Question 1

If households save $40 billion less at each level of income and the marginal propensity to consume (MPC) is 0.8,the aggregate expenditure line will _____.

Accepted Answer

A)  intersect the 45-degree line at a real GDP of $40 billion
B)  shift upward by $40 billion
C)  shift downward by $40 billion
D)  shift upward by $200 billion because of the multiplier mechanism
E)  shift downward by $200 billion because of the multiplier mechanism

Question 2

If the marginal propensity to consume (MPC) equals 0.9,the multiplier is _____.

Accepted Answer

A)  1
B)  2
C)  5
D)  10
E)  12

Question 3

A decrease in the U.S.price level,other things constant,will _____.

Accepted Answer

A)  stimulate U.S.exports,pushing the aggregate demand curve to the right
B)  stimulate U.S.imports,pushing the aggregate demand curve to the right
C)  stimulate U.S.exports but discourage imports,causing a downward movement along a given aggregate demand curve
D)  discourage U.S.exports but stimulate imports,causing an upward movement along a given aggregate demand curve
E)  not affect U.S.net exports,so the aggregate quantity demanded will remain constant

Question 4

If the market interest rate decreases,then there will be _____.

Accepted Answer

A)  an upward movement along the investment demand curve
B)  a downward movement along the investment demand curve
C)  a rightward shift of the investment demand curve
D)  a leftward shift of the investment demand curve
E)  no movement along or shift of the investment demand curve

Question 5

The smaller the marginal propensity to save,other things constant,_____.

Accepted Answer

A)  the smaller the marginal propensity to consume
B)  the larger the multiplier
C)  the smaller the multiplier
D)  the flatter the consumption function
E)  the steeper the saving function

Question 6

If the price level in an economy decreases,other things constant,people consume _____.

Accepted Answer

A)  more because nominal income falls
B)  less because nominal income rises
C)  more because the real value of their wealth increases
D)  less because real income decreases
E)  less because the real value of their wealth decreases

Question 7

Which of the following will shift the consumption function upward?

Accepted Answer

A)  A lower interest rate
B)  An increase in the interest rate
C)  An increase in disposable income
D)  A decrease in disposable income
E)  Expectations of lower prices in the future

Question 8

A decrease in net wealth will _____.

Accepted Answer

A)  shift the consumption function downward
B)  make the consumption function steeper
C)  cause an upward movement along the consumption function
D)  cause a downward movement along the consumption function
E)  make the consumption function flatter

Question 9

Expectations that the price level will increase in the future will:

Accepted Answer

A)  shift the current consumption function upward.
B)  make the current consumption function steeper.
C)  make the current consumption function flatter.
D)  result in a downward movement along the current consumption function.
E)  shift the current consumption function downward.

Question 10

The table given below shows the disposable income and consumption of a household.In the table below,saving:
Table 9.1
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  Disposable  Income ($)  Consumption ($) 1,0008001,1008801,2009601,3001,0401,4001,120\begin{array}{cc}	ext { Disposable }\	ext { Income }(\$)  & 	ext { Consumption }(\$)  \\hline 1,000 & 800 \1,100 & 880 \1,200 & 960 \1,300 & 1,040 \1,400 & 1,120\end{array} Disposable  Income ($) 1,0001,1001,2001,3001,400​ Consumption ($) 8008809601,0401,120​​

Accepted Answer

A)  decreases as disposable income increases.
B)  decreases as disposable income decreases.
C)  remains constant as disposable income increases.
D)  is negative at a disposable income of $1,000.
E)  is negative at a disposable income of $1,400.

Exam 9: Aggregate Demand

Expectations that the price level will increase in the future will:

Correct Answer
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If the marginal propensity to consume (MPC) equals 0.9,the multiplier is _____.

Correct Answer
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If the market interest rate decreases,then there will be _____.

Correct Answer
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A decrease in the U.S.price level,other things constant,will _____.

Correct Answer
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If the price level in an economy decreases,other things constant,people consume _____.

Correct Answer
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The smaller the marginal propensity to save,other things constant,_____.

Correct Answer
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A decrease in net wealth will _____.

Correct Answer
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Which of the following will shift the consumption function upward?

Correct Answer
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If households save $40 billion less at each level of income and the marginal propensity to consume (MPC) is 0.8,the aggregate expenditure line will _____.

Correct Answer
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Exam 9: Aggregate Demand

Expectations that the price level will increase in the future will:

Correct AnswerverifiedShow Answer

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If the marginal propensity to consume (MPC) equals 0.9,the multiplier is _____.

Correct AnswerverifiedShow Answer

If the market interest rate decreases,then there will be _____.

Correct AnswerverifiedShow Answer

A decrease in the U.S.price level,other things constant,will _____.

Correct AnswerverifiedShow Answer

If the price level in an economy decreases,other things constant,people consume _____.

Correct AnswerverifiedShow Answer

The smaller the marginal propensity to save,other things constant,_____.

Correct AnswerverifiedShow Answer

A decrease in net wealth will _____.

Correct AnswerverifiedShow Answer

Which of the following will shift the consumption function upward?

Correct AnswerverifiedShow Answer

If households save $40 billion less at each level of income and the marginal propensity to consume (MPC) is 0.8,the aggregate expenditure line will _____.

Correct AnswerverifiedShow Answer

Correct Answer
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