Question 1

The size of the simple multiplier is equal to the:

Accepted Answer

A)   slope of the consumption schedule.
B)   reciprocal of the slope of the consumption schedule.
C)   slope of the saving schedule.
D)   reciprocal of the slope of the saving schedule.E) A) and D)
F) None of the above

Question 2

If the MPS is 1,the multiplier will be 1.

Accepted Answer

A) True 
 B)False

Question 3

An upward shift of the saving schedule suggests:

Accepted Answer

A)   nothing with respect to changes in the APC and APS.
B)   that the APC and APS have both decreased at each GDP level.
C)   that the APC and APS have both increased at each GDP level.
D)   that the APC has decreased and the APS has increased at each GDP level.E) None of the above
F) C) and D)

Question 4

The slope of the saving schedule measures the size of the multiplier.

Accepted Answer

A) True 
 B)False

Question 5

3 only. C)  C1,C2,and C3 only. D)  C4 only." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.The MPC is constant as income rises for:

Accepted Answer

A)   none of the consumption schedules shown.
B)   C3 only.
C)   C1,C2,and C3 only.
D)   C4 only.E) C) and D)
F) A) and D)

Question 6

Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.Other things equal,which economy embodies the greatest degree of macroeconomic stability?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) All of the above
F) None of the above

Question 7

The multiplier:

Accepted Answer

A)   varies directly with the slope of the investment-demand schedule.
B)   is unrelated to the slope of the saving schedule.
C)   will be greater,the smaller the slope of the saving schedule.
D)   will be greater,the steeper the slope of the saving schedule.E) A) and D)
F) None of the above

Question 8

Assume that for the entire business sector of the economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent;another $15 with an expected rate of return of 15-20 percent;and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.
-Refer to the above information.If the real interest rate is 15 percent,what amount of investment will be undertaken?

Accepted Answer

A)   $15
B)   $30
C)   $45
D)   $60E) B) and C)
F) All of the above

Question 9

Assume that for the entire business sector of the economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent;another $15 with an expected rate of return of 15-20 percent;and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.
-Refer to the above information.The expected rate of return curve:

Accepted Answer

A)   shows a direct relationship between the interest rate and investment.
B)   is also the investment-demand curve.
C)   is indeterminate.
D)   cannot be calculated without knowing the level of saving.E) All of the above
F) A) and B)

Question 10

In comparison with the consumption schedule,the investment schedule is:

Accepted Answer

A)   relatively stable.
B)   relatively unstable.
C)   upsloping.
D)   independent of the price level.E) All of the above
F) None of the above

Question 11

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.
 
-Refer to the above data.The marginal propensity to consume:

Accepted Answer

A)   is highest in economy (1) .
B)   is highest in economy (3) .
C)   is highest in economy (2) .
D)   cannot be calculated from the data given.E) A) and B)
F) A) and C)

Question 12

If a consumption schedule shifts upward,this means that the:

Accepted Answer

A)   MPC has increased.
B)   MPS has decreased.
C)   APC is now higher at each level of disposable income.
D)   APC is now lower at each level of disposable income.E) A) and C)
F) B) and C)

Question 13

The investment-demand curve will shift to the right as the result of:

Accepted Answer

A)   the availability of excess productive capacity.
B)   an increase in business taxes.
C)   businesses becoming more optimistic with respect to future business conditions.
D)   an increase in the real interest rate.E) A) and B)
F) A) and D)

Question 14

Assume there are no prospective investment projects (I) which will yield an expected rate of return (r) of 25 percent or more,but that there are $5 billion of investment opportunities with an expected rate of return between 20 and 25 percent,an additional $5 billion between 15 and 20 percent,and so on.The investment-demand curve for this economy is:

Accepted Answer

A)   Column A
B)   Column B
C)   Column C
D)   Column DE) A) and B)
F) B) and C)

Question 15

-Refer to the above diagram.The average propensity to consume:

Accepted Answer

A)   is greater than 1 at all levels of disposable income above $100.
B)   is greater than 1 at all levels of disposable income below $100.
C)   is equal to the average propensity to save.
D)   cannot be determined from the information given.E) C) and D)
F) A) and D)

Question 16

The MPC can be defined as the fraction of a:

Accepted Answer

A)   change in income which is not spent.
B)   change in income which is spent.
C)   given total income which is not consumed.
D)   given total income which is consumed.E) A) and D)
F) C) and D)

Question 17

-Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.The MPC is greatest in economy:

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) B) and C)
F) B) and D)

Question 18

A $1 billion increase in investment will cause a:

Accepted Answer

A)   (1/MPS) billion increase in equilibrium GDP.
B)   (MPS) billion increase in equilibrium GDP.
C)   (1 - MP
C)  billion increase in equilibrium GDP.
D)   (MPC - MPS) billion increase in equilibrium GDP.E) All of the above
F) A) and D)

Question 19

The business investment is not based on the expected returns.

Accepted Answer

A) True 
 B)False

Question 20

-Refer to the above diagram.The break-even level of disposable income:

Accepted Answer

A)   is zero.
B)   is minus $10.
C)   is $100.
D)   cannot be determined from the information given.E) A) and B)
F) A) and D)

Exam 10: Basic Macroeconomic Relationships

A $1 billion increase in investment will cause a:

Correct Answer
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-Refer to the above diagram.The MPC is constant as income rises for:

Correct Answer
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In comparison with the consumption schedule,the investment schedule is:

Correct Answer
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The slope of the saving schedule measures the size of the multiplier.

Correct Answer
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Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. -Refer to the above data.The marginal propensity to consume:

Correct Answer
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Correct Answer
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Correct Answer
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The investment-demand curve will shift to the right as the result of:

Correct Answer
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The size of the simple multiplier is equal to the:

Correct Answer
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The business investment is not based on the expected returns.

Correct Answer
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The MPC can be defined as the fraction of a:

Correct Answer
verified

-Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.The MPC is greatest in economy:

Correct Answer
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The multiplier:

Correct Answer
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If a consumption schedule shifts upward,this means that the:

Correct Answer
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-Refer to the above diagram.The average propensity to consume:

Correct Answer
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If the MPS is 1,the multiplier will be 1.

Correct Answer
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-Refer to the above diagram.The break-even level of disposable income:

Correct Answer
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An upward shift of the saving schedule suggests:

Correct Answer
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Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.Other things equal,which economy embodies the greatest degree of macroeconomic stability?

Correct Answer
verified

Correct Answer
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Exam 10: Basic Macroeconomic Relationships

A $1 billion increase in investment will cause a:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.The MPC is constant as income rises for:

Correct AnswerverifiedShow Answer

In comparison with the consumption schedule,the investment schedule is:

Correct AnswerverifiedShow Answer

The slope of the saving schedule measures the size of the multiplier.

Correct AnswerverifiedShow Answer

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. -Refer to the above data.The marginal propensity to consume:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The investment-demand curve will shift to the right as the result of:

Correct AnswerverifiedShow Answer

The size of the simple multiplier is equal to the:

Correct AnswerverifiedShow Answer

The business investment is not based on the expected returns.

Correct AnswerverifiedShow Answer

The MPC can be defined as the fraction of a:

Correct AnswerverifiedShow Answer

-Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.The MPC is greatest in economy:

Correct AnswerverifiedShow Answer

The multiplier:

Correct AnswerverifiedShow Answer

If a consumption schedule shifts upward,this means that the:

Correct AnswerverifiedShow Answer

-Refer to the above diagram.The average propensity to consume:

Correct AnswerverifiedShow Answer

If the MPS is 1,the multiplier will be 1.

Correct AnswerverifiedShow Answer

-Refer to the above diagram.The break-even level of disposable income:

Correct AnswerverifiedShow Answer

An upward shift of the saving schedule suggests:

Correct AnswerverifiedShow Answer

Refer to the consumption schedules shown in the above diagram for economies 1,2,3,and 4.Other things equal,which economy embodies the greatest degree of macroeconomic stability?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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