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# B increase the marginal propensity to consume c

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Unformatted text preview: on to close an expansionary gap is to: a) increase transfer payments. b) increase the marginal propensity to consume. c) increase taxes. d) increase potential output. e) increase government purchases. 29. In Macroland potential output equals \$100 trillion and the natural rate of unemployment is 5 percent. If the actual unemployment rate is 7 percent, then the output gap equals: a) \$5 trillion. b) \$1 trillion. c) \$7 trillion. d) \$4 trillion. e) \$2 trillion. 30. The interest rate promised when a bond is issued is called the: a) dividend rate. d) real after-tax rate of interest. b) coupon rate. e) real rate of interest. c) discount rate. Page 7 of 11 ECO 2013 – Section 0008 – QUIZ IV – Version 1 O. Mikhail – http://www.bus.ucf.edu/omikhail 31. In Macroland autonomous consumption equals 100, the marginal propensity to consume equals .75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Short-run equilibrium output in this economy equals: a) 1150 b) 387 c) 1280 d) 1000 e) 1160 32. You expect a share of RiskyEcon.Com to sell for \$56 a year from now and to pay a dividend of \$1 per share annually. If the current interest rates on government bonds is 5%, but you demand a risk premium of 5% to hold a share of this risky stock, what is the most you should pay for this stock today (rounded to the nearest dollar)? a) \$54 b) \$57 c) \$52 d) \$63 e) \$56 33. A recession occurs when either _____ and/or _______. a) potential output grows rapidly; actual output equals potential output b) potential output grows rapidly; actual output falls below potential output...
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## This note was uploaded on 03/31/2012 for the course ECON 112 taught by Professor Merinoff during the Spring '12 term at SUNY Jefferson.

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