Question 1

Which diagram in Figure 9.4 shows what happens to investment if the government decides to make housing cheaper by lowering interest rates?  Which diagram in Figure 9.4 shows how investment responds to the expectation that the economy is about to go into a period of fast growth,causing firms to expect increased sales?

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) A) and D)
F) A) and C)

Question 2

In Figure 9.5,a movement from Point A to Point C would result from

Accepted Answer

A)  An improvement in technology.
B)  An improvement in expectations for future sales.
C)  A decrease in the interest rates.
D)  A decrease in disposable income.E) None of the above
F) A) and B)

Question 3

The marginal propensity to consume (MPC)is related to the marginal propensity to save (MPS)by the formula MPC = 1 - MPS.

Accepted Answer

A) True 
 B)False

Question 4

Which diagram in Figure 9.4 shows what happens to investment as the economy enters a recession,causing both business expectations to collapse and saving to increase further,thus causing banks to lower interest rates?

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) A) and B)
F) A) and C)

Question 5

Using Figure 9.9,and assuming the full-employment output level is $50 billion,

Accepted Answer

A)  There is an inflationary gap of $50 billion income.
B)  There is a recessionary gap of $50 billion income.
C)  There is an inflationary gap of $25 billion income.
D)  The economy is at macro equilibrium.E) A) and B)
F) A) and C)

Question 6

Keynes was concerned that at macroeconomic equilibrium in a laissez faire free market economy,full employment

Accepted Answer

A)  And price stability might not continue simultaneously.
B)  Would continue but price stability might not.
C)  Might not continue but price stability would.
D)  None of the choices are correct.E) A) and B)
F) None of the above

Question 7

Suppose the consumption function is C = $200 + 0.85YD.If disposable income is $400,consumption is

Accepted Answer

A)  $200.
B)  $540.
C)  $340.
D)  $185.E) A) and B)
F) All of the above

Question 8

Keynes was concerned that at macroeconomic equilibrium the economy would experience

Accepted Answer

A)  Full employment and price stability.
B)  Full employment but not price stability.
C)  Price stability but not full employment.
D)  Neither full employment nor price stability.E) C) and D)
F) A) and B)

Question 9

Suppose the MPC in an economy is 0.9.The APC is initially 0.95 and disposable income is $4 billion.If disposable income increases to $14 billion,what is the new level of consumption?

Accepted Answer

A)  $13.3 billion.
B)  $12.8 billion.
C)  $9 billion.
D)  $12.6 billion.E) None of the above
F) B) and C)

Exam 9: Aggregate Demand

Using Figure 9.9,and assuming the full-employment output level is $50 billion,

Correct Answer
verified

Suppose the consumption function is C = $200 + 0.85Y_D.If disposable income is $400,consumption is

Correct Answer
verified

Keynes was concerned that at macroeconomic equilibrium in a laissez faire free market economy,full employment

Correct Answer
verified

Correct Answer
verified

In Figure 9.5,a movement from Point A to Point C would result from

Correct Answer
verified

Keynes was concerned that at macroeconomic equilibrium the economy would experience

Correct Answer
verified

Suppose the MPC in an economy is 0.9.The APC is initially 0.95 and disposable income is $4 billion.If disposable income increases to $14 billion,what is the new level of consumption?

Correct Answer
verified

The marginal propensity to consume (MPC)is related to the marginal propensity to save (MPS)by the formula MPC = 1 - MPS.

Correct Answer
verified

Which diagram in Figure 9.4 shows what happens to investment as the economy enters a recession,causing both business expectations to collapse and saving to increase further,thus causing banks to lower interest rates?

Correct Answer
verified

Exam 9: Aggregate Demand

Using Figure 9.9,and assuming the full-employment output level is $50 billion,

Correct AnswerverifiedShow Answer

Suppose the consumption function is C = $200 + 0.85YD.If disposable income is $400,consumption is

Correct AnswerverifiedShow Answer

Keynes was concerned that at macroeconomic equilibrium in a laissez faire free market economy,full employment

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In Figure 9.5,a movement from Point A to Point C would result from

Correct AnswerverifiedShow Answer

Keynes was concerned that at macroeconomic equilibrium the economy would experience

Correct AnswerverifiedShow Answer

Suppose the MPC in an economy is 0.9.The APC is initially 0.95 and disposable income is $4 billion.If disposable income increases to $14 billion,what is the new level of consumption?

Correct AnswerverifiedShow Answer

The marginal propensity to consume (MPC)is related to the marginal propensity to save (MPS)by the formula MPC = 1 - MPS.

Correct AnswerverifiedShow Answer

Which diagram in Figure 9.4 shows what happens to investment as the economy enters a recession,causing both business expectations to collapse and saving to increase further,thus causing banks to lower interest rates?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Suppose the consumption function is C = $200 + 0.85Y_D.If disposable income is $400,consumption is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct 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
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