1. Disposable income is equal toA) income minus taxes.B) income plus taxesC) income plus saving minus taxes.D) consumption plus government purchases m

1. Disposable income is equal toA) income minus taxes.B) income plus taxesC) income plus saving minus taxes.D) consumption plus government purchases m

1. Disposable income is equal toA) income minus taxes.B) income plus taxesC) income plus saving minus taxes.D) consumption plus government purchases minus taxes.E) consumption plus saving minus taxes.2. If the MPC in an economy equals 0.8, and disposable income falls by $100, consumption spending will fall byA) $8.00.B) $0.80C) $80D) $20E) $5003. Which of the following will cause the consumption-income line to shift upward?A) An increase in incomeB) An increase in taxes.C) An increase in government spending.D) All of these answers.E) None of these answers.4. The increase in inventories during the year is equal toA) GDP ? AE.B) C + I + G + NX.C) AE – I.D) AE – (C + I + G + NX).E) C + I + G + NX – GDP.5. In the short-run macro model, a rise in autonomous consumption (a) causesA) a movement rightward along the consumption-income line.B) equilibrium real GDP to increase by an amount equal to the rise in autonomous consumption.C) equilibrium real GDP to decrease by an amount equal to the rise in autonomous consumption.D) no change in equilibrium real GDP.E) equilibrium real GDP to increase by a multiple of the rise in autonomous consumption.6. Automatic stabilizers areA) well-timed government policy changes that help keep the economy stable at full employment.B) forces in the economy that increase the size of the expenditure multiplier.C) spending shocks that move in the opposite direction of, and help to neutralize, other spending shocks.D) actions taken by foreign governments that help stabilize our own economy.E) none of these answers.7. In the short-run macro model, an increase in saving has the effect ofA) speeding economic growth.B) causing a recession.C) increasing consumption.D) increasing investment.E) increasing government spending.8. In the short-run macro model, cyclical unemployment is caused by insufficientA) spending.B) labor supply.C) labor demand.D) saving.E) taxes.9. If the MPC were equal to zero, the expenditure multiplier would be one.A) TrueB) False10. Autonomous consumption spending is represented graphically as the vertical intercept of the consumption function.A) TrueB) False11. An increase in disposable income causes the consumption function to shift upward.A) TrueB) False12. An increase in taxes causes the consumption-income line to shift downward.A) TrueB) False13. In the short-run macro model, an increase in autonomous consumption spending, investment spending, net exports, government purchases, or taxes will all cause equilibrium GDP to increase.A) TrueB) False14. When aggregate expenditure is less than GDP, the change in inventories is negative and GDP will increase in future periods.A) TrueB) False15. In the short-run macro model, an increase in government spending will cause an increase in employment.A) TrueB) False16. All else being equal, the larger the MPC, the larger will be the multiplier.A) TrueB) False17. As the economy adjusts to its new equilibrium after an increase in government spending, consumption spending rises.A) TrueB) False

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