Macro exam 2
If the value of the MPC is 0.6 and real GDP falls by $25, this was caused by a decrease in initial spending of
$10
Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by:
$20 billion
GDP C 140 150 180 180 220 210 260 240 300 270 Refer to the data. If gross investment is $10 at all levels of GDP, the equilibrium GDP will be:
$220.
Disposable Income Consumption 200 205 225 225 250 245 275 265 300 285 Refer to the given data. If disposable income was $325, we would expect consumption to be:
$305.
Assume the MPC is .8. If government were to impose $50 billion of new taxes on household income, consumption spending would initially decrease by:
$40 billion.
Disposable income Consumption 300 310 350 340 400 370 450 400 500 430 Refer to the data above. If disposable income is $550, we would expect consumption to be:
$460
Suppose that the level of GDP increased by $100 billion in a private closed economy where the marginal propensity to consume is .5. Aggregate expenditures must have increased by:
$50 billion.
Disposable income Consumption 0 8 80 80 160 152 240 224 320 296 400 368 Refer to the data above. At the $320 billion level of disposable income, the average propensity to save is:
.075
Disposable income Consumption 0 8 80 80 160 152 240 224 320 296 400 368 Refer to the data above. The marginal propensity to save in this economy is:
.1
Disposable Income Consumption 200 205 225 225 250 245 275 265 300 285 Refer to the given data. The marginal propensity to consume is:
.80
Disposable income Consumption 0 8 80 80 160 152 240 224 320 296 400 368 Refer to the data above. If plotted on a graph, the slope of the consumption schedule would be:
.9
If C spending increases from $358 to $367 when DI increases from $412 to $427, it can be concluded that the MPC is
0.6
If, in an economy, a $200 billion increase in consumption spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the marginal propensity to consume and the multiplier are, respectively:
0.8 and 5.0
With a marginal propensity to save of .4, the marginal propensity to consume will be:
1.0 minus .4.
As disposable income goes up, the:
average propensity to consume falls.
In a private closed economy, when aggregate expenditures exceed GDP:
business inventories will fall.
Dissaving occurs where:
consumption exceeds income.
In a simple economy, if real GDP is $275, C is $250 and I is $30, real GDP
will tend to increase
If a lump-sum income tax of $25 billion is levied and the MPS is .20, the:
consumption schedule will shift downward by $20 billion.
Higher real rates of interest are likely to
decrease C and increase S
A decline in disposable income:
decreases consumption by moving downward along a specific consumption schedule
Disposable Income Consumption 200 205 225 225 250 245 275 265 300 285 Refer to the given data. At the $200 level of disposable income:
dissaving is $5.
In the aggregate expenditures model, it is assumed that investment:
does not change when real GDP changes.
When the economy's real GDP exceeds its equilibrium real GDP,
there is unplanned I
If in an economy a $150 increase in I creates a $150 of new income in the first round of the multiplier process and $105 in the second round, the multiplier and the MPC will be, respectively,
3.33 and 0.7
If there was a change in investment spending of $10 and the MPS was 0.25, then real GDP would increase by
40
Suppose a family's consumption exceeds its disposable income. This means that its:
APC is greater than 1.
As DI increases
Both C and S decrease
Saving equals
DI minus C
GDP C 140 150 180 180 220 210 260 240 300 270 Refer to the data. If a lump-sum tax of $20 is imposed, the consumption schedule will become:
GDP C 145 135 180 165 220 195 260 225 300 255
Which relationship is an inverse one?
I and rate of interest
Assume the marginal propensity to consume is 0.8. If consumer spending increases by $20 billion, then real GDP will:
Increase by $100 billion
If the consumption schedule is a straight line, it can be concluded that the:
MPC is constant at various levels of income
Assume that an increase in a household's disposable income from $40,000 to $48,000 leads to an increase in consumption from $35,000 to $41,000, then the:
Slope of the consumption schedule is .75
Assume that in a private closed economy consumption is $240 billion and investment is $50 billion, both at the $280 billion level of domestic output. Thus:
unplanned decreases in inventories of $10 billion will occur.
If DI is $375 when the APC is 0.8, it can be concluded that
S is $75
If disposable income is $900 billion when the average propensity to consume is 0.9, it can be concluded that:
Saving is $90 billion
An increase in wealth shifts the C-schedule
upward and the S-schedule downward
Other things equal, if a change in the tastes of American consumers causes them to purchase more foreign goods at each level of U.S. GDP, then:
U.S. real GDP will fall.
A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because:
a portion of a tax cut will be saved.
Households tend to spend a larger portion of
a small DI than a large DI
A decrease in investment demand would be a consequence of a decline in
expected future sales
If the multiplier in an economy is 5, a $20 billion increase in net exports will:
increase GDP by $100 billion.
If the MPC is .70 and investment increases by $3 billion, the equilibrium GDP will:
increase by $10 billion.
MPC is 0.67 and initial spending increases by $25, real GDP will
increase by $25
If 100 percent of any change in income is spent, the multiplier will be:
infinitely large.
Which is an injection?
investment
The relationship between the real interest rate and investment is shown by the:
investment demand schedule.
The size of the multiplier is equal to the:
reciprocal of the slope of the saving schedule.
If Trent's MPC is .80, this means that he will:
spend eight-tenths of any increase in his disposable income.
In a mixed closed economy:
taxes and savings are leakages, while investment and government purchases are injections.
The investment demand curve will shift to the right as a result of:
technological progress.
As the DI increases
the APC falls and the APS rises
The consumption schedule is such that:
the MPC is constant and the APC declines as income rises