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Unformatted text preview: c. rnom = 5%, QLF = 15 billion
d. rnom = 5%, QLF = 8 billion
Page 1 of 11 5. Let rGDP* be the “very” short run equilibrium level of output. If rGDP < rGDP*, then:
a. Iu > 0; firms produced too much; consumption was lower than expected.
b. Iu < 0; firms produced too much; consumption was higher than expected.
c. Iu > 0; firms didn’t produce enough; consumption was lower than expected.
d. Iu < 0; firms didn’t produce enough; consumption was higher than expected.
6. The table to the right shows the consumption
levels of three consumers at different levels of
individual income. Assuming there is no
income tax, what is the aggregate marginal
propensity to consume?
d. 0.833 Consumer
800 Individual Income
1,300 7. Consider an economy whose aggregate expenditure line has a slope of 0.8. The income tax rate t =
11.1%. What is the spending multiplier in this economy?
d. 10 8. The full statement of short-run equilibrium output is given by the equation
When this equation holds true, which of the following options is FALSE?
a. MPC = 1
b. t = 0.25
c. TR = 0
d. Iu > 0
9. When Ann’s disposable income is 10 she spends it all on consumption goods. When her disposable
income is 15 she spends 12.5 on consumption. Assuming her marginal propensity to consume (MPC)
is constant, calculate her MPC and autonomous consumption (A).
a. MPC=0.5, A=5
b. MPC=1, A=0
c. MPC=0.125, A=10
d. MPC=0.5, A=2.5 Page 2 of 11 10. An economy has a level of government spending 200, no income tax, and no lump-sum taxes or
0.6 and autonomous consumption
20. Total investment
100. The planned aggregate expenditure function in this economy is
420 0.4 .
320 0.4 .
520 0.6 . 11. An economy initially has an income tax rate t of ½, and an MPC of ½. After a financial crisis, the
savings rate rises and the MPC falls to ¼ (while all other au...
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- Spring '08