WorksheetsUnit 3 Module 16 - 21
Total questions: 20
Worksheet time: 18mins
Name
Class
Date
1.
The equation for the spending multiplier is:
a)
1/MPC
b)
1/1+MPC
c)
1/MPS
d)
MPC/MPS
2.
If the MPC is .7 and gross investment spending increase by $3 billion, GDP will
a)
increase approximately by $10 billion
b)
increase approximately by 2.1 billion
c)
decrease approximately by $4.29 billion
d)
increase approximately by $4.29 billion
3.
The marginal propensity to consume is
a)
the change in income over the change in consumption
b)
the change in consumption as a result of a chang in income
c)
the slope of the savings curve
d)
the change in consumption over the change in savings
4.
An autonomous increase in aggregate income of $100 leads to additional spending of $80 in the next period and $64 in the following period and so on. From this information the value of the multiplier coefficient is
a)
0.8
b)
1.25
c)
5
d)
6
5.
If MPC = 0.75, the original equilibrium level of income = $300 bn and then investment falls by $20bn then the new equilibrium level of income =
a)
$380bn
b)
$280bn
c)
$220bn
d)
$205bn
6.
If the West Australian government decided to build a $1 billion football stadium and the marginal propensity to consume (MPC) for the state economy is 0.8, the level of income will
a)
remain unchanged
b)
increase by $800 million
c)
increase by $1 billion
d)
increase by $5 billion
7.
Which of the following occurs during an upswing (expansion)
(i) falling levels of unemployment
(ii) rising price levels
(iii) an increase in new investment
(iv) rising levels of household debt
(i) falling levels of unemployment
(ii) rising price levels
(iii) an increase in new investment
(iv) rising levels of household debt
a)
(i), (ii) and (iii)
b)
(i), (ii) and (iv)
c)
(i), (iii) and (iv)
d)
(i), (ii), (iii) and (iv)
8.
If Y = 200, C =100, I =30, G=40 and M =30, what is the value of exports?
a)
60
b)
40
c)
90
d)
50
9.
The largest and most stable component of aggregate demand is:
a)
savings
b)
consumption
c)
exports
d)
income
10.
Consumers spending $120 from a wage increase of $200 implies:
a)
an MPS of 0.8 and a multiplier of 5
b)
an MPS of 0.4 and a multiplier of 2.5
c)
an MPS of 0.6 and a multiplier of 2
d)
an MPS of 0.4 and a multiplier of 3.5
11.
If consumption spending totals $40 million, investment is $30 million, tax revenue totals $15 million, government spending is $10 million, exports are $3 million and imports are $5 million, GDP is...
a)
$103 million
b)
$80 million
c)
$93 million
d)
$78 million
12.
this is
a)
cost push inflation
b)
demand pull inflation
c)
disinflation
d)
structural unemployment
13.
With an MPS of 0.2, an increase in government spending of $240 m will result in the equilibrium level of income rising by
a)
$1200m
b)
$480m
c)
$960m
d)
$2400m
14.
When income is $200 consumption is $140, and when income is $250 consumption is $180. The marginal propensity to save is
a)
0.80
b)
0.75
c)
0.25
d)
0.20
15.
The value of the multiplier will increase if
a)
autonomous investment increases.
b)
induced investment increases.
c)
the MPC decreases.
d)
the MPS decreases.
16.
If taxation decreased by $20 million and government spending decreased by $20 million, other things being equal, the equilibrium level of income will
a)
increase by $20 million.
b)
remain unchanged.
c)
fall by $20 million.
d)
rise by $40 million
17.
Lionsville is an open economy with a complex multiplier of 2.5. The current level of GDP is $250m below the full employment level of GDP. For the government to close this gap, it needs to increase its spending by
a)
$250 million.
b)
$100 million.
c)
$10 million.
d)
$625 million.
18.
People in Oobi Doobi spend 80% of any change in income. If taxation decreased by $20 million and government spending decreased by $16 million, other things being equal, the equilibrium level of income will
a)
decrease.
b)
increase.
c)
decrease initially, then increase.
d)
not change.
19.
What would be the effect of an increase in imports?
a)
Increase AD
b)
Decrease AD
c)
Increase SRAS
d)
Decrease SRAS
20.
Which of the following would shift AS in the short run but not in the long run?
a)
Increase in capital stock
b)
Increase in wages
c)
Decrease in capital stock
d)
Improvements in technology
100 %
