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Quiz 2

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Question 1 (1.0 points)
Use the following information to answer the question below.
C = 1000 + .8YD
I = 800
G = 2000
T = 1000
The exogenous variables in this model are:
  1. T, G, and I.
  2. C and Y.
  3. G only.
  4. T only.
  5. S only.
Question 2 (1.0 points)
For a closed economy, which of the following conditions must be satisfied for equilibrium to be maintained?
  1. X = IM = 0
  2. G = T
  3. S = I
  4. none of the above
Question 3 (1.0 points)
Based on our understanding of the model presented in Chapter 3, we know with certainty that an increase in investment will cause:
  1. a reduction in the multiplier.
  2. an increase in the multiplier.
  3. an increase in output.
  4. a reduction in the marginal propensity to save.
Question 4 (1.0 points)
An increase in the marginal propensity to consume from .5 to .7 will cause:
  1. the ZZ line to become steeper and a given change in government spending (G) to have a larger effect on output.
  2. the ZZ line to become steeper and a given change in government spending (G) to have a smaller effect on output.
  3. the ZZ line to become flatter and a given change in government spending (G) to have a smaller effect on output.
  4. the ZZ line to become flatter and a given change in government spending (G) to have a larger effect on output.
Question 5 (1.0 points)
If C = 100 + .5YD, what increase in government spending would raise GDP by 1000?
  1. 2000
  2. 2500
  3. 1000
  4. 500
  5. 1500
Question 6 (1.0 points)
Which of the following components of GDP is the largest for the United States?
  1. government spending
  2. exports
  3. investment
  4. consumption
  5. imports
Question 7 (1.0 points)
The marginal propensity to consume represents:
  1. the change in output caused by a one-unit change in autonomous demand.
  2. the level of consumption that occurs if disposable income is zero.
  3. the change in consumption caused by a one-unit change in disposable income.
  4. the ratio of total consumption to disposable income.
  5. total income minus total taxes.
Question 8 (1.0 points)
In the model of the goods market presented in Chapter 3, which of the following variables is endogenous?
  1. disposable income (YD)
  2. demand (Z)
  3. saving (S)
  4. consumption (C)
  5. all of the above
Question 9 (1.0 points)
A reduction in the marginal propensity to save from .3 to .1 will cause:
  1. the ZZ line to become steeper and a given change in government spending (G) to have a larger effect on output.
  2. the ZZ line to become flatter and a given change in government spending (G) to have a smaller effect on output.
  3. the ZZ line to become steeper and a given change in government spending (G) to have a smaller effect on output.
  4. the ZZ line to become flatter and a given change in government spending (G) to have a larger effect on output.
Question 10 (1.0 points)
Suppose the consumption equation is represented by the following: C = 100 + .75YD. Given this information, the marginal propensity to save is ________.
  1. 4
  2. 0.25
  3. 0.75
  4. 1.33
  5. none of the above
Question 11 (1.0 points)
Which of the following events will cause an increase in equilibrium output?
  1. an increase in taxes
  2. an increase in the marginal propensity to consume
  3. an increase in the marginal propensity to save
  4. all of the above
  5. none of the above
Question 12 (1.0 points)
A reduction in the marginal propensity to consume from .8 to .7 will cause:
  1. the ZZ line to become flatter and a given change in government spending (G) to have a larger effect on output.
  2. the ZZ line to become steeper and a given change in government spending (G) to have a larger effect on output.
  3. the ZZ line to become flatter and a given change in government spending (G) to have a smaller effect on output.
  4. the ZZ line to become steeper and a given change in government spending (G) to have a smaller effect on output.
Question 13 (1.0 points)
An increase in the marginal propensity to save from .2 to .3 will cause:
  1. the ZZ line to become steeper and a given change in government spending (G) to have a smaller effect on output.
  2. the ZZ line to become steeper and a given change in government spending (G) to have a larger effect on output.
  3. the ZZ line to become flatter and a given change in government spending (G) to have a larger effect on output.
  4. the ZZ line to become flatter and a given change in government spending (G) to have a smaller effect on output.
Question 14 (1.0 points)
Based on our understanding of the model presented in Chapter 3, we know with certainty that a reduction in investment will cause:
  1. a reduction in the multiplier.
  2. an increase in the multiplier.
  3. a reduction in the marginal propensity to save.
  4. none of the above
Question 15 (1.0 points)
Use the following information to answer the question(s) below.
C = 1000 + .8YD
I = 800
G = 2000
T = 1000
The equilibrium level of GDP for the above economy equals:
  1. 8000.
  2. 15000.
  3. 6000.
  4. 10000.
  5. none of the above
Question 16 (1.0 points)
A reduction in consumer confidence will cause:
  1. a reduction in investment.
  2. no change in investment.
  3. no change in autonomous spending.
  4. an increase in investment.
Question 17 (1.0 points)
Based on our understanding of the model presented in Chapter 3, we know with certainty that an equal and simultaneous increase in G and T will cause:
  1. no change in output.
  2. a reduction in output.
  3. an increase in investment.
  4. an increase in output.
Question 18 (1.0 points)
An increase in consumer confidence will cause:
  1. no change in investment.
  2. no change in autonomous spending.
  3. an increase in investment.
  4. a reduction in investment.
Question 19 (1.0 points)
Based on our understanding of the model presented in Chapter 3, we know with certainty that an equal and simultaneous reduction in G and T will cause:
  1. an increase in output.
  2. an increase in investment.
  3. no change in output.
  4. a reduction in output.
Question 20 (1.0 points)
Which of the following conditions must be satisfied in a closed economy?
  1. exports equal imports
  2. there is no government spending or taxes
  3. saving equals investment
  4. government spending equals taxes
  5. none of the above
Question 21 (1.0 points)
Which of the following equals demand in an open economy?
  1. C + I + G + X
  2. C + I + G + IM - X
  3. C + I + G + X - IM
  4. C + I + G
Question 22 (1.0 points)
The marginal propensity to consume and the marginal propensity to save must:
  1. sum to exactly one.
  2. have the ratio 2 to 1.
  3. sum to more than one.
  4. sum to less than one.
  5. be equal to each other.
Question 23 (1.0 points)
Which of the following represents total saving for an economy?
  1. the sum of private saving and fixed investment
  2. the sum of taxes and government spending
  3. the sum of private saving and consumption
  4. the excess of taxes over government spending
  5. none of the above
Question 24 (1.0 points)
Disposable income is:
  1. the same as "income".
  2. income minus saving.
  3. income after adding transfers and subtracting taxes.
  4. income minus both saving and taxes.
  5. consumption minus taxes.
Question 25 (1.0 points)
When government spending is calculated to determine GDP, spending by which of the following is included?
  1. federal, state, and local governments
  2. state and local governments only
  3. federal government only
  4. the federal and state governments only
  5. none of the above
Copyright 2008, by the Contributing Authors. Cite/attribute Resource. admin. (2006, July 14). Quiz 2. Retrieved October 12, 2008, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/Economics/Macroeconomics_for_Managers/quiz2.htm. This work is licensed under a Creative Commons License. Creative Commons License
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