Econ 151 unit 5

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March 14th, 2023

question

Fluctuations in investment:

answer

account for more of the variability in gross domestic product (GDP) than consumption.

question

At the equilibrium level of real gross domestic product (GDP), unplanned inventory adjustment equals _____.

answer

zero

question

In the simple aggregate expenditure model, the slope of the aggregate expenditure line depends on:

answer

the marginal propensity to consume.

question

The fraction of an increase in income that is saved is referred to as the _____.

answer

marginal propensity to save

question

Along the consumption function, an increase in disposable income will:

answer

cause a movement along the given consumption function.

question

An increase in the market interest rate, other things equal, will _____.

answer

reduce the amount invested because the opportunity costs of investing will be higher

question

If the price level in an economy increases, other things constant, consumption spending is likely to _____.

answer

decrease because the real value of wealth decreases

question

An increase in the price level in an economy will _____.

answer

shift the aggregate expenditure line downward

question

The slope of the consumption function shows how:

answer

consumption changes as the level of income changes.

question

If consumption is greater than income, saving must be negative.

answer

True

question

The slope of the consumption function equals the marginal propensity to consume.

answer

True

question

Which of the following is true of the relationship between disposable income and consumption?

answer

Consumption is the dependent variable and disposable income is the independent variable.

question

Which of the following will shift the consumption function upward?

answer

An increase in net wealth

question

The marginal propensity to consume is:

answer

the relationship between a change in consumption and a change in income.

question

An increase in income in other countries, other things equal, would cause U.S. _____.

answer

imports to remain unchanged and exports to increase

question

Identify the correct statement about net exports.

answer

The value of net exports increases as real domestic income decreases.

question

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

answer

1.0.

question

Increases in the marginal propensity to consume (MPC), other things constant, _____.

answer

increase the value of the multiplier

question

In the income-expenditure framework, if planned aggregate expenditures are less than real gross domestic product (GDP), _____.

answer

inventories will increase

question

An increase in the interest rate will increase consumption spending.

answer

False

1 of 20

question

Fluctuations in investment:

answer

account for more of the variability in gross domestic product (GDP) than consumption.

question

At the equilibrium level of real gross domestic product (GDP), unplanned inventory adjustment equals _____.

answer

zero

question

In the simple aggregate expenditure model, the slope of the aggregate expenditure line depends on:

answer

the marginal propensity to consume.

question

The fraction of an increase in income that is saved is referred to as the _____.

answer

marginal propensity to save

question

Along the consumption function, an increase in disposable income will:

answer

cause a movement along the given consumption function.

question

An increase in the market interest rate, other things equal, will _____.

answer

reduce the amount invested because the opportunity costs of investing will be higher

question

If the price level in an economy increases, other things constant, consumption spending is likely to _____.

answer

decrease because the real value of wealth decreases

question

An increase in the price level in an economy will _____.

answer

shift the aggregate expenditure line downward

question

The slope of the consumption function shows how:

answer

consumption changes as the level of income changes.

question

If consumption is greater than income, saving must be negative.

answer

True

question

The slope of the consumption function equals the marginal propensity to consume.

answer

True

question

Which of the following is true of the relationship between disposable income and consumption?

answer

Consumption is the dependent variable and disposable income is the independent variable.

question

Which of the following will shift the consumption function upward?

answer

An increase in net wealth

question

The marginal propensity to consume is:

answer

the relationship between a change in consumption and a change in income.

question

An increase in income in other countries, other things equal, would cause U.S. _____.

answer

imports to remain unchanged and exports to increase

question

Identify the correct statement about net exports.

answer

The value of net exports increases as real domestic income decreases.

question

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

answer

1.0.

question

Increases in the marginal propensity to consume (MPC), other things constant, _____.

answer

increase the value of the multiplier

question

In the income-expenditure framework, if planned aggregate expenditures are less than real gross domestic product (GDP), _____.

answer

inventories will increase

question

An increase in the interest rate will increase consumption spending.

answer

False

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