Exam II ECON 2105 Fall 2008A

Exam II ECON 2105 Fall 2008A - Exam II ECON 2105 Fall 2008...

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1) Consider the following scenario: an individual makes 50,000/year in disposable income and saves 5,000 of it each year. If next year the income of this individual increases to 60,000/year and his saving increases to 7,000 year, then a) the marginal propensity to save is 50% b) the marginal propensity to save is 75% c) the marginal propensity to consume is 80% d) the average propensity to save is 90% e) none of the above 2) Consider the setup from the previous question. What would the multiplier in this simple economy be (no income tax is present)? a) 2 b) 3 c) 4 d) 5 e) 6 3) Follow the previous setup. If the government wanted to raise the GDP level by 200 dollars what would the increase in the government spending have to be? a) 100 b) 66.7 c) 50 d) 40 e) 33.3 4) If the government were to introduce income taxes in this example, what would happen to the multiplier? a) It would increase b) It would decrease c) It would remain unchanged 5) If the marginal propensity to consume increases then the multiplier will a) Increase b) Decrease c) Remain unchanged 6) Which of the following relationships is NOT captured in the slope of the AD? a) consumer confidence b) the wealth effect that is induced by a change in the price level c) the open economy effect resulting from the change in the domestic price level and its impact on trade d) none of the above For questions 7-10 state whether (remember that the same choice can be used more than once) A – the AD increases B – the AD decreases C – the LRAS increases
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This note was uploaded on 03/06/2012 for the course BIOL 2107 taught by Professor J.louten during the Spring '10 term at SPSU.

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Exam II ECON 2105 Fall 2008A - Exam II ECON 2105 Fall 2008...

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