MACRO Test #3 (Homework 10, 12, 13)
the public debt is the :
Accumulation of all past deficits minus all past surpluses
as disposable income decreases, the:
Average propensity to consume increases
If a family's MPC is 0.7, it means that the family is:
Spending seven-tenths of any increment to its income
when the economy is experiencing demand-pull inflation, its real GDP tends to be rising:
True
Which of the following will NOT cause the consumption schedule to shift?
a change in consumer incomes
A sharp rise in the real value of stock prices, which is independent of a change in the price level, would best be an example of:
a change in real value of consumer wealth
Which of the following would shift the saving schedule upward?
a decrease in wealth
a decrease in consumer spending can be expected to shift the:
aggregate expenditures curve downward and the aggregate demand curve leftward
an increase in net exports will shift the:
aggregate expenditures curve upward and the aggregate demand curve rightward.
which combination of factors would most likely increase aggregate demand?
an increase in consumer wealth and a decrease in interest rates
the fraction or % of total income which is consumed is called the:
average propensity to consume
a decrease in aggregate demand in the short run will reduce:
both real output & the price level
An MPC value of less than 1.0 indicates that as income increases:
consumption also increases, though not as much as income
the intent of contra dictionary fiscal policy is to:
decrease aggregate demand
a decrease in government spending will cause a (n)?
decrease in aggregate demand
a decrease in gov spending and a cut in taxes would be a pair of fiscal policies that reinforce each other
false
a decrease in taxes is one way to pursue a contra dictionary fiscal policy because it will make government revenues contract
false
prices and wages tend to be:
flexible upward, but inflexible downward.
A high rate of inflation is likely to cause a :
high nominal interest rate.
an expected increase in the prices of consumer goods in the near future will:
increase (or shift right) in aggregate demand now
the crowding out effect suggests that
increases in government spending may reduce private investment
a contradictionary fiscal policy is shown as a:
leftward shift in the economy's aggregate demand curve
the most important determinant of consumption and saving is:
level of income
the 2 reasons why bankruptcy is a false concern about the public debt are:
refinancing and taxation
in contrast to investment, consumption is:
relatively stable
a major advantage of the built in or automatic stabilizers is that they:
require no legislative action by congress to be made effective
an expansionary fiscal policy is shown as :
rightward shift in the economy's aggregate demand curve.
The greater the MPS, the:
smaller would be the increase in income which results from an increase in consumption spending
a fall in labor costs will cause aggregate:
supply increase
dissaving means:
that households are spending more than their current incomes.
the consumption schedule shows:
the amounts households intend to consume at various possible levels of aggregate income
which of the following will NOT tend to shift the consumption schedule upward?
the expectation of a future decline in the consumer price index (CPI)
a contradictionary fiscal policy shifts the aggregate demand curve leftward
true
if the government wants to reduce unemployment using fiscal policy, it may do so by increasing government spending
true
Wage contracts, efficiency wages, and the minimum wage are explanations for why:
wages tend to be inflexible downward
How is the public debt calculated?
By cumulating the annual difference between tax revenues and government spending over the years
minimum wage laws tend to make the price level more flexible rather than less flexible
False
a budget surplus means that
Government revenues are greater than expenditures in a given year