Macroeconomics Final Exam

If the marginal propensity to consume is .9, and income increases from 10,000 to 11000, by how much does consumption increase

$900

If disposable income increases from $250 to $300 and saving increases from $40 to $50, how much is the average propensity to save when the disposable income is $300

0.167= 50/300

5. The 45-degree line in the Keynesian model represents a set of points where _____ equals _____. A) disposable income; consumption B) saving; investment C) disposable income; saving D) saving; consumption

A) disposable income; consumption

12. Which of the following items is NOT a determinant of aggregate demand? A) government spending B) consumption C) investment D) government saving

D) Government saving

At high domestic price levels compared to other countries, Americans:

buy more imported goods

Along the 45-degree in the graph of consumption and disposable income:

consumption is equal to disposable income

A rising aggregate price level _____ an economy's interest rates and therefore _____ output demanded. a)reduces; reduces b)reduces; increases c)increases; increases d)increases; reduces

d)increases;reduces

When home values collapsed in the period that began in 2008, it reduced many Americans':

household wealth

Which of the following events causes a decrease in aggregate demand

increase in taxes

Classical economists claim that ______ is the primary determinant of savings, and Keynes claimed that _______ is the primary determinant of saving

interest rate, income

Increased consumer confidence will shift the aggregate demand curve to the _____ and _____ output demanded. right; decrease left; decrease left; increase right; increase

right; increase

Simple Keynesian Model ignores

the government and foreign sector