Macroeconomics Quiz CH 4

What are the components of GDP?

• Gross Income, Net Income, Disposable Income, Personal Income Tax

• Household Spending, Business Investment, Foreign Purchases, Personal Income

• Exports, Imports, Savings, Taxes

• Consumption, Investment, Government Spending, Net Exports

What is the formula for Net Domestic Product (NDP)?

• GDP - Consumption of Fixed Capital

• GDP - Government Spending

• GDP - Net Foreign Factor Income

• GDP - Indirect Business Taxes

What does the consumption function describe?

• Relationship between savings and income

• Relationship between government spending and net exports

• Relationship between investment and interest rate

• Relationship between consumption and disposable income

What is the marginal propensity to consume (MPC)?

• Proportion of increased-income households likely to spend on consumption rather than saving

• Percentage of household income spent on goods and services

• Ratio of investment to income

• Fraction of disposable income households put into saving

What is the saving function?

• I = 퐼̅ + 푖Y

• C = a + bYd

• Yd = C + S

• S = -a + (1-b)Yd

What is the investment function?

• I = 퐼̅ + 푖Y

• S = -a + (1-b)Yd

• G = 퐺̅

• NX = X - M

What does the investment-interest rate relationship refer to?

• Relationship between consumption and disposable income

• Relationship between government spending and net exports

• Relationship between savings and income

• Relationship between the investment level and the economy's interest rate

What is the government spending function?

• I = 퐼̅ + 푖Y

• S = -a + (1-b)Yd

• G = 퐺̅

• NX = X - M

What is the net export function?

• NX = X - M = 푋̅ - 푀̅ - 푚Y

• S = -a + (1-b)Yd

• I = -푐푖

• I = 퐼̅ + 푖Y -푐푖

What is the symbol of autonomous export?

• 푖Y

• 푐

• 푀̅

• 푋̅