practicequestions7fall2004

- Econ 102 Fall 2004 Practice Questions 7 Readings Chapter 10 and Appendixes The Short-Run Macro Model I Binary 1 The presence of structural

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Econ 102 Fall 2004 Practice Questions 7 Readings: Chapter 10 and Appendixes: The Short-Run Macro Model I: Binary 1. The presence of structural unemployment in the economy means the economy is not in equilibrium. a. True b. False 2. The consumption function is the relationship between real consumption spending and real disposable income. a. True b. False 3. In the simple Keynesian model, consumption spending increases when the interest rate increases. a. True b. False 4. If the increase in exports equals the increase in imports, the aggregate expenditure function is unaffected. a. True b. False 5. In the simple Keynesian model, the expenditure multiplier is always equal to 1/(1-MPC), no matter the value of the MPC. a. True b. False 6. The Keynesian model is a more recent and better tool to analyze the behavior of the economy at the aggregate level. a. True b. False 7. The aggregate expenditure function and the consumption function have the same slope. a. True b. False 8. An increase in wealth results in a movement along the consumption function. a. True b. False 9. The tax multiplier is equal to the negative of the expenditure multiplier pre-multiplied by the marginal propensity to consume. a.
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This note was uploaded on 08/08/2008 for the course ECON 102 taught by Professor Drozd during the Spring '08 term at Wisconsin.

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- Econ 102 Fall 2004 Practice Questions 7 Readings Chapter 10 and Appendixes The Short-Run Macro Model I Binary 1 The presence of structural

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