Macroeconomics II

Disposable income is....

• Marginal Propensity to Consume

• Marginal Propensity to Save

• Personal Income less Taxes

• All of the above choices are true.

If the income increases by £800, spending rises by £560 and saving grows by £240, what will be the proportion of Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS)?

• MPC=0.8

  MPS=0.2

• MPC=0.7

  MPS=0.3

• MPC=0.3

  MPS=0.7

• MPC=0.2

  MPS=0.8

If the spending multiplier is 3.3 (1/0.3=3.3), how much will £560 of new consumption increase GDP?

• £ 1848

• £169.6

• £4000

• None

There is an inverse relationship between the price level and real gross domestic product (RGDP) in aggregate demand. True/False

• True

• False

Increase in business tax and regulations will result in aggregate supply curve shift to the ....

• Right

• Left

• No changes

Inflationary gap occurs when ... .It means the economy is experiencing low level of unemployment.

• Current output> Long-run Output

• Current Output<Long-run Output

• Current Output=Long-run Output

What are the automatic stabilisers in the economy?

• Fiscal policy

  Taxes

  Benefits

• Budget Deficit

  Taxes

  Transfer Payments

• Taxes

  Benefits

• All correct