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Economics - Chapter 12 MCQs

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Question;Assessment 12Note: It is recommended that you save your response as you complete each question.________________________________________Question 1 (0.25 points)Autonomous consumptionQuestion 1 options:is the same as the break-even point.gives the amount a person changes planned consumption for a change in real disposable income.is the amount of consumption that is independent of the level of disposable income.is the proportion of total disposable income that is consumed.SaveQuestion 2 (0.25 points)Consumption goodsQuestion 2 options:include goods such as CD's that firms hold in inventory.are only the goods bought by households for immediate satisfaction.include spending on machines and buildings so that goods can be produced in the future.are goods that are used to make other goods.SaveQuestion 3 (0.25 points)Refer to the above table. The table gives the combinations of income and consumption for a college student for a year. What does the average propensity to consume equal when income equals $14,000?Question 3 options:0.090.70.91 [APC=Real consumption/Real Disposable income =12800/14000=0.91]1.1SaveQuestion 4 (0.25 points)A permanent reduction in investment spending leads toQuestion 4 options:a more than proportional increase in real GDP.a more than proportional decrease in real GDP. [As I falls, the multiplier effect results in a larger than proportional decrease in RDGP]a less than proportional decrease in real GDP.a proportional decrease in real GDP.SaveQuestion 5 (0.25 points)Question 5 options:average propensity to consume.average propensity to save.marginal propensity to consume.marginal propensity to save.SaveQuestion 6 (0.25 points)Saving differs from savings in thatQuestion 6 options:saving is a flow while savings is a stock.saving is a stock while savings is a flow.saving is both a flow and a stock while savings is a stock.saving is a stock while savings is a flow.SaveQuestion 7 (0.25 points)The ratio of the change in the equilibrium level of real GDP to the change in autonomous real expenditures is theQuestion 7 options:average propensity to consume.marginal propensity to consume.multiplier.unplanned investment.SaveQuestion 8 (0.25 points)An increase in investment spending causesQuestion 8 options:a movement along the C + I + G + X curve and a shift of the aggregate demand curve.a shift of the C + I + G + X curve and a movement along the aggregate demand curve.a shift of the C + I + G + X curve but has no effect on the aggregate demand curve.a shift of the C + I + G + X curve that causes the aggregate demand curve to shift.SaveQuestion 9 (0.25 points)Refer to the above table. When real GDP equals 10Question 9 options:government expenditures will increase.the economy is in equilibrium.unplanned inventories will increase.unplanned inventories will decrease.SaveQuestion 10 (0.25 points)Refer to the above table. The table gives the combinations of income and consumption for a college student for a year. The break-even level of income isQuestion 10 options:06,00010,000 [At 10,000 Real Disposable income > or = Planned Real Consumption expenditure]14,000SaveQuestion 11 (0.25 points)Question 11 options:average propensity to consume.average propensity to save.marginal propensity to consume.marginal propensity to save.SaveQuestion 12 (0.25 points)Whenever total planned expenditures differ from real GDPQuestion 12 options:unplanned inventories will remain unchanged.unplanned inventories will change.government spending will adjust.tax revenues will move the economy back to equilibrium.SaveQuestion 13 (0.25 points)A lump-sum tax, such as a $1000 tax that every family must pay one time, isQuestion 13 options:a type of income tax.an autonomous tax.negatively related to real GDP.a regressive tax.SaveQuestion 14 (0.25 points)Keynes thought that the key to determining the broader economic effects of investment fluctuationsQuestion 14 options:was to examine how businesses react to flexible prices and wages.was to closely regulate the real interest rate.was to understand the relationship between how much people earn and their willingness to engage in personal consumption spending.was to understand how changes in the money supply influences consumption decisions.SaveQuestion 15 (0.25 points)Which of the following is a flow variable?Question 15 options:SavingsWealthConsumptionPopulationSaveQuestion 16 (0.25 points)Which of the following will not lead to a change in investment?Question 16 options:A firm downgrades its future profitability.A new discovery leads to a technological advancement.The government just lowered business taxes.The cost of borrowing has just decreased.SaveQuestion 17 (0.25 points)The marginal propensity to consume is 0.8. There is a $2,000 increase in autonomous consumption. Real GDP will increase byQuestion 17 options:$1,600. [dY/dE=m=0.8, i.e. dY=dE*0.8=2000*0.8=1600]$2,000.$2,500.$10,000.SaveQuestion 18 (0.25 points)The average price of a share of stock on the New York Stock Exchange falls by 30 percent. Other things constant, we would expectQuestion 18 options:an increase in the marginal propensity to consume.a decrease in the marginal propensity to consume.a shift up of the consumption function.a shift down of the consumption function. [The real net wealth of the household decreases and the consumption function shifts down]SaveQuestion 19 (0.25 points)At the point where consumption function intersects the 45 degree reference lineQuestion 19 options:planned real consumption equals real disposable income.equilibrium output is supply determined equilibrium output is determined by both.planned saving equals real disposable income.planned consumption of real disposable income equals zero.SaveQuestion 20 (0.25 points)Consumption expenditures include all of the following EXCEPTQuestion 20 options:buying a pizza.going to a concert.having your house cleaned by Klean Maids.purchasing a share of stock.

 

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