Exam Econ 222 Second Exam - 9 ECON 222 Prof Takis...

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Unformatted text preview: 9) ECON 222 Prof. Takis Papakyriazis Summer, 2003 . SECOND EXAM 1. MPC is a. the change in consumption divided by the change in income. b. consumption divided by income. c. the change in consumption divided by the change in saving. d. the change in saving divided by the change in income. 2. If the MP8 is .15, MPG a. is 1.15. b. is .85. c. is .15. d. Cannot be determined by the given information. 3. If Jack received a $1,000 bonus and his MP8 is 0.15, his consumption rises by $ and his saving rises by $ 150; 500 850; 150 150; 850 1,000; 150 a b c d Higher interest rates are likely to a have no effect on consumer spending or saving. b decreases consumer spending and increase consumer saving. c decrease both consumer spending and consumer saving. d increase consumer spending and decrease consumer saving. 5. Consumption is a. positively related to household income and wealth and households' expectations about the future, but negatively related to interest rates. ’negatively related to household income and wealth, interest rates, and households' expectations about the future. fletermined only by income. ‘ d . positively related to household income and wealth, interest rates, and households' expectations about the future. saving Saving (3 LOW Income Figure 8.1 6. Refer to Figure 8.1. The MP8 for this household is and the MP0 is a. 0.4; 0.6 b. 0.5; 0.5 c. 0.2; 0.8 d 0.3; 0.7 10. 11. 12. 13. 14. I envy: comumption Refer to Figure 8.2. Along the line segment AC, Jerry's consumption equals his income. consumption is greater than his income. saving is zero. saving is positive. 999'!» J eny's consumption Jerry’s Income Figure 8.2 Refer to Figure 8.2. Suppose Jerry's MPC increased. At income Y1, Jerry's a. consumption will be greater than his income. b. consumption will be less than his income. saving will be zero. All of the above Suppose consumption is $4,000 when income is $6,000 and MPC equals 0.8. When income increases to $7,000, consumption is .7 _. t 9: a. t ’8' b. _ $5,600. “[000 -59” c. $4,600. ,, ~30 v» d. $4,800. C "w '- C“ If the MP8 is .55, the MPC is a. Y45. b. Y65. c. 1.45. d. 2.55. If the consumption function is in the form C = 80 + 0.6Y, MPS equals a. -0.6. b. 0.4. c. 0.5. d -0.4. 20. 85§§ Agyogato consumption 1m 2CD 3011 Aggregate income Figure 8.3 Refer to Figure 8.3. Which of the following statements is FALSE? a. Aggregate saving is negative for all income levels below $400 billion. b. For all aggregate income levels above $200 billion, aggregate consumption is less than aggregate income. ‘ c. If consumption is the only expenditure, this economy would be in equilibrium at an aggregate income level of $200 billion. d. Saving is negative at all income levels below $200 billion. E» % <1 1'1 72 Amgm income Figure 8.4 Refer to Figure 8.4. The aggregate consumption functions C1 and C2 a. have the same MPC. b. have the same MPS. c. differ in terms of the amount of consumption when income is zero. d. all of the above. ’E‘ 2:: .9 a, no i g ‘1 400 am 900 r Aggregate income (an billions) Figure 8.5 Refer to Figure 8.5. The MP8 for this saving function is a. 5. b. Y25. c. Y5. d 4. All Figures in Billions of Dollars Aggregate Output Aggregate Consumption Planned Investment 200 30 I ' 50 400 450 50 600 600 50 800 750 50 1,000 900 50 Table 8.3 25. Refer to Table 8.3. At an aggregate output level of $400 billion, planned expenditure equals a. $400 billion. b. $450 billion. GHZ 0. $500 billion. d $850 billion. 26. Refer to Table 8.3. The equilibrium level of aggregate output equals a. $400 billion. b. $600 billion. $800 billion. C. d. $1,000 billion. %n as ea 2m .3 175 got, 150 Q < 100 zoo zoo Assesmmmfim'lfim) Figure 8.8 27. Refer to Figure 8.8. Equilibrium output equals a. 100. b. 200. c. 150. d 300. 28. Refer to‘l'lgm At aggregate output levels below $41680 million, there are {unplanned increases in inventories and output increases. b. unplanned decreases in inventories and output increases. c. unplanned decreases in inventories and output decreases. per—unplanned increases in inventories and output decreases; 29. Which of the following is NOT a category of fiscal policy? «a? Government policies regarding the purchase of goods and services —b./ Government policies regarding taxation 0. Government policies regarding money supply in the economy I Government policies regarding transfer payments and welfare benefits g in 3 is a? m 9° 7m 3 200 4f. ' Awesmwfibimw) Figure 9.4 36. Refer to Figure 9.4. What is the value of theexpeaditures-multiplier? a. 8 b. 10 c. 12 d. 20 37. Assume an economy is in equilibrium at an output level of $400 billion. If government spending decreases by $50 billion, then at the output level of $400 billion, there is a. an unplanned increase in inventories. b. an unplanned inventory change of zero. c. either an unplanned increase or decrease in inventories depending on the value of the MPC. d. an unplanned fall in inventories. I 38. The formula for the tax multiplier is a. -(MPS/MPC). . MPS/MPC. c. (MPC/MPS). . -1/MPS. 39. If the MP8 is .25, the tax multiplier is a. -9. b. c. -3. d. Aggogm expenditures (5 billions) 40. Refer to Figure 9.5. Which of the following equations ‘best represents the aggregate expenditures function? a. AE = 750 + .5Y. b. AE = 2,250 + .75Y. c. AE = 750 + .75Y. d. AE = 2,250 + .25Y. 47. 48. 49. As the size of the MP0 increases, the value of the balanced-budget multiplier a. increases. b. decreases. c. remains constant. d. could either increase or decrease. The balanced-budget multiplier a. equals 0. b. is greater than 0 but less than 1. c. is greater than 1. d. None of the above The total amount owed by the federal government to the public is the a. federal budget deficit. b. federal debt. / net tax revenue. ,d/ fiscal drag. 50.? of the following is a CORRECT sequence of events during a recession? . Unemployment falls, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit rises. b. Unemployment rises, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit rises. c. Unemployment rises, income falls, tax revenue rises, unemployment benefits fall, and the budget deficit falls. d. Unemployment rises, income rises, tax revenue rises, unemployment benefits rise, and the budget deficit rises. 11 ...
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