Macro Chapter 11 Quiz

if the MPC=0.75 and a household obtains $50,000 more dollars, then how much would the household spend of the additional $50,000?

$37500

If the MPC=0.75, then the spending multiplier must be

1/(1-mpc)= 4

If a recent stock market dip caused a decline in autonomous consumption by $12 billion, and the MPC is 0.6m what will be the impact on the economy

C/(1-b)= -12/(1-.6)=-30

When we compare PAE and actual output (Y) if PAE is greater than Y we expect that:

Eventually production will increase

planned investment is the

amount that firms decide to allocate to new capital resources and inventory accumulation

The four components of aggregate expenditure are

consumption, investment, government purchases, and net exports

Net Exports are defined to be

exports-imports

When we compare PAE and actual output (Y) if PAE is greater than Y we expect that

inventories will decrease

When we say investment in macroeconomics we are talking about

physical capital

Which of the following is not a primary determinant of consumptions spending: interest rates on savings real income wealth rate of return on capital

rate of return on capital

which of the following could be a direct cause of investment spending decreasing: real income increases real interest rates increase a firms revenues increases while their costs remain constant expected future income increases

real interest rates increase

which of the following is not an example of a transfer payment: social security sales tax unemployment benefits workman's compensation

sales tax