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You are watching: Given that c = $500 + 0.8yd, if the level of disposable income is $1,000, the level of saving is




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13. (Figure: Consumption and Real GDP) The slope of the consumption function is called the:A) marginal propensity to save.B) average propensity to consume.C) marginal propensity to consume.D) marginal consumption increment.
14. (Figure: Consumption and Real GDP) If real GDP is $4 trillion, consumption is _______ trillion.A) $0.75B) $1 C) $3 D) $4
16. (Table: Individual and Aggregate Consumption Functions) Which of the following represents Fred"s individual consumption function?A) C=100+0.7YD.B) C=100+0.5YD.C) C=150+0.8YD.D) C = 0.80YD.
Use the following to answer questions 17-18:Scenario: Consumption SpendingSuppose that the consumption function is: C = $500 + 0.8 × YD, where YD is disposable income.17. (Scenario: Consumption Spending) Autonomous consumption is:A) $500.B) 0.C) 0.8 of disposable income.D) $1,300 if disposable income is $1,000.
18. (Scenario: Consumption Spending) The marginal propensity to consume is: A) $500.B) 0. C) 0.8. D) 0.2.
20. According to the table, the MPC and autonomous consumption are ________ and ________, respectively, for Bob.A) 0.6; $10,000B) 0.4; $13,000C) 0.6; $9,000D) 0.4; $9,000
44. (Figure: Aggregate Expenditures and Real GDP) At a real GDP of $9,000 billion:A) planned investment is less than investment.B) planned investment equals investment.C) planned investment is greater than investment.D) there will be no unplanned investment.
45. (Figure: Aggregate Expenditures I) Refer to the figure Aggregate Expenditures I. The equilibrium real GDP is:A) $500 billion.B) $300 billion.C) $700 billion.D) $625 billion.
46. (Figure: Aggregate Expenditures I) Refer to the figure Aggregate Expenditures I. When real GDP is $700 billion, there will be a:A) $125 million increase in unplanned inventory investment.B) $125 million decline in unplanned inventory investment.C) $200 million decline in unplanned inventory investment.D) $200 million increase in unplanned inventory investment.
Scenario: A Country"s Consumption FunctionA country is closed. It has no government sector, and its aggregate price levels and interest rate levels are fixed. Furthermore, the marginal propensity to consume is constant and the country"s consumption function is as follows: C = 200 + 0.75YD, where YD is disposable income and C is consumption. Assume that planned investment equals 75.51. (Scenario: A Country"s Consumption Function) Given this consumption function, if this country experienced an increase in income of $10,000, consumption would increase by: A) $10,000.B) $7,500.C) $200. D) $7,700.
70. (Figure: Shift of the Aggregate Demand Curve) A movement from point A on AD1 to point C on AD2 could have resulted from a(n):A) lower price level.B) higher price level.C) increase in the total quantity of consumer goods and services demanded at every price level.D) significant decrease in the income level of consumers.
71. (Figure: Shift of the Aggregate Demand Curve) A movement from point B on AD1 to point E on AD2 could have been the result of:A) an increase in consumer optimism.B) an increase in consumer pessimism.C) an increase in personal income taxes.D) the central bank reducing the quantity of money.
72. (Figure: Shift of the Aggregate Demand Curve) A movement from point C on AD2 to point A on AD1 may have been the result of:A) an increase in investment demand due to optimistic GDP forecasts.B) a decrease in investment due to pessimistic GDP forecasts.C) decreases in the taxes paid by businesses.D) lower interest rates.
73. (Figure: Shift of the Aggregate Demand Curve) An increase in aggregate demand is illustrated by a movement from:A) AD1 to AD2.B) point C to point A.C) point B to point A.D) point C to point E.
84. (Figure: Aggregate Supply Movements) Refer to the accompanying figure called Aggregate Supply Movements. In this figure, ________.A) an increase in the price level is responsible for pushing the SRAS curve to the rightB) a decrease in the price level is responsible for pushing the SRAS curve to the rightC) that there has been an increase in the short-run aggregate supplyD) that there has been a decrease in the short-run aggregate supply
94. (Figure: Aggregate Supply) If the economy is at point E, which of the following describes the likely adjustment process?A) Nominal wages increase, and the short-run aggregate supply curve shifts left until actual and potential output are equal.B) Nominal wages increase, and the short-run aggregate supply curve shifts right until potential output is greater than actual output.C) Nominal wages decrease, and the short-run aggregate supply curve shifts right until actual and potential output are equal.D) Nominal wages decrease, and the short-run aggregate supply curve shifts right until potential output is less than actual output.
A) Nominal wages increase, and the short-run aggregate supply curve shifts left until actual and potential output are equal.
110. (Figure: Inflationary and Recessionary Gaps) In panel (a), an expansionary policy designed to move the economy from Y1 to Yp would attempt to:A) shift the aggregate demand curve to the left by increasing aggregate demand.B) shift the aggregate demand curve to the right by increasing aggregate demand.C) shift the SRAS curve to the left.D) shift the LRAS curve to the left.
111. (Figure: AD–AS Model I) If the economy is at point X, there is:A) an inflationary gap with low unemployment.B) an inflationary gap with high unemployment.C) a recessionary gap with low unemployment.D) a recessionary gap with high unemployment.
112. (Figure: AD–AS Model II) If nominal wages fall, which of the following will take place in the short run?A) SRAS curve will shift to the left.B) SRAS curve will shift to the right.C) LRAS will shift to the right.D) AD curve will shift to the right.
113. (Figure: AD–AS) Suppose that initially the economy is at long-run equilibrium. If the government cuts taxes, ________.A) SRAS will shift to the rightB) SRAS will shift to the leftC) AD will shift to the rightD) AD will shift to the left
127. (Figure: Short-Run Equilibrium) The accompanying graph shows the current short-run equilibrium in the economy. Appropriate fiscal policy action in this situation would be:A) a decrease in transfer payments.B) an increase in government purchases.C) a decrease in tax rates.D) an increase in the investment tax credit.
128. (Figure: Short-Run Equilibrium) The accompanying graph reflects a short-run inflationary gap. According to the labeling on the graph, the size of the inflationary gap is equal to:A) P2–P1.B) Y1–YP.C) P2–P0.D) P1–P0.
129. (Figure: Short-Run Equilibrium) If the economy is at equilibrium at Y1 and P1, the government should use __________ fiscal policy to shift the aggregate demand curve to the ________.A) expansionary; rightB) expansionary; leftC) contractionary; rightD) contractionary; left
130. (Figure: Short-Run Equilibrium) If the economy is at equilibrium at Y1 and P1, the appropriate policy to return the economy to potential output would be a(n):A) increase in transfer payments.B) increase in government spending.C) increase in taxes.D) decrease in taxes.
131. (Figure: Short- and Long-Run Equilibrium) Using the accompanying figure, which of the following would be the appropriate response of the government upon viewing the state of the economy?A) Expand aggregate demand by increasing taxes to close the inflationary gap.B) Reduce aggregate demand by cutting taxes to close the inflationary gap.C) Expand aggregate demand by cutting taxes to close the recessionary gap.D) Reduce aggregate demand by increasing taxes to close the recessionary gap.
132. (Figure: Short- and Long-Run Equilibrium) If the economy is at equilibrium at E1, it is experiencing a(n):A) recessionary gap.B) inflationary gap.C) high level of unemployment.D) liquidity trap.
133. (Figure: Short- and Long-Run Equilibrium) If the economy is at equilibrium at E1, the government should use __________ fiscal policy to shift the aggregate demand curve to the ________ .A) expansionary; rightB) expansionary; leftC) contractionary; rightD) contractionary; left
134. (Figure: Short- and Long-Run Equilibrium) If the economy is at equilibrium at E1, the appropriate policy to return the economy to potential output would be a(n):A) increase in transfer payments.B) decrease in transfer payments.C) increase in taxes.D) decrease in government spending.
140. (Figure: Inflationary and Recessionary Gaps) At E1, the economy:A) is in equilibrium.B) has an inflationary gap.C) has a recessionary gap.D) is booming.
141. (Figure: Inflationary and Recessionary Gaps) At E2, the economy:A) is in equilibrium.B) has an inflationary gap.C) has a recessionary gap.D) is booming.
142. (Figure: Inflationary and Recessionary Gaps) At E3, the economy:A) is in equilibrium.B) has an inflationary gap.C) has a recessionary gap.D) is stagnating.
143. (Figure: Inflationary and Recessionary Gaps) A movement from AD3 to AD1 could be caused by:A) increased government purchases.B) increased government transfers.C) higher tax rates.D) increased government purchases, increased government transfers, or higher taxrates.
144. (Figure: Inflationary and Recessionary Gaps) Which of the following measures an inflationary gap?A) Y3–Y1. B) Y3–Y2. C) Y2–Y1. D) Y3–Y0.
145. (Figure: Inflationary and Recessionary Gaps) Which of the following measures a recessionary gap?A) Y3–Y1. B) Y3–Y2. C) Y2–Y1. D) Y3–Y0.
146. A government might want to increase aggregate demand to:A) close an inflationary gap.B) close a recessionary gap.C) lower prices in the economy.D) lower employment in the economy.
147. (Figure: Fiscal Policy I) Suppose that this economy is in equilibrium at E1. If there is an increase in government purchases, then:A) AD2 will shift to the left, causing an increase in the price level and a decrease in real GDP.B) AD2 will shift to the left, causing a decrease in the price level and a decrease in the real GDP.C) AD1 will shift to the right, causing an increase in the price level and an increase in real GDP.D) AD1 will shift to the right, causing a decrease in the price level and an increase inreal GDP.
148. (Figure: Fiscal Policy II) Suppose that this economy is in equilibrium at E1. If there is a decrease in government transfers, then:A) AD2 will shift to the left, causing an increase in the price level and a decrease in real GDP.B) AD2 will shift to the left, causing a decrease in the price level and a decrease in the real GDP.C) AD1 will shift to the right, causing an increase in the price level and an increase in real GDP.D) AD1 will shift to the left, causing a decrease in the price level and a decrease in real GDP .
152. (Figure: AD–AS) Suppose the economy is producing the output level Yp and a negative demand shock shifts the AD1 curve to AD3. The economy now has:A) an inflationary gap, which can be closed by expansionary fiscal policy.B) a recessionary gap, which can be closed by contractionary fiscal policy.C) a recessionary gap, which can be closed by expansionary fiscal policy.D) an inflationary gap, which can be closed by contractionary fiscal policy.
158. (Figure: Short-Run Equilibrium) The accompanying graph shows the economy in short- run equilibrium. To move the economy to potential GDP, the government should reduce government spending by an amount equal to:A) (Y1–YP)B) (Y1 –YP)/(1–MPC)C) (Y1 – YP)MPCD) (Y1 – YP)(1 – MPC)
162. (Scenario: Fiscal Policy) Refer to the information provided in the scenario. The government spending multiplier in Arcadia is equal to:A) 5.B) three-fourths.C) 4. D) 3.
163. (Scenario: Fiscal Policy) Refer to the information provided in the scenario. If actual output is 500 billion arcs, what should the government do to restore the economy to potential output?A) increase taxes by 25 billion arcsB) decrease taxes by 25 billion arcsC) increase government spending by 25 billion arcsD) decrease government spending by 25 billion arcs
183. (Table: Monetary Aggregates) Refer to the information in the table. The value of M1 is:A) $880 billion.B) $895 billion.C) $2,005 billion.D) $920 billion.
184. (Table: Monetary Aggregates) Refer to the information in the table. M2 is:A) $2,805 billion.B) $3,340 billion.C) $3,355 billion.D) $2,005 billion.
190. (Table: Balance Sheet) Refer to the information in the balance sheet. If the reserve ratio is 25%, loans are:A) $5,000. B) $15,000. C) $60,000. D) $80,000.
206. (Scenario: Holding Cash) As a result of the deposit, required reserves will increase by: A) $0B) $1,200 C) $3,000D) $6,000
207. (Scenario: Holding Cash) As a result of the deposit, the bank"s loans will increase by: A) $6,000B) $1,200C) $3,000D) $4,800
208. (Scenario: Monetary Base and Money Supply) How much is M1?A) $325 billionB) $330 billionC) $380 billionD) $480 billion
209. (Scenario: Monetary Base and Money Supply) How much is the monetary base?A) $325 billionB) $330 billionC) $225 billionD) $175 billion
210. (Scenario: Monetary Base and Money Supply) How much are required reserves?A) $50 billionB) $100 billionC) $150 billionD) $250 billion
211. (Scenario: Monetary Base and Money Supply) How much are excess reserves?A) $50 billionB) $100 billionC) $150 billionD) $250 billion
212. (Scenario: Monetary Base and Money Supply) By how much can checkable bank deposits increase?A) $100 billionB) $250 billionC) $500 billionD) $1,650 billion
219. (Table: ABC Bank"s Balance Sheet) Refer to the balance sheet. If the minimum reserve ratio for ABC Bank is 10%, then the bank is required to maintain minimum reserves of:A) $10 million.B) $15 million.C) $9.5 million.D) $7.5 million.
220. (Table: ABC Bank"s Balance Sheet) According to the information in ABC Bank"s balance sheet, the bank is holding excess reserves of:A) $17 million.B) $15 million.C) $5 million.D) $25 million.


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