Question 1

If total production is less than total expenditures,then business firms

Accepted Answer

A)   have overproduced.
B)   will cut back on production.
C)   will raise production.
D)   will experience increases in inventory.
E)   a and d

Question 2

-Refer to Exhibit 10-8.The multiplier is

Accepted Answer

A)   0.20.
B)   4.
C)   20.
D)   5.
E)   0.80.

Question 3

The work of John Maynard Keynes led to a major revolution in economic thought.

Accepted Answer

A) True 
 B)False

Question 4

Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level.

Accepted Answer

A) True 
 B)False

Question 5

-Refer to Exhibit 10-2.Equilibrium Real GDP occurs at

Accepted Answer

A)   $3,000 billion.
B)   $1,500 billion.
C)   $7,500 billion.
D)   $4,000 billion.
E)   $4,500 billion.

Question 6

-Refer to Exhibit 10-8.The consumption function is

Accepted Answer

A)   C = 0.80(Yd) .
B)   C = $4,000 + 0.90(Yd) .
C)   C = $400 + 0.2(Yd) .
D)   C = $400 + 0.8(Yd) .

Question 7

Classical economists and Keynes shared the belief that increased saving would necessarily stimulate an equal amount of increased investment spending.

Accepted Answer

A) True 
 B)False

Question 8

2 to AD1,the price level remains constant,and Real GDP falls. B)  The AD curve shifts leftward from AD4 to AD3,the price level falls,and Real GDP remains constant. C)  The AD curve shifts rightward from AD1 to AD2,the price level remains constant,and Real GDP rises. D)  The AD curve shifts rightward from AD3 to AD4,the price level rises,and Real GDP remains constant. E)  a and b" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 10-7.If government purchases decrease,which of the following is possible?

Accepted Answer

A)   The AD curve shifts leftward from AD2 to AD1,the price level remains constant,and Real GDP falls.
B)   The AD curve shifts leftward from AD4 to AD3,the price level falls,and Real GDP remains constant.
C)   The AD curve shifts rightward from AD1 to AD2,the price level remains constant,and Real GDP rises.
D)   The AD curve shifts rightward from AD3 to AD4,the price level rises,and Real GDP remains constant.
E)   a and b

Question 9

Keynes believed that

Accepted Answer

A)   Say's law would hold in a laissez-faire economy.
B)   the economy would always be near or on its production possibilities frontier.
C)   wages and prices are often inflexible in the downward direction.
D)   the equilibrium level of output will always be at the full-employment level of output.

Question 10

-Refer to Exhibit 10-5.When TE is $800 billion,what happens to inventories?

Accepted Answer

A)   Inventories are at their optimum levels.
B)   Inventories will fall,then rise above their optimum levels.
C)   Inventories will fall below optimum levels.
D)   Inventories will rise above optimum levels.

Question 11

The economy is in equilibrium,TP = TE,and Real GDP is $2,000 billion.The MPC is 0.75,the multiplier is operative,and idle resources exist at each expenditure round.Autonomous investment spending falls by $10 billion.As a result,the TE curve shifts __________,inventory levels unexpectedly __________,business firms __________ the quantity of goods and services they produce,and Real GDP __________ by __________.

Accepted Answer

A)   downward; rise; decrease; falls; $7.5 billion
B)   downward; fall; increase; rises; $40 billion
C)   downward; rise; decrease; falls; $40 billion
D)   upward; rise; decrease; falls; $40 billion
E)   downward; fall; decrease; falls; $7.5 billion

Question 12

In the simple Keynesian model,an increase in aggregate demand leads to an increase in

Accepted Answer

A)   Real GDP and the price level at all levels of Real GDP.
B)   the price level and no change in Real GDP for levels of Real GDP below Natural Real GDP.
C)   the price level and a decrease in Real GDP at all levels of GDP.
D)   Real GDP and no change in the price level for levels of Real GDP below Natural Real GDP.

Question 13

If we graph the consumption function such that it cuts the vertical axis at a point above the origin,this is because we are assuming that

Accepted Answer

A)   the MPC is positive.
B)   the MPS is positive.
C)   autonomous consumption is positive.
D)   induced consumption is positive.

Question 14

-Refer to Exhibit 10-3.When disposable income equals $2,300,saving equals

Accepted Answer

A)   -$20.
B)   -$10.
C)   0.
D)   $10.
E)   $20.

Question 15

Given the following data,what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? ​
C = $4,200 + 0.90Yd
I = $1,820
G = $970
​

Accepted Answer

A)   $2,790
B)   $4,290
C)   $6,990
D)   $5,170
E)   $390

Question 16

Here is a consumption function: C = C0 + MPC(Yd) .The C0 term is usually defined as

Accepted Answer

A)   autonomous consumption.
B)   point-zero consumption.
C)   mandatory consumption.
D)   propensitory consumption.
E)   none of the above

Question 17

In the simple Keynesian model,there are three simplifying assumptions.Among these assumptions is:

Accepted Answer

A)   the price level is flexible
B)   no foreign sector
C)   the price level is constant until the economy reaches its full-employment level
D)   the money supply always rises
E)   b and c

Question 18

A change in autonomous spending leads to an even greater change in total spending through the multiplier process.

Accepted Answer

A) True 
 B)False

Question 19

According to the Keynesian consumption function,an increase in disposable income will result in

Accepted Answer

A)   a decrease in consumption.
B)   an increase in consumption.
C)   a decrease in investment.
D)   an increase in investment.

Question 20

The economy is in equilibrium,TP = TE,and Real GDP is $4,000 billion.The MPC is 0.70,the multiplier is operative,and idle resources exist at each expenditure round.Government purchases fall by $17 billion.As a result,the TE curve shifts __________,inventory levels unexpectedly __________,business firms __________ the quantity of goods and services they produce,and Real GDP __________ by __________.

Accepted Answer

A)   downward; rise; decrease; falls; approximately $56.7 billion
B)   downward; fall; increase; falls; approximately $56.7 billion
C)   upward; rise; decrease; falls; $17 billion
D)   upward; fall; decrease; rises; $17 billion
E)   downward; rise; decrease; falls; approximately $11.9 billion

Exam 10: Monopoly

Correct Answer
verified

-Refer to Exhibit 10-8.The consumption function is

Correct Answer
verified

Classical economists and Keynes shared the belief that increased saving would necessarily stimulate an equal amount of increased investment spending.

Correct Answer
verified

Correct Answer
verified

-Refer to Exhibit 10-8.The multiplier is

Correct Answer
verified

In the simple Keynesian model,there are three simplifying assumptions.Among these assumptions is:

Correct Answer
verified

A change in autonomous spending leads to an even greater change in total spending through the multiplier process.

Correct Answer
verified

If total production is less than total expenditures,then business firms

Correct Answer
verified

The work of John Maynard Keynes led to a major revolution in economic thought.

Correct Answer
verified

Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level.

Correct Answer
verified

If we graph the consumption function such that it cuts the vertical axis at a point above the origin,this is because we are assuming that

Correct Answer
verified

Given the following data,what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? C = $4,200 + 0.90Yd I = $1,820 G = $970

Correct Answer
verified

-Refer to Exhibit 10-2.Equilibrium Real GDP occurs at

Correct Answer
verified

According to the Keynesian consumption function,an increase in disposable income will result in

Correct Answer
verified

-Refer to Exhibit 10-3.When disposable income equals $2,300,saving equals

Correct Answer
verified

Here is a consumption function: C = C₀ + MPC(Y_d) .The C₀ term is usually defined as

Correct Answer
verified

Keynes believed that

Correct Answer
verified

-Refer to Exhibit 10-5.When TE is $800 billion,what happens to inventories?

Correct Answer
verified

In the simple Keynesian model,an increase in aggregate demand leads to an increase in

Correct Answer
verified

-Refer to Exhibit 10-7.If government purchases decrease,which of the following is possible?

Correct Answer
verified

Exam 10: Monopoly

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-8.The consumption function is

Correct AnswerverifiedShow Answer

Classical economists and Keynes shared the belief that increased saving would necessarily stimulate an equal amount of increased investment spending.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-8.The multiplier is

Correct AnswerverifiedShow Answer

In the simple Keynesian model,there are three simplifying assumptions.Among these assumptions is:

Correct AnswerverifiedShow Answer

A change in autonomous spending leads to an even greater change in total spending through the multiplier process.

Correct AnswerverifiedShow Answer

If total production is less than total expenditures,then business firms

Correct AnswerverifiedShow Answer

The work of John Maynard Keynes led to a major revolution in economic thought.

Correct AnswerverifiedShow Answer

Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level.

Correct AnswerverifiedShow Answer

If we graph the consumption function such that it cuts the vertical axis at a point above the origin,this is because we are assuming that

Correct AnswerverifiedShow Answer

Given the following data,what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? ​ C = $4,200 + 0.90Yd I = $1,820 G = $970 ​

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-2.Equilibrium Real GDP occurs at

Correct AnswerverifiedShow Answer

According to the Keynesian consumption function,an increase in disposable income will result in

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-3.When disposable income equals $2,300,saving equals

Correct AnswerverifiedShow Answer

Here is a consumption function: C = C0 + MPC(Yd) .The C0 term is usually defined as

Correct AnswerverifiedShow Answer

Keynes believed that

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-5.When TE is $800 billion,what happens to inventories?

Correct AnswerverifiedShow Answer

In the simple Keynesian model,an increase in aggregate demand leads to an increase in

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-7.If government purchases decrease,which of the following is possible?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Given the following data,what is the distance from the origin to the point where the total expenditures (TE) curve cuts the vertical axis? C = $4,200 + 0.90Yd I = $1,820 G = $970

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Here is a consumption function: C = C₀ + MPC(Y_d) .The C₀ term is usually defined as

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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