Exam 3 Econ

If disposable income is $3,000 and saving is $1,200, how much is consumption?

$1,800

If disposable income is $3,000 and saving is $1,200, how much is the average propensity to consume?

.6

If income rises from $10,000 to $20,000 and savings increases from $9,000 to $16,000, then the marginal propensity to save is:

.7

If the Bureau of Economic Analysis reports that the annualized U.S. growth rate was 2.5% for the second quarter, then the actual growth rate from the first quarter to the second quarter was

0.625%.

Rocky Gap Furniture hires ten employees working eight hours each to produce 100 rocking chairs. What is the productivity of these workers?

1.25 chairs per hour

If an economy's GDP will double in 25 years, then its growth rate must be about:

2.8%

If the growth rate in an economy is 3.5%, then its GDP will double in about

20 Years

Suppose the marginal propensity to consume in Economia is 0.75. People feel increasing confidence in their economy and spend $5 billion more on vacations. Equilibrium income will rise by:

20 billion

If the marginal propensity to save is 0.25, the multiplier is:

4

If output equals A × (5K + 2L), what is output if A equals 2,000, capital equals 10, and labor equals 100?

500,000

Infrastructure is

A country's public capital

Which of the following events will NOT cause the aggregate demand curve to shift?

A rise in the aggregate price level causes a decline in exports.

Which of the following equations is correct?

AE = C + I + G + (X - M)

In the Keynesian macroeconomic equilibrium:

AE = Y and S = I.

____ inflation occurs when a supply shock reduces aggregate supply

Cost-push

____ inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output and the price level rises.

Demand-pull

Long-run growth is MOST likely to be achieved by promoting:

Development of new technologies

Which of the following events causes a decrease in aggregate demand?

Increase in taxes

In the long run, attempts to expand beyond an economy's natural rate of unemployment tend to result in:

Increased Inflation

As income increases, consumption ____

Increases at a slower rate

Investment spending

Tends to be volatile

Which of the following best illustrates the wealth effect?

The Jones family has $50,000 in a bank. Prices in the market rose dramatically, diminishing their purchasing power by $50,000.

Which of the following did classical economists believe would happen if the economy experienced a downturn?

The economy would self-correct

The real GDP that firms will produce at varying price levels is:

aggregate supply.

According to the textbook, what brought the United States out of the Great Depression?

an increase in spending on World War II

A(n) _____ in government spending, a _____ domestic currency, and _____ interest rates will shift a country's aggregate demand to the left.

decrease; stronger; higher

The aggregate demand curve slopes _____ and has _____ on the vertical axis

downward; the price level

The capital-to-labor ratio is

high in rich countries.

As a general rule, the more capital employed with workers, the _____ their productivity and the _____ their earnings.

higher; higher

An increase in the incomes of the countries that purchase U.S.-made products will cause a(n) _____ in the _____ U.S.-made products

increase; aggregate demand for

A(n) _____ in oil prices and a(n) _____ in taxes will shift short-run aggregate supply to the left.

increase; increase

. The _____ effect is a reason for the negative slope of the aggregate demand curve.

interest rate

A shift to the _____ of the _____ curve would cause the price level and employment to decrease

left; aggregate demand

Physical capital includes:

manufactured products that are used to produce other goods and services.

The reason business investment is sensitive to interest rates is that:

most funds used for investment are borrowed, so firms incur an interest charge.

Which is NOT a source of productivity growth

moving resources from production to pension benefits

If the U.S. aggregate price level falls

net exports rise

Because of the wealth effect, a rising aggregate price level _____ the purchasing power of wealth and therefore _____ output demanded

reduces; reduces

. Increased consumer confidence will shift the aggregate demand curve to the _____ and _____ output demanded.

right; increase

1. Improvements in production capacity will:

shift the PPF outward

If a pill is discovered that allows people to work twice as fast as they would ordinarily work, then the aggregate supply curve will:

shift to the right

Economic Growth is shown as a

shift to the right of the long-run aggregate supply curve.

A production function

shows the output that is produced using different combinations of inputs combined with existing technology.

If a country's population increases at a higher rate than the growth in its real GDP:

the standard of living in the country has declined.

Which of the following statements is NOT true?

Economic growth always leads to a more equitable distribution of income

If consumption decreases from $600 billion to $575 billion and the marginal propensity to consume is 0.8, then equilibrium income will:

Fall by 125 billion

. Economic growth is most accurately measured using:

Real GDP per capita

In the Keynesian model, the price level is _____; in the aggregate demand and supply model, the price level is _____.

fixed; flexible

_____ is the change in consumption associated with a change in income

The marginal propensity to consume