion. B. Aggregate demand will decrease by $500 billion. C. Aggregate demand will decrease by $400 billion. D. Aggregate demand will decrease by $100 billion. E. Aggregate demand will not change.

D. Aggregate demand will decrease by $100 billion.

Based on the data on savings and disposable income in the table above, what are the income tax multiplier and the spending multiplier? A. The tax multiplier is −−0.1 and the spending multiplier is 0.9. B. The tax multiplier is 0.2 and the spending multiplier is −0.8. C. The tax multiplier is −2 and the spending multiplier is 8. D. The tax multiplier is −9 and the spending multiplier is 10. E. The tax multiplier is 10 and the spending multiplier is −1.

D. The tax multiplier is −9 and the spending multiplier is 10.

Which of the following is a reason why the aggregate demand curve is downward sloping? A. A higher price level decreases savings. B. A higher price level decreases interest rates. C. A higher price level increases exports. D. A higher price level decreases imports. E. A higher price level decreases real wealth.

E. A higher price level decreases real wealth.

A decrease in the price level will produce a movement between which of the following two points on the diagram above? A. From point X to point Y B. From point W to point Y C. From point W to point Z D. From point Z to point Y E. From point Y to point Z

E. From point Y to point Z

Based on the level of savings and disposable income data in the table above, which of the following must be true? A. The marginal propensity to save is 0.2. B. The marginal propensity to save is 0.9. C. When disposable income is $12,000, consumption is $10,000. D. The marginal propensity to consume is 0.1. E. The marginal propensity to consume is 0.9.

E. The marginal propensity to consume is 0.9.