Question 1

The marginal propensity to consume (MPC)refers to the proportion of disposable income that is spent on consumption.

Accepted Answer

A) True 
 B)False

Question 2

If income rises from $12,000 to $12,400 and consumption rises from $11,800 to $12,176,the marginal propensity to consume is __________ percent.

Accepted Answer

A)   8
B)   85
C)   16
D)   94E) C) and D)
F) B) and D)

Question 3

-Refer to Exhibit 10-9.What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (G) and the value of the multiplier that would correctly fill in blank (H) ?

Accepted Answer

A)   0.80; 20
B)   0.80; 5
C)   0.20; 0.80
D)   0.50; 0.50
E)   There is not enough information given to answer this question.F) All of the above
G) A) and C)

Question 4

John Maynard Keynes was a very famous economist from

Accepted Answer

A)   the United States.
B)   England.
C)   Germany.
D)   Ireland.E) A) and C)
F) All of the above

Question 5

How does the classical position on saving differ from Keynes's position?

Accepted Answer

A)   Classical position: people save more at lower interest rates.Keynes's position: people save less at lower interest rates.
B)   Classical position: changes in the interest rate are irrelevant to saving decisions.Keynes's position: saving is directly related to the interest rate.
C)   Classical position: saving is directly related to the interest rate.Keynes's position: at times,saving may be inversely related to the interest rate.
D)   Classical position: saving can be inversely related to the interest rate.Keynes's position: consumption rises as saving rises.
E)   none of the aboveF) A) and E)
G) B) and C)

Question 6

If total production is greater than total expenditures,then business firms

Accepted Answer

A)   have underproduced.
B)   will step up production.
C)   will lower production.
D)   will experience decreases in inventory.
E)   a and bF) D) and E)
G) A) and C)

Question 7

Discuss how the Great Depression contributed to the development of Keynesian economics.

Accepted Answer

During the Great Depression,high levels ...

Question 8

The two major curves or lines in the TE-TP diagram are:

Accepted Answer

A)   the total expenditure curve and the 45-degree line.
B)   the supply and demand curves.
C)   the total expenditures and national income curves.
D)   the total production and national income curves.E) A) and D)
F) A) and C)

Question 9

Most economists think that the Keynesian position is that

Accepted Answer

A)   the wage rate will never fall and the price level will never adjust downward if the economy is in a recessionary gap.
B)   the time required before wages and prices adjust downward is short enough for the economy to be called self-regulating.
C)   the time required before wages and prices adjust downward is long enough for the economy to exist in a recessionary gap for a long time.
D)   the time required before wages and prices adjust downward if the economy is in a recessionary gap is rather long,but short enough for the economy to be considered self-regulating.E) All of the above
F) A) and B)

Question 10

Keynes held that saving is more responsive to changes in income than to changes in the interest rate.

Accepted Answer

A) True 
 B)False

Question 11

Explain the sequence of events that occurs in the economy once total production (TP)is less than total expenditure (TE).

Accepted Answer

If TP is less than TE,it indicates that ...

Question 12

Here is a consumption function: C = C0 + MPC(Yd) .If C0 = $200,then we know that

Accepted Answer

A)   if Yd is zero,C will be $200.
B)   when Yd rises,C rises by $200.
C)   when Yd falls,C falls by MPC times C0.
D)   C will always equal C0.E) A) and B)
F) All of the above

Question 13

Here is a consumption function: C = C0 + MPC(Yd) .If consumption is $3,000,MPC =0.80,and disposable income is $2,900,what does autonomous consumption equal?

Accepted Answer

A)   $100
B)   $5,900
C)   $680
D)   $500
E)   none of the aboveF) A) and E)
G) A) and D)

Question 14

Keynes's major work,The General Theory of Employment,Interest and Money,was published during the

Accepted Answer

A)   late 1800s.
B)   mid-1700s.
C)   1930s.
D)   Panic of 1907.E) A) and C)
F) All of the above

Question 15

In the Keynesian analysis of changes from one Real GDP level to another,which of the following plays a critical role?

Accepted Answer

A)   changes in prices
B)   the relationship between optimum inventory levels and current inventory levels
C)   the long-run aggregate supply (LRAS) curve
D)   the relationship between total expenditures (T
E)  and the aggregate demand (A
D)  curve
E)   none of the aboveF) C) and D)
G) A) and B)

Question 16

Classical economists used efficiency wage models to support their belief in a self-regulating economy.

Accepted Answer

A) True 
 B)False

Question 17

In the real world,we should expect the multiplier process to work itself out

Accepted Answer

A)   almost instantaneously.
B)   within a few days.
C)   within about one month.
D)   over many months,perhaps even years.E) A) and D)
F) B) and D)

Question 18

1,autonomous consumption is equal to A)  C0. B)  C1. C)  C2. D)  C1 - C0. E)  C2 - C1." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 10-4.If the present level of disposable income is Yd1,autonomous consumption is equal to

Accepted Answer

A)   C0.
B)   C1.
C)   C2.
D)   C1 - C0.
E)   C2 - C1.F) None of the above
G) A) and B)

Question 19

When there is economy-wide equilibrium,there is a tendency for

Accepted Answer

A)   total output to rise.
B)   total output to fall.
C)   total output to remain unchanged.
D)   prices to fall.
E)   prices to rise.F) B) and E)
G) None of the above

Question 20

Which of the following is good evidence against the classical view of Say's law?

Accepted Answer

A)   Investment does not always rise as interest rates fall.
B)   Consumption falls by the amount that saving increases.
C)   Exports are usually greater than imports.
D)   People save more at higher interest rates than lower interest rates.
E)   none of the aboveF) A) and B)
G) A) and C)

Exam 10: Monopoly

Most economists think that the Keynesian position is that

Correct AnswerverifiedShow Answer

In the Keynesian analysis of changes from one Real GDP level to another,which of the following plays a critical role?

Correct AnswerverifiedShow Answer

When there is economy-wide equilibrium,there is a tendency for

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-4.If the present level of disposable income is Yd1,autonomous consumption is equal to

Correct AnswerverifiedShow Answer

Here is a consumption function: C = C0 + MPC(Yd) .If consumption is $3,000,MPC =0.80,and disposable income is $2,900,what does autonomous consumption equal?

Correct AnswerverifiedShow Answer

In the real world,we should expect the multiplier process to work itself out

Correct AnswerverifiedShow Answer

Here is a consumption function: C = C0 + MPC(Yd) .If C0 = $200,then we know that

Correct AnswerverifiedShow Answer

-Refer to Exhibit 10-9.What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (G) and the value of the multiplier that would correctly fill in blank (H) ?

Correct AnswerverifiedShow Answer

Keynes's major work,The General Theory of Employment,Interest and Money,was published during the

Correct AnswerverifiedShow Answer

If total production is greater than total expenditures,then business firms

Correct AnswerverifiedShow Answer

Discuss how the Great Depression contributed to the development of Keynesian economics.

Correct AnswerverifiedDuring the Great Depression,high levels ...View AnswerShow Answer

Classical economists used efficiency wage models to support their belief in a self-regulating economy.

Correct AnswerverifiedShow Answer

Explain the sequence of events that occurs in the economy once total production (TP)is less than total expenditure (TE).

Correct AnswerverifiedIf TP is less than TE,it indicates that ...View AnswerShow Answer

Which of the following is good evidence against the classical view of Say's law?

Correct AnswerverifiedShow Answer

The marginal propensity to consume (MPC)refers to the proportion of disposable income that is spent on consumption.

Correct AnswerverifiedShow Answer

John Maynard Keynes was a very famous economist from

Correct AnswerverifiedShow Answer

If income rises from $12,000 to $12,400 and consumption rises from $11,800 to $12,176,the marginal propensity to consume is __________ percent.

Correct AnswerverifiedShow Answer

The two major curves or lines in the TE-TP diagram are:

Correct AnswerverifiedShow Answer

Keynes held that saving is more responsive to changes in income than to changes in the interest rate.

Correct AnswerverifiedShow Answer

How does the classical position on saving differ from Keynes's position?

Correct AnswerverifiedShow Answer

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-Refer to Exhibit 10-4.If the present level of disposable income is Yd₁,autonomous consumption is equal to

Correct Answer
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Here is a consumption function: C = C₀ + MPC(Y_d) .If consumption is $3,000,MPC =0.80,and disposable income is $2,900,what does autonomous consumption equal?

Correct Answer
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Here is a consumption function: C = C₀ + MPC(Y_d) .If C₀ = $200,then we know that

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During the Great Depression,high levels ...
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If TP is less than TE,it indicates that ...
View Answer

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