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(Solution document) Question 1 (1 point) The classical economists argued that the production of goods and services generates an equal amount of income and, in turn,...


Question 1 (1 point)

 

The classical economists argued that the production of goods and services generates an equal amount of income and, in turn, total spending. This theory is called

Question 1 options:


A) Keynes' General Theory.


B) Say's Law.


C) the "aminal spirits" theory.


D) the law of autonomous consumption.

Question 2 (1 point)

 

According to Keynes, what is the most important determinant of households' spending on goods and services?

Question 2 options:


A) Disposable income.


B) Autonomous consumption.


C) The price level.


D) The interest rate.

Question 3 (1 point)

 

If households spend less on goods and services than they earn during the year, then

Question 3 options:


A) more dissaving will occur.


B) the marginal propensity to consumer (MPC) is negative.


C) autonomous consumption increases.


D) households must be saving.

Question 4 (1 point)

 

The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always equals

Question 4 options:


A) 0.


B) 1.


C) the interest rate.


D) the marginal propensity to invest (MPI).

Question 5 (1 point)

 

Which of the following would cause an upward shift in the consumption function?

Question 5 options:


A) More disposable income.


B) Greater wealth


C) A fall in consumer confidence.


D) A higher interest rate.

Question 6 (1 point)

 

Since 1960, real investment spending in the U.S. has

Question 6 options:


A) increased by at least 1 percent annually.


B) remained stable.


C) steadily declined.


D) fluctuated more than real personal consumption expenditures.

Question 7 (1 point)

 

If the interest rate rises, then firms' investment spending

Question 7 options:


A) also rises.


B) falls.


C) remains unchanged


D) reacts unpredictably.

Question 8 (1 point)

 


What is the households' marginal propensity to consume (MPC)?

Question 8 options:


A) 0.5


B) 0.67


C) 0.75


D) 0.8

Question 9 (1 point)

 


What is the value of autonomous invenstment?

Question 9 options:


A) $0.67 trillion.


B) $2 trillion.


C) $2.67 trillion.


D) $4.67 trillion.

Question 10 (1 point)

 


Aggregate income will equal consumption plus investment and the economy will be in equilibrium when real disposable income is

Question 10 options:


A) $4 trillion.


B) $6 trillion.


C) $8 trillion.


D) $10 trillion.

 







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