Macro ch 10 delgado
D
As the consumption and saving schedules relate to real GDP, an increase in taxes will shift A) Upward both the consumption and saving schedules. B) The saving schedule upward and the consumption schedule downward. C) The consumption schedule upward and the saving schedule downward. D) Downward both the consumption and saving schedules.
A
Disposable Income Consumption $200 $205 225 225 250 245 275 265 300 285 Refer to the given data. The marginal propensity to consume is A) 0.80 B) 0.25 C) 0.75 D) 0.20
C
The fraction, or percentage, of total income which is consumed is called the: A) Consumption schedule B) Marginal propensity to consume C) Average propensity to consume D) Break-even income
D
$4 $0 $65 $0 $2 10 11 80 125 20 20 20 18 160 185 40 38 30 25 240 245 60 56 40 32 320 305 80 74 50 39 400 365 100 92 Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. The marginal propensity to consume: A) Cannot be calculated from the data given B) Is highest in economy (2) C)Is highest in economy (1) D)Is highest in economy (3)
D
(1) (2) (3) DI C DI C DI C $0 $4 $0 $65 $0 $2 10 11 80 125 20 20 20 18 160 185 40 38 30 25 240 245 60 56 40 32 320 305 80 74 50 39 400 365 100 92 Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. At an income level of $400 billion, the average propensity to save in economy (2) is A) 0.0725 B) 0.9125 C) 0.9305 D) 0.0875
B
(1) (2) (3) DI C DI C DI C $0 $4 $0 $65 $0 $2 10 11 80 125 20 20 20 18 160 185 40 38 30 25 240 245 60 56 40 32 320 305 80 74 50 39 400 365 100 92 Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. At an income level of $40 billion, the average propensity to consume A) Is highest in economy (1). B) Is highest in economy (2). Correct C) Is highest in economy (3). D) Cannot be determined from the data given.
C
(Advanced analysis) Assume the following consumption schedule: C = 20 + 0.9Y, where C is consumption and Y is disposable income. The MPC is: A)0.45 B) 0.50 C) 0.90 D) 0.20
B
A lower real interest rate typically induces consumers to A) Buy fewer imported goods. B) Purchase more goods that are bought using credit. C) Save more. D) Purchase fewer goods that are bought without using credit.
A
Assume that for the entire business sector of a private closed economy, there are $0 worth of investment projects that will yield an expected rate of return of 25 percent or more. But there are $15 worth of investments that will yield an expected rate of return of 20-25 percent, another $15 with an expected rate of return of 15-20 percent, and an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range. If the real interest rate is 15 percent, what amount of investment will be undertaken? A) $30 B) $60 C) $45 D) $15
A
Assume the marginal propensity to consume is 0.8. If consumer spending increases by $20 billion, then real GDP will: A) Increase by $100 billion B) Not change C) Increase by $16 billion d) Decrease by $100 billion
B
Assume there are no investment projects that will produce an expected rate of return of 8 percent or more. There are, however, $2 billion worth of investment projects with an expected rate of return at 7 percent, and an additional $2 billion for every drop of the interest rate by 1 percent. If the real interest rate is 3 percent in this economy, the cumulative amount of investment at the 3 percent or higher rate of return is: A) $6 billion B) $10 billion C) $8 billion D) $4 billion
B
At the point where the consumption schedule intersects the 45-degree line, A) Saving is equal to consumption B) The APC is 100 C) The economy is in equilibrium D) The MPC is 100
D
Disposable Income Consumption $0 $8 80 80 160 152 240 224 320 296 400 368 The disposable income (DI) and consumption (C) schedules are for a private, closed economy. All figures are in billions of dollars. The marginal propensity to save in this economy is A) 0.8 B) 0.72 C) 0.9 D) 0.1
A
If disposable income increases from $912 to $927 billion and MPC = 0.6, then consumption will increase by A) $9 billion. Correct B) $54 billion. C) $56 billion. D) $6 billion.
C
If disposable income is $900 billion when the average propensity to consume is 0.9, it can be concluded that A) The marginal propensity to consume is also 0.9. B) The marginal propensity to save is 0.1. C) Saving is $90 billion. Correct D) Consumption is $900 billion.
False
If the consumption schedule becomes steeper, then the saving schedule will become steeper also. T/F
False
Investment is not affected by current profits; it is affected by expected future profits only.T/F
C
Investment spending in the United States tends to be unstable because A) The price level fluctuates rapidly B) Investment spending is affected by interest rates C) Profits are highly variable D) Capital wears out quickly and must be replaced often
C
The Great Recession of 2007-2009 altered the prior behavior of consumers in the economy by A) Shifting the consumption schedule up. B) Moving the economy down along a stable consumption schedule. C) Shifting the consumption schedule down. Correct D) Shifting the saving schedule down.
C
The MPC can be defined as the: A) Ratio of income to saving B) Change in income divided by the change in consumption C) Change in consumption divided by the change in income D) Ratio of saving to consumption
C
The Paradox of Thrift highlights the idea that: A) In spending more, workers may end up losing their jobs. B) Saving more is good for the economy in the short run C) Saving more can be bad for the economy during a recession D) In spending more, households will end up saving less
True
The multiplier effect magnifies the effect of a decrease in spending, resulting in a bigger decrease in real GDP. T/F
False
The multiplier value is the reciprocal of the marginal propensity to consume. T/F
B
The numerical value of the multiplier will be smaller the: A) Larger the slope of the consumption schedule B) Larger the slope of the saving schedule C) Larger the average propensity to consume D) Smaller the slope of the saving schedule
A
The saving schedule is drawn on the assumption that as income increases, A) Saving will increase absolutely and as a percentage of income B) Saving will decline absolutely and as a percentage of income C) Saving will increase absolutely but decline as a percentage of income D) Saving will increase absolutely but remain constant as a percentage of income
C
The saving schedule shows the relationship of saving of households to the level of A) The average propensity to save B) Consumption C) Disposable income D) Investment
D
The saving schedule would be shifted upward by A) An increase in the value of real and financial assets. B) A reduction in real interest rates. C) Expectations of rising prices of products. D) A decrease in taxes.
A
The slope of the consumption schedule between two points on the schedule is A) The ratio of the change in consumption to the change in disposable income between those two points. Correct B) Equivalent to one plus the marginal propensity to save. C) The ratio of the change in disposable income over the change in consumption between those two points. D) Equivalent to the average propensity to consume.
B
The so-called Paradox of Thrift that became quite obvious in the Great Recession of 2007-2009 does not refer to which of the following? A) Consumers becoming thriftier may help long-term growth but, ironically, reduces current output. B) In trying to spend less now, consumers will end up spending more later on. Correct C) Saving may be virtuous for the individual, but it could be bad for the economy as a whole. D) As individuals try to save more, the whole group may end up saving less as total income declines.
C
The wealth effect is shown graphically as a A) Movement along an existing investment schedule. B) Movement along an existing consumption schedule. C) Shift of the consumption schedule. Correct D) Shift of the investment schedule.
False
The wealth effect will tend to decrease consumption and increase saving. T/F
D
What is the most volatile component of total spending? A) Government spending B) Net exports C) Consumption D) Investment
C
What is the slope of the consumption schedule or consumption line for a given economy? A) APS B) 1-MPC C) 1-MPS D) APC
A
Which of the following statements about investment spending is false? A) During the Great Recession in 2007-2009 when interest rates essentially declined to zero, investment spending rose sharply B) The percentage swings in real investment spending are greater than the percentage swings in real GDP C) The durability of capital goods is one basic reason for the variability of investment spending D) It is much more volatile than consumption spending
B
https://ezto.mheducation.com/extMedia/bne/McConnell%2021e/image003ch30b.png Refer to the consumption schedule shown in the graph. At income level 3, the amount of saving is represented by the line segment A) FH B) FG C) GH D) FD
A
https://ezto.mheducation.com/extMedia/bne/McConnell%2021e/image017ch30a.png Refer to the given diagram. Consumption will be equal to income at A) An income of E. Correct B) Point C. C) An income of F. D_ Point D.
B
https://ezto.mheducation.com/extMedia/bne/McConnell%2021e/image036ch30b.png In the accompanying graph, which of the following would shift the investment demand curve from ID2 to ID1? A) Decreasing operating costs for capital goods B) Increasing operating costs for capital goods C) A falling real interest rate D) A rising real interest rate
