Questions in economics?
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QUESTION 1
1. ; If Carol’s disposable income increases from $1,000 to $1,600 and her level of saving increases from minus $100 to a plus $100, her marginal propensity to:
; |
A. |
consume is one-sixth. |
; |
B. |
consume is one-half. |
; |
C. |
consume is two-thirds. |
; |
D. |
save ;is two-thirds. |
QUESTION 2
1. ; A decline in disposable income:
increases consumption by moving along a specific consumption schedule. |
decreases consumption because it shifts the consumption schedule downward. |
decreases consumption by moving along a specific consumer schedule. |
increases consumption because it shifts the consumption schedule upward. |
QUESTION 3
1. ; In contrast to investment, consumption is:
relatively unstable. |
relatively stable. |
measurable. |
unmeasurable. |
QUESTION 4
1. ; At the point where the consumption schedule intersects the 45-degree line:
the APC is 1.00. |
the MPC is 1.00. |
saving is equal to consumption. |
consumption is less than income. |
QUESTION 5
1. ; The MPC can be defined as the fraction of a:
change in income that is spent. |
change in income that is saved. |
given total income that is not consumed. |
given total income that is consumed. |
QUESTION 6
1. ; In the late 1990s the U.S. stock market boomed, causing U.S. consumption to rise. Economists refer to this outcome as the:
wealth effect. |
multiplier effect. |
interest-rate effect. |
none of the above. |
QUESTION 7
1. ; Which of the following could shift both consumption and saving schedules upward?
a decrease in the personal income tax. |
an increase in the personal income tax. |
a decrease in the real interest rate. |
an increase in stock market prices. |
QUESTION 8
1. ;
A downward shift of the consumption schedule might be caused by a(an): |
increase in income. |
wealth effect, caused by an increase in stock market prices. |
increase in real interest rate. |
decrease in saving. |
QUESTION 9
1. ; The investment demand slopes downward and to the right because lower real interest rates:
expand consumer borrowing, making investments more profitable. |
enable more investment projects to be undertaken profitably. |
result in fewer investment projects to be undertaken profitably. |
create ;disincentives to invest. |
QUESTION 10
1. ; The relationship between the real interest rate and investment is shown by the:
investment demand curve. |
investment schedule. |
saving schedule. |
consumption ;schedule. |
QUESTION 11
1. ; When we draw an investment demand curve we hold constant all of the following ;except:
operating and maintenance costs |
business taxes. |
the interest rate. |
the present stock of capital goods. |
QUESTION 12
1. ; Capital goods, because their purchases can be postponed like ______ consumer goods, tend to contribute to ________ in investment spending.
durable; instability |
nondurable; instability |
nondurable; stability |
durable; stability |
QUESTION 13
1. ; If the slope of the consumption schedule is 0.8, MPC must be :
0.2 |
0.3 |
0.8 |
1 |
QUESTION 14
1. ; With an MPS of .3, the MPC will be: ;
.3 |
.7 |
1.3 |
none of the above |
QUESTION 15
1. ; The disposable income (DI) and consumption (C) schedules are for a private, closed economy. All figures are in billions of dollars. ;If plotted on a graph, the slope of the consumption schedule would be: ;
.6 |
.9 |
.8 |
.7 |
QUESTION 16
1. ; If the MPC in an economy is 0.8 and ;government ;expenditures increase by $5 billion, then ;GDP will increase by:
$20 billion. |
$25 billion. |
$16 billion. |
$4 billion. |
QUESTION 17
1. ; In a private closed economy, saving and investment are, respectively:
an injection and a leakage. |
a leakage and an injection. |
income and wealth. |
none of the above. |
QUESTION 18
1. ; The multiplier can be calculated by dividing: ;
The change in real GDP by the initial change in spending. |
The initial change in spending by the change in real GDP. |
One by one minus the marginal propensity to save. |
One by the marginal propensity to consume. |
QUESTION 19
1. ; If a lump-sum tax of $40 billion is levied at each level of income and the MPC is 0.75, then the consumption schedule will shift:
upward by $30 billion. |
upward by $10 billion. |
downward by $10 billion. |
downward by $30 billion. |
QUESTION 20
1. ; If the marginal propensity to consume in this economy is 0.8, a $10 increase in its net exports would increase its real GDP by: ;
$50 |
$25 |
$75 |
$200 |
QUESTION 21
1. ; As disposable income decreases, consumption: ;
and saving both increase. |
and saving both decrease. |
increases and saving decreases. |
decreases and saving increases |
QUESTION 22
1. ; Refer to the consumption schedule below. At income level 3, the amount of saving is represented by the line segment: ;
FG |
FH |
FD |
GH |
QUESTION 23
1. ; Refer to the consumption schedule below. At income level 1, the amount of saving is: ;
positive. |
negative. |
zero. |
not measurable. |
QUESTION 24
1. ; If consumers expect prices to rise and shortages to occur in the future, then it will shift:
the consumption schedule upward and the saving schedule downward. |
downward both the consumption and saving schedules. |
upward both the consumption and saving schedules. |
the consumption schedule downward and the saving schedule upward. |
QUESTION 25
1. ; Planned investment is $30 billion at the $100 billion equilibrium level of output in a closed, private economy. Saving must be:
less than planned investment. |
greater than planned investment. |
equal to $100 billion. |
equal to $30 billion. |
QUESTION 26
1. ; Two basic determinants of investment spending are: ;
consumer spending and government spending. |
expected returns and real interest rate. |
general price level and the level of output. |
domestic trade and international trade. |
QUESTION 27
1. ; The nominal rate of interest is 8.5 percent and the real rate is 5 percent. The expected rate of return on an investment is 8 percent. The firm should:
undertake the investment because the expected rate of return of 8 percent is greater than the real rate of interest. |
undertake the investment because the expected rate of return of 8 percent is greater than the difference between the nominal and real interest rates. |
not undertake the investment because the expected rate of return of 8 percent is less than the nominal plus the real interest rate. |
not undertake the investment because the expected rate of return of 8 percent is less than the nominal interest rate. |
QUESTION 28
1. ; Which of the following would shift the investment demand curve to the left?
A lower real interest rate. |
Rising maintenance costs of investment goods. |
Increasing business taxes. |
Both B and C. |