Economics 4

If the marginal propensity to consume were 60 percent, how much would be saved of an additional dollar of income?

• $1.

• $.60.

• $.40.

• impossible to say

The level of GDP, the overall price level, and the level of employment are influenced by events in this market

• the goods-and-services market.

• the labor markets.

• the financial (money) markets.

• All of the above

Which of the following will NOT shift the consumption function upward?

• an increase in wealth.

• a fall in the real interest rate.

• an increase in disposable income.

• none of the above shift the consumption function upward.

As a nation’s GDP increases, that nation’s

• autonomous consumption decreases.

• autonomous consumption increases.

• imports increase.

• exports increase.

In the above figure, the line APE = C + I + G + NX is called

• the consumption function.

• the aggregate demand.

• the saving function.

• the expenditure function.

The marginal propensity to save (MPS) is

• total saving divided by total consumption expenditure.

• the decrease in saving per dollar increase in consumption expenditure.

• the decrease in saving that is caused by inflation.

• the increase in saving per dollar increase in disposable income.

The slope of the aggregate expenditure curve equals the change in

• autonomous expenditure divided by the change in real GDP.

• real GDP divided by the change in planned expenditure.

• planned expenditure divided by the change in real GDP.

• government expenditure divided by the change in real GDP.

Which of the following is NOT an autonomous expenditure in the aggregate expenditures model?

• imports

• investment

• exports

• government purchases

When investment is below planned investment, aggregate planned expenditure is ......... than actual aggregate expenditure and inventories are ...............than planned.

• greater; less

• less; greater

• less; less

• greater; greater

The multiplier is

• the ratio of the change in real GDP to the change in autonomous expenditure.

• the ratio of the change in autonomous expenditure to the change in real GDP.

• the ratio of the equilibrium level of real GDP to the change in induced expenditure.

• the ratio of the change in induced expenditure to the change in autonomous expenditure.