Test3_sample - 1.Use the table below to determine...

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1.Use the table below to determine autonomous consumption spending. Real Real Disposable Consumption Income Spending ($Billions) ($Billions) $ 0 $ 100 200 280 400 460 600 640 800 820 1,000 1,000 1,200 1,180 a. $0 b. $100 c. $180 d. $200 e. $1,000 2. Use the information in previous question to determine the marginal propensity to consume (MPC). a. 0 b. 0.8 c. 0.9 d. 1.0 e. 1.8 Table 1. Real GDP or Real Income Consumption Spending Investment Spending Government Purchases Net Exports Aggregate Expenditure 1,000 950 100 50 200 1,300 1,500 1,350 100 50 200 1,700 2,000 1,750 100 50 200 2,100 2,500 2,150 100 50 200 2,500 3,000 2,550 100 50 200 2,900 3,500 2,950 100 50 200 3,300 4,000 3,350 100 50 200 3,700 3. Use data in Table 1 to answer the question: In this economy, the equilibrium level of GDP is a. 1,700 b. 2,000 c. 2,500 d. 3,000 e. 3,500 4. Use data in Table 1 to answer the question: If GDP in this economy is currently $3,500 million, then Inventories will a. Increase by 100 b. Increase by 200 c. Decrease by 100 d. Decrease by 200
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e. Stay the same 5. Which of the following is not an automatic stabilizer? a. forward-looking behavior b. interest rates c. imports d. transfer payments e. consumption spending 6. Suppose an economy has an MPC of 0.75. Initially, the economy is operating at full-employment output. Then, two things happen simultaneously: autonomous consumption falls by $100 billion, and planned investment falls by $150 billion. Suppose the government wanted to use a change in government purchases as a countercyclical fiscal policy to prevent any recession. What should government do? a. Increase government expenditure by 250 billion b. Decrease government expenditure by 250 billion c. Increase government expenditure by 1,000 billion d. Decrease government expenditure by 1,000 billion e. Do nothing and wait until economy gets back to potential level. 7. If we know that the slope of the consumption function is 0.6, then we know that if real disposable income increased by $1,000 billion, real consumption spending would a. increase by $60 billion b. increase by $1,000 billion c. increase by $600 billion
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Test3_sample - 1.Use the table below to determine...

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