Macro Review Test
1. Two economists, Smith and Jones, are discussing the currently high unemployment rate. Smith says that something ought to be done quickly because the economy may not be able to restore itself to full employment. Jones says that it is better to take a "hands-off" approach. Which of the following is most likely to be true?
a. Smith and Jones are most likely both Keynesian economists with a few minor differences of opinion.
b. Smith and Jones are most likely both classical economists with a few minor differences of opinion.
c. Jones is likely to be a Keynesian economist and Smith is likely to be a classical economist.
d. Smith is likely to be a Keynesian economist and Jones is likely to be a classical economist.
e. none of the above. Q16, Chapter 10, 2. Autonomous consumption is
a. the change in consumption that results as a person's (or nation's) income increases or decreases.
b. that portion of total consumption that is dependent upon the level of income.
c. the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult.
d. that portion of total consumption that is independent of the level of income.
Q 20, Chp 10
3. If income rises from $1,000 to $1,400 and consumption rises from $800 to $1,175, the marginal propensity to consume is __________ percent.
a. 6.25
b. 85
c. 15
d. 93.75
Q 25, Chp 10
4. If income rises from $1,000 to $1,800 and consumption rises from $1,100 to $1,700, the marginal propensity to save (MPS) is
a. 0.25.
b. 0.75.
c. 4.00.
d. 2.00.
Q 29, Chp 10
5. Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.80, then we know that
a. as Yd rises by $1, Co rises by $0.80.
b. as Yd rises by $1, C rises by $0.80.
c. Yd rises by $0.80.
d. as C0 rises by $0.80, Yd rises by $1.
Q 30 Chp 10 6. Here is a consumption function: C = C0 + MPC(Yd). If C0 = $200, then we know that
a. if Yd is zero, C will be $200.
b. when Yd rises, C rises by
a. Smith and Jones are most likely both Keynesian economists with a few minor differences of opinion.
b. Smith and Jones are most likely both classical economists with a few minor differences of opinion.
c. Jones is likely to be a Keynesian economist and Smith is likely to be a classical economist.
d. Smith is likely to be a Keynesian economist and Jones is likely to be a classical economist.
e. none of the above. Q16, Chapter 10, 2. Autonomous consumption is
a. the change in consumption that results as a person's (or nation's) income increases or decreases.
b. that portion of total consumption that is dependent upon the level of income.
c. the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult.
d. that portion of total consumption that is independent of the level of income.
Q 20, Chp 10
3. If income rises from $1,000 to $1,400 and consumption rises from $800 to $1,175, the marginal propensity to consume is __________ percent.
a. 6.25
b. 85
c. 15
d. 93.75
Q 25, Chp 10
4. If income rises from $1,000 to $1,800 and consumption rises from $1,100 to $1,700, the marginal propensity to save (MPS) is
a. 0.25.
b. 0.75.
c. 4.00.
d. 2.00.
Q 29, Chp 10
5. Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.80, then we know that
a. as Yd rises by $1, Co rises by $0.80.
b. as Yd rises by $1, C rises by $0.80.
c. Yd rises by $0.80.
d. as C0 rises by $0.80, Yd rises by $1.
Q 30 Chp 10 6. Here is a consumption function: C = C0 + MPC(Yd). If C0 = $200, then we know that
a. if Yd is zero, C will be $200.
b. when Yd rises, C rises by