1) Higher export demand __________ output and a higher MPZ __________ output? a. reduces, reduces b. reduces, increase c. increase, reduces d. increases, increases
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2) when the level of income _________ there will be a tendency for the trade balance to improve as imports? a. increase, increase b. falls, increase c. falls, fall d. increase, fall
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3) Aggregate demand in an economy trading internationally with a government sector can be written as ? a. AD = C + I b. AD = C + I + G c. AD = C + I + G + X + Z d. AD = C + I + G + X – Z
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4) Starting from a balanced budget, for a given tax rate, an increasing in income will cause the government budget to ? a. move into surplus b. move into deficit c. remain unchanged d. None of the above above
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5) Aggregate demand without a foreign sector is the sum of ? a. C + 1 b. C + G c. I + G d. C + 1 + G
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6) If the MPC is 0.5 the multiplier is ? a. 2 b. 1/2 c. 0.2 d. 20
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7) The multiplier tells us how much __________ changes after a shift in ____________? a. consumption income b. investment output c. savings investment d. output aggregate demand
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8) If desired spending in the economy exceeds income we would expect ? a. households to save more b. firms to produce less c. firms to produce more d. the MPC to change
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9) A linear consumption function with a positive slope less than one means that if income increases consumption will ? a. fall b. not change c. fluctuate d. increase
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10) In a macroeconomic model without foreign trade or a government aggregate demand is the sum of ? a. personal saving and private investment b. personal saving and personal consumption c. personal consumption and private investment d. None of the above
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