Pre-Test Chap 27 e18 - Pre-Test Chap 27 e18 Student: _ 1....

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Pre-Test Chap 27 e18 Student: ___________________________________________________________________________ 1. The consumption schedule would be shifted upward by: A. A decrease in real and financial assets B. A rising level of household debt C. Expectations of rising prices D. An increase in taxes 2. Which would shift the saving schedule downward? A. An increase in real and financial assets B. Expectations of falling incomes C. Expectations of falling prices D. A decrease in taxes 3. If the slope of a linear consumption schedule increases in a private, closed economy, then it can be concluded that the: A. MPS has increased B. MPC has increased C. Income has increased D. Income has decreased 4. Assume the MPC is .6. If spending increases by $8 billion, income will increase by: A. $8 billion B. $13.3 billion C. $15 billion D. $20 billion 5. The saving schedule shows the relationship of saving of households to the level of: A. Consumption B. Investment C. Disposable income D. The average propensity to save 6. In general, the steeper the consumption schedule the: A. Smaller is the marginal propensity to consume B. Greater is the average propensity to consume C. Smaller is the multiplier D. Larger is the multiplier
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7. An $18 billion increase in spending creates $18 billion of new income in the first round of the multiplier process and $13.5 billion in the second round. The multiplier in the economy is: A. 2 B. 3 C. 4 D. 5 8. Other things being equal, business taxes fall, investment: A. Is likely to decrease B. Is likely to increase C. Is not likely to change D. May increase, decrease, or stay the same Answer the next question(s) on the basis of the following table that illustrates the multiplier process. 9. Refer to the above table. The marginal propensity to consume is: A. .5 B. .75 C. .8 D. .9
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10. Refer to the above graph. As income rises from level 1 to level 2, the amount of: A. Consumption increases and the amount of dissaving decreases B. Consumption increases and the amount of dissaving increases
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Pre-Test Chap 27 e18 - Pre-Test Chap 27 e18 Student: _ 1....

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