Question 1

The difference between savings and saving

Accepted Answer

A)  is nonexistent.
B)  is that savings occurs when consumption does not and saving is used to purchase consumption goods.
C)  is that savings is a stock concept and saving is a flow concept.
D)  is that savings is measured in real terms while saving is measured in nominal terms.

Question 2

A lower price level causes the C + I + G + X curve to shift as a result of a change in all the following EXCEPT

Accepted Answer

A)  an increase in real wealth.
B)  a decrease in interest rates.
C)  an increase in aggregate supply.
D)  an increase in foreign spending on domestic goods.

Question 3

Autonomous consumption is the level of consumption that is

Accepted Answer

A)  consistent with the average standard of living.
B)  observed at the poverty line.
C)  independent of real income.
D)  available to someone earning the minimum wage.

Question 4

If the marginal propensity to consume is unchanged and autonomous consumption expenditures increase,then

Accepted Answer

A)  saving at every level of disposable income increases.
B)  the break-even disposable income decreases.
C)  the break-even disposable income increases.
D)  saving is unaffected.

Question 5

-Refer to the above figure.Autonomous consumption equals

Accepted Answer

A)  0.
B)  -$5000.
C)  $5000.
D)  $25,000.

Question 6

If the MPC is 0.75,the multiplier is equal to

Accepted Answer

A)  0.25.
B)  0.75/0.25 = 3.
C)  4.
D)  5.

Question 7

Which of the following represents the relationship between disposable income (DI) ,consumption (C) ,and saving (S) ?

Accepted Answer

A)  DI + C = S
B)  DI = C + S
C)  DI = C * S
D)  DI = C - S

Question 8

According to Keynes,the primary determinant of a person's saving is NOT

Accepted Answer

A)  the person's level of income but the desired real income of the person.
B)  the person's level of savings but the expected interest rate in the near future.
C)  the interest rate but the level of savings the person has.
D)  the interest rate but the level of the person's real disposable income.

Question 9

-Refer to the above figure.If the MPC is unchanged and level of autonomous consumption increases,what occurs?

Accepted Answer

A)  Line EBD will shift up.
B)  Line ABC will drop down.
C)  Line ABC shifts up.
D)  Line EBD rotates and becomes steeper.

Question 10

The terms "saving" and "savings" differ in that

Accepted Answer

A)  saving is a stock,and savings are a flow.
B)  saving always exceeds savings.
C)  savings are a stock,and saving is a flow.
D)  savings can be negative,but saving cannot.

Question 11

-In the above table,the marginal propensity to consume when disposable income changes from $5,000 to $6,000 is

Accepted Answer

A)  0.8.
B)  0.75.
C)  0.6.
D)  0.5.

Question 12

Which of the following is a flow variable?

Accepted Answer

A)  Savings
B)  Wealth
C)  Consumption
D)  Population

Question 13

Which of the following is correct?

Accepted Answer

A)  1 + MPS = MPC
B)  1 - MPC = MPS
C)  1 - MPS = MPC + 1
D)  1 - MPS = MPC - 1

Question 14

When the equilibrium price level adjusts to an increase in autonomous investment spending,the impact of the multiplier effect resulting from that spending increase

Accepted Answer

A)  will increase real GDP by an amount smaller than the multiplier effect would indicate.
B)  will increase nominal GDP by an amount smaller than the multiplier effect would indicate.
C)  will have no impact on the real GDP.
D)  is only felt when there are changes in consumption.

Question 15

If the multiplier is 10,then the marginal propensity to consume (MPC) is

Accepted Answer

A)  0.9.
B)  0.1.
C)  1.
D)  9.

Question 16

Investment is

Accepted Answer

A)  the purchasing of stocks and mutual funds.
B)  goods bought by households.
C)  spending by businesses on things which can be used to produce goods and services in the future.
D)  the production of goods for immediate satisfaction.

Question 17

Which of the following does NOT occur when the economy is operating at the equilibrium level of GDP?

Accepted Answer

A)  Total planned expenditures equal real GDP.
B)  Real GDP tends to rise over time.
C)  Planned investment equals actual investment.
D)  Inventory investment equals zero.

Question 18

Which of the following statements is true?

Accepted Answer

A)  investment = disposable income + consumption
B)  saving = personal income - consumption
C)  saving = disposable income - consumption
D)  saving = personal income + consumption

Question 19

A higher level of real Gross Domestic Product (GDP) will result if

Accepted Answer

A)  total planned real expenditures exceed real Gross Domestic Product (GDP) .
B)  aggregate supply exceeds aggregate demand.
C)  aggregate demand exceeds aggregate supply.
D)  leakage exceeds injections.

Question 20

The marginal propensity to save (MPS) is

Accepted Answer

A)  the rate at which real savings changes over time.
B)  the percentage of real disposable income saved.
C)  the difference between the amounts of real disposable income consumed and saved.
D)  the percentage of an additional dollar of real disposable income that will go toward additional real savings.

Exam 12: Consumption, real GDP, and the Multiplier

If the MPC is 0.75,the multiplier is equal to

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If the marginal propensity to consume is unchanged and autonomous consumption expenditures increase,then

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If the multiplier is 10,then the marginal propensity to consume (MPC) is

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Which of the following is a flow variable?

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Which of the following does NOT occur when the economy is operating at the equilibrium level of GDP?

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When the equilibrium price level adjusts to an increase in autonomous investment spending,the impact of the multiplier effect resulting from that spending increase

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The terms "saving" and "savings" differ in that

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Autonomous consumption is the level of consumption that is

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Investment is

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A lower price level causes the C + I + G + X curve to shift as a result of a change in all the following EXCEPT

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The marginal propensity to save (MPS) is

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Which of the following is correct?

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Which of the following represents the relationship between disposable income (DI) ,consumption (C) ,and saving (S) ?

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-Refer to the above figure.Autonomous consumption equals

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-Refer to the above figure.If the MPC is unchanged and level of autonomous consumption increases,what occurs?

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A higher level of real Gross Domestic Product (GDP) will result if

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-In the above table,the marginal propensity to consume when disposable income changes from $5,000 to $6,000 is

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The difference between savings and saving

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According to Keynes,the primary determinant of a person's saving is NOT

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Which of the following statements is true?

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