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14.The ratio of the increase in ________ to the increase in ________ is called the multiplier.A) induced expenditure; equilibrium real GDPB) autonomous expenditure; equilibrium real GDPC) equilibrium real GDP; autonomous expenditureD) equilibrium nominal GDP; autonomous expenditurePoints Earned:1.0/1.0Correct Answer(s):C15.A decrease in the real interest rate willA) most likely increase consumer's purchases of durable goods.B) most likely increase the reward to savings.C) most likely increase the cost of borrowing.D) cause consumers to spend less and save more.Points Earned:0.0/1.0Correct Answer(s):A16.At macroeconomic equilibrium,A) total spending equals total production.B) total consumption equals total production.C) total taxes equal total transfers.D) total investment equals total inventories.Points Earned:1.0/1.0Correct Answer(s):A
17.Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $32,000, what will the new equilibrium level of GDP be if government spending increases to 2,500?C = 5,000 + (MPC)YI = 1,500G = 2,000NX = -500A) $32,500B) $34,000C) $38,000D) $42,000Points Earned:0.0/1.0Correct Answer(s):B18.Decreases in the price level willA) raise consumption because goods and services are more affordable.B) lower consumption because real wealth decreases.C) raise consumption because real wealth increases.D) lower consumption because goods and services are less affordable.Points Earned:1.0/1.0Correct Answer(s):C19.Consumption is $5 million, planned investment spending is $8 million, government purchases are $10 million, and net exports are equal to $2 million. If GDP during that same time period is equal to $27 million, what unplanned changes in inventories occurred?A) There was an unplanned increase in inventories equal to $2 million.B) There was an unplanned decrease in inventories equal to $19 million.C) There was no unplanned change in inventories.D) There was an unplanned decrease in inventories equal to $2 million.Points Earned:1.0/1.0
Correct Answer(s):A20.Which of the following leads to a decrease real GDP?A) households have increasingly optimistic expectations about future incomeB) an increase in the inflation rate in other countries, relative to the inflation in the United StatesC) an increase in government spendingD) an increase in interest ratesPoints Earned:0.0/1.0Correct Answer(s):D21.If the consumption function is defined as C = 5,500 + 0.9Y, what is the autonomous level ofconsumption expenditure?A) $4,950B) $5,500C) $6,050D) $6,111