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1 | |
We would expect a Keynesian economist to believe that governments should ___________ and _______________ |
|
| | A) | not intervene, allow the economy to regulate itself |
| | B) | intervene, keep output close to potential output |
| | C) | balance their budget, practice strict monetarism |
| | D) | promote supply-side policies, impose trade barriers |
|
2 | |
In a macroeconomic model without foreign trade or a government, aggregate demand is the sum of |
|
| | A) | personal saving and private investment |
| | B) | personal saving and personal consumption |
| | C) | personal consumption and private investment |
| | D) | none of the above |
|
3 | |
A linear consumption function with a positive slope less than one means that if income increases, consumption will ___________ |
|
| | A) | fall |
| | B) | not change |
| | C) | fluctuate |
| | D) | increase |
|
4 | |
Short-run equilibrium output means that aggregate demand _________ actual output |
|
| | A) | is less than |
| | B) | equals |
| | C) | is greater than |
| | D) | fluctuates around |
|
5 | |
If desired spending in the economy exceeds income we would expect _________ |
|
| | A) | households to save more |
| | B) | firms to produce less |
| | C) | firms to produce more |
| | D) | the MPC to change |
|
6 | |
When investment is assumed to autonomous the slope of the AD schedule is determined by the _______________ |
|
| | A) | marginal propensity to invest |
| | B) | disposable incomes |
| | C) | marginal propensity to consume |
| | D) | average propensity to consume |
|
7 | |
The multiplier tells us how much ____________ changes after a shift in ________________ |
|
| | A) | consumption, income |
| | B) | investment, output |
| | C) | savings, investment |
| | D) | output, aggregate demand |
|
8 | |
The multiplier is calculated as |
|
| | A) | 1/(1 - MPC) |
| | B) | 1/MPS |
| | C) | 1/MPC |
| | D) | a or b |
|
9 | |
If the MPC is 0.5, the multiplier is ________ |
|
| | A) | 2 |
| | B) | 1/2 |
| | C) | 0.2 |
| | D) | 20 |
|
10 | |
If as a result of households' wish to save more, there is a change in equilibrium income and no change in equilibrium saving, this is an example of ___________ |
|
| | A) | market imperfection |
| | B) | the law of diminishing returns |
| | C) | the paradox of thrift |
| | D) | market failure |
|
11 | |
The sum of the MPS and MPC is 1 |
|
| | A) | TRUE |
| | B) | FALSE |
|
12 | |
In equilibrium savings exceed investment |
|
| | A) | TRUE |
| | B) | FALSE |
2002 A McGraw-Hill Online Learning Centre