If GDP = C + I and DI = C + S, then ...

a. C = S

b. C = I

c. I = S

d. GDP = C

What two characteristics of a line equation have to occur in order for the consumption function to be valid?

A. positive slope and positive intercept

B. positive slope and negative intercept

C. negative slope and negative intercept

D. negative slope and positive intercept

How can you use your income?

A. Spend it

B. Spend it or save it

C. Invest it and save it

D. Save it

What is not one of the four simplifying assumptions to study the Aggregate Expenditures Model

A. No Depreciation

B. No Government

C. All saving is done in households

D. Limited Grocery shopping

What is the aggregate expenditure? 

a. expected future income 

b. total spending in the economy

c. no international trades 

d. total take-home pay

How do you solve for APC (Average propensity to consume)?

A. APC=C/DI

B. APC=DI/C

C. APC=S/DI

D. APC=C*DI

what does APC + APS equal 

A. 2

B. 3

C. 1

D. 4

Which of the following is not an assumption of the aggregate expenditure model?

A. No international trade

B. No government

C. No savings are done by households

D. No depreciation  

How do you solve for GDP when using the assumptions discussed in class?

A. C + S = GDP

B. DI + S = GDP

C. C + I + G + NX = GDP

D. C + I = GDP

Disposable income is positively correlated to all of the following except...

A. Consumption

B. Savings

C. APC

D. APS

What is the opposite of wealth?

A. Disposable Income 

B. Consumer Indebtedness 

C. Interest Rates 

D. Household Wealth 

What is the definition of marginal propensity to consume? 

A. proportion of a change in income that households spend

B. proportion of a change in income that households save

C. proportion of income that households spend

D. proportion of income that households save 

What's the difference between MPC and MPS? 

A. MPC is proportion of a change in income that households save, and MPS is proportion of a change in income that households spend.

B. MPC is proportion of a change in income that households spend, and MPS is proportion of a change in income that households save.

C. MPC is propensity to consume and MPS is propensity to spend.

D. MPC is propensity to spend and MPS is propensity to consume. 

What does DI equal?

A) C+S

B) C+I

C) S/C

D) C/I

As disposable income  _____ consumer spending _______

A. stays the same, goes down

B. goes up, goes up

C. goes down, goes down

D. goes down, goes up

Consumer indebtedness has what type of relationship?

A. Inverse with the more in debt, consumption increases 

B. Inverse with the more debt, consumption decreases

C. Direct with the more debt, consumption decreases

D. Direct with the more debt, consumption increases 

What is the interest rate 

A. The cost of money

B. How much you like something 

C. Flow variable 

D. Fixed 

How many ways are there to use your income?

a. 1

b. 2

c. 3

d. 4

What are the 2 things that you can do with Disposable Income?

A. Spend it or save it 

B. only can save or invest it

C. Sell things you buy with it 

D. only one thing you can do which is Spend it 

How many simplifying assumptions must we make in order to study the Aggregate Expenditure Model?

A. One

B. Two

C. Three

D. Four

What are the only two things you can do with Disposable Income?

A. Share and Spend 

B. Save and Spend

C. Donate and Sacrifice 

D. Wealth and Savings 

The consumption function has a _____ slope and a ______ intercept. 

a. negative, positive 

b. positive, negative

c. negative, negative

d. positive, positive 

Multiplier =

A. 1/APC

B. 1/MPS

C. 1/DI

D. 1/APS

What is the paradox of thrift?

A. A thrift store name

B. What is good for economy is good for the individual.

C. What is bad for economy is good for individual.

D. What is bad for economy is bad for individual.

What occurs, in terms of investment, when we are at equilibrium?

A. actual investment is greater than planned investment

B. actual investment is less than planned investment

C. actual investment is equal to planned investment

D. actual investment is not related to planned investment

What is the value of the multiplier if the MPS is equal to 0.45?

A. 3.34

B. 1.27

C. 2.22

D. 4.57

What does the Multiplier equal?

A) The change in Nominal GDP/ The Final Change in Spending

B) The change in Real GDP/The Initial Change in Spending

C) The change in Nominal GDP/The Initial Change in Spending 

D) The change in Real GDP/ The Final Change in Spending

Which is not true about the multiplier?

A. Multiplier = 1/MPS

B. There is an inverse relationship between MPS and the multiplier

C. There is a direct relationship between MPS and the multiplier 

D. Multiplier = the change in real GDP / the initial change in spending 

What does actual investment always equal?

a. consumption function 

b. positive intercept

c. spending by firms

d. savings

What is meant by equilibrium?

a. When all is right with the world

b. what's good for you is bad for the economy

c. the relationship shown between real GDP and initial change in spending

d. where the consumption function cross the 45 degree line

What type of relationship is there between MPS & the multiplier?

A. Direct 

B. Inverse 

C. Positive 

D. Linear 

Based upon the Paradox of Thrift, which of the following are true? 

a. The more you spend, the better for the economy vs the more you save, the worse for the economy. 

b. What is good for economy is good for the individual.

c. What is bad for economy is bad for individual.

d. All is right with the world 

What Statement is False?

A. Equilibrium means that all is right with the world. 

B.  The Multiplier = 1/MPC

C. "What's good for a person is bad for the economy as a whole" is the definition of The Paradox of Thrift. 

D. There is an inverse relationship between The Multiplier and MPS. 

Actual Investment equals...

A) Equilibrium

B) Savings

C) MPS

D) C

Equilibrium is reached when...

A. Customers will not buy any more because they are satisfied.

B. The amount planned for investment is actually invested.

C. When disposable income is equal to consumption.

D. When one is divided by the MPS.

MPS equals proportion of a change in income that we (     ).

A. Give to charity

B. Give to family members

C. Spend to buy necessary items

D. Save

As mps goes up the multiplier _______.

A. goes up

B. goes down

C. stays the same 

D. disappears

Multiplier = x/MPS, what does x equal 

A. 2

B. 3

C. 4

D. 1

Given a chart where will PI be found?

A. 1/APC

B. On the Chart

C. Calculating C=DI from the values 

D. 1/MPS

If APC is equal to 0.83, what is APS equal to?

A. 0.17

B. -0.17

C. 0.83

D. -0.83

What would the C, S, APC, APS, MPC, MPS and breakeven with the following data:

DI = 100 C = 40 + .40DI

A. C = 216.7, S = -7, APC = 1.08, APS = -.8, MPC = .40, MPS =  .60, breakeven = 50

B. C = 28, S = 17, APC .80, APS = .20, MPC = .40, MPS = .40, breakeven = 60

C. C = 80, S = 20, APC = 0.8, APS 0.2, MPC = 0.40, MPS = 0.6, breakeven = 66.67

D. C = 80, S = 20, APC = 0.8, APS 0.1, MPC = 0.4, MPS = 0.6, breakeven = 66.67

What does Actual Investments equal? 

A. Savings

B. MPS

C. Income

D. Money spent

What does actual investment equal?

A) Income

B) Savings

C) GDP

D) Revenue

Household income is a ______ variable.

A. Constant

B. Flow 

C. Consumer

D. Quantity demanded

What trade barrier does not protect domestic users?

A. Protective tariffs

B. Import Quotas

C. Export Subsidies

D. Nontariff Barriers

Which of the following does NOT lead to comparative advantage?

A. having a larger company

B. the different climate and natural resources

C. the different types of technology

D. external economies

GATT is known for?

A. establishing a free trade zone in NA

B. reducing tariffs among approximately 100 countries

C. establishing the EU

D. increasing demand by imposing tariffs on imported goods

How do protective tariffs protect domestic producers? 

A) raise prices on domestic products to make demand for foreign products rise

B) decrease supply of foreign products to increase demand of domestic products

C) raise supply of domestic products to increase demand

D) raise prices on foreign substitutes to make demand for domestic products rise 

What limits supply and raises demand, causing a shortage?

A. protective tariffs

B. import quotas

C. export subsidies 

D. nontariff barriers

Which of these is not a trade barrier?

A. Import Quota

B. Export Subsidies 

C. Nontariff barriers  

D. Comparative advantage 

What does NAFTA stand for?

A. North American Free Trade Agreement

B. National Association of Federal Tax Agreement

C. North American Federation of Taxes 

D. North American Fax Trade Association 

What did the European Union do that was beneficial for international trade? 

a. Made it easier to communicate worldwide

b. They created a union

c. They created a central currency called the euro 

d. They created a free trade zone between Canada, the U.S., and Mexico

What are protective tariffs and what do they raise? 

a. a shortage; price goes up higher than domestic  

b.  cost placed on an imported good and meant to protect domestic producers; raise the price of a compliment 

c. cost placed on an imported good and meant to protect domestic producers; raise the price of a substitute 

d.  cost taken off an imported good and meant to protect domestic producers; raise the price of a substitute 

Which of the following is NOT a reason why we don't see complete specialization?

A. not all goods and services are traded internationally

B. production of most goods involves increasing opportunity costs

C. GDP differs for every country 

D. taste for products differ

What trade barrier limits the supply, raises the price of substitutes, and increases demand for domestic?

A. Protective Tariffs 

B. Import Quotas 

C. Export subsidies 

D. Nontariff Barriers

Transportation technology helps to make trade...?

A. Faster, Easier, Cheaper

B. Faster, Easier, More expensive

C. Slower, Easier, Cheaper

D. Slower, Easier, More expensive

What is an example of a non-tariff trade barrier?

A. Subsidies, Embargos, Boycotts. (Limits to free trade.)

B. Foreign Wages

C. Domestic Employment 

D.  National Security 

Which is NOT a factor that facilitates trade?

A. Peace

B. Communications Technology

C. Population

D. Transportation Technology

What did NAFTA create in North America?

A. A free trade zone.

B. An international highway.

C. A new stock market.

D. A new economic boom.

Which of the following is a factor that facilitates trade?

A. General decline in tariffs

B. War

C. New business in Europe

D.  Positive GDP

Which of the following is true:

A. All goods and services are traded internationally 

B. Taste for products are generally the same 

C. Production of most goods involves opportunity costs 

D.   Tariffs don't increase demand for products 

Which one of these is a trade barrier?

A. Transportation Technology

B. Import Quotas

C. EU

D. General decline in tariffs

What is free trade between countries?

A. All items are free

B. A central currency is used

C. There are no tariffs between the countries

D. There are open borders

Why was the euro good for global trade

A. Standardized currency in most of Europe

B. Dollars are bad

C. To uphold the gold standard 

D. To stop the Swiss

What is NOT an example of something that causes a general decline in tariffs?

A. NAFTA

B. ASAP

C. EU

D. GAAT

Which of these are examples of trade Barriers 

A. NAFTA 

B. GATT

C.EU (not an answer indicator)

D.  Nontariff barriers

What is the correct meaning for NAFTA?

A. North American financial trade association 

B. North American free trade agreement 

C. National American financial trade agreement

D. National American free trade agreement

Which is not a factor that facilitates trade?

A) General decline in tariffs

B) Communications Technology

C) Stock Market Analysis

D) Transportation Technology