A.   price level.

B.   level of bank credit.

C.   level of income.

D.   interest rate.

A.   consume is two-fifths.

B.   save is three-fifths.

C.   consume is one-half.

D.   consume is three-fifths.

A.   the amounts households will plan to save at each possible level of income.

B.   all the points at which saving and income are equal.

C.   all the points where the MPC is constant.

D.   all the points at which consumption and income are equal.

A.   that households consume more when interest rates are low.

B.   that consumption depends primarily on the level of business investment.

C.   that the MPC increases in proportion to GDP.

D.   the amounts households intend to consume at various possible levels of aggregate income.

A.   income/consumption.

B.   change in income/change in consumption.

C.   change in consumption/change in income.

D.   consumption/income.

A.   1 divided by the slope of the savings schedule or line.

B.   the slope of the savings schedule or line.

C.   1 divided by the slope of the consumption schedule or line.

D.   the slope of the consumption schedule or line.

A.   An increase in consumer indebtedness.

B.   A decrease in stock prices.

C.   A decrease in disposable income.

D.   An increase in stock prices.

A.   saving exceeds income.

B.   saving exceeds consumption.

C.   income exceeds consumption.

D.   consumption exceeds income.

A.   saving is zero.

B.   the APC is zero.

C.   the MPC equals 1.

D.   saving equals income.

A.   1.1

B.   0.1

C.   1

D.   -0.9

A.   mone of these

B.   9

C.   10

D.   1

A.   interest-rate effect.

B.   wealth effect.

C.   Keynes effect.

D.   multiplier effect.

A.   A currently small stock of durable goods in the possession of consumers.

B.   The expectation of a future decline in the consumer price index.

C.   The expectation of future shortages of essential consumer goods.

D.   A currently low level of household debt.

A.   a movement down along a stable consumption function.

B.   an upward shift of the consumption schedule.

C.   a downshift of the saving schedule.

D.   an upward shift of the saving schedule.

A.   the nominal interest rate and the level of investment spending..

B.   the price level and the level of investment spending..

C.   the real interest rate and the level of investment spending..

D.   the level of investment spending and real GDP..

A.   80 percent.

B.   8 percent.

C.   20 percent.

D.   2 percent.

A.   shift the investment schedule downward.

B.   shift the investment demand curve to the right.

C.   increase the amount of investment spending.

D.   shift the investment demand curve to the left.

A.   level of saving and the real interest rate.

B.   expected rate of return on capital goods and the real interest rate.

C.   interest rate and the expected price level.

D.   marginal propensity to consume and the real interest rate.

A.   shift the investment-demand curve to the right.

B.   shift the investment-demand curve to the left.

C.   have no effect on the location of the investment-demand curve.

D.   decrease the market price of real capital goods.

A.   also called the after-tax interest rate.

B.   the percentage increase in money that the lender receives on a loan.

C.   usually higher than the nominal interest rate.

D.   the percentage increase in purchasing power that the lender receives on a loan.

A.   24 percent.

B.   12 percent.

C.   18 percent.

D.   6 percent.

A.   low rate of growth of nominal GDP.

B.   high nominal interest rate.

C.   low nominal interest rate.

D.   decrease in nominal wages.

A.   expected profits are highly variable.

B.   innovation occurs at an irregular pace.

C.   capital goods are durable, expected profits are highly variable, and innovation occurs at an irregular pace.

D.   capital goods are durable.

A.   a decline in the MPC can cause GDP to rise by several times that amount.

B.   an increase in investment can cause GDP to change by a larger amount.

C.   a change in consumption can cause a larger increase in investment.

D.   consumption is typically several times as large as saving.

A.   change in GDP resulting from a change in spending.

B.   level of business inventories.

C.   full-employment unemployment rate

D.   change in the rate of inflation from a change in the interest rate.

A.   the investment demand curve shifted inward.

B.   purchases of capital from abroad increased, and these were not reflected in investment spending figures for that period.

C.   the investment demand curve was positively sloped during this period.

D.   firms were optimistic about future sales.

A.   Economic expansion of the 1920s

B.   Bank panic of 1907

C.   Spectacular economic growth during World War II.

D.   Great Depression.

A.   The economy is at full employment.

B.   Government spending policy has no ability to affect the level of output.

C.   Prices are fixed.

D.   Prices are fully flexible.

A.   declined by 21 percent; rose to 27 percent

B.   increased by 21 percent; fell to 2 percent

C.   declined by 40 percent; rose to 50 percent

D.   declined by 27 percent; rose to 25 percent

A.   does not respond to changes in interest rates.

B.   automatically changes in response to changes in real GDP.

C.   does not change when real GDP changes.

D.   changes by less in percentage terms than changes in real GDP.

A.   the business sector will lay off workers.

B.   domestic output will increase.

C.   the aggregate level of saving will decline.

D.   the price level will fall.

A.   upward and increase aggregate expenditures.

B.   downward and decrease aggregate expenditures.

C.   downward and increase aggregate expenditures.

D.   upward and decrease aggregate expenditures.

A.   consumption.

B.   exports.

C.   saving.

D.   investment.

A.   a country's exports and imports to both fall

B.   a country's net exports to fall.

C.   a country's net exports to rise.

D.   the multiplier to decrease.

A.   cause inflation in the U.S. economy.

B.   depress real output and employment in the U.S. economy.

C.   stimulate real output and employment in the U.S. economy.

D.   have no perceptible impact on the U.S. economy.

A.   downsloping because production costs decrease as real output rises.

B.   vertical under conditions of full employment.

C.   horizontal when there is considerable unemployment in the economy.

D.   downsloping because of the interest-rate, real-balances, and foreign purchases effects.

A.   a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending.

B.   an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending.

C.   an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending.

D.   an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.

A.   a lower price level will decrease the real value of many financial assets and therefore reduce spending.

B.   a higher price level will increase the real value of many financial assets and therefore increase spending.

C.   an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending.

D.   a higher price level will decrease the real value of many financial assets and therefore reduce spending.

A.   increase the amount of U.S. real output purchased.

B.   increase U.S. imports and decrease U.S. exports.

C.   increase both U.S. imports and U.S. exports.

D.   decrease both U.S. imports and U.S. exports.

A.   explain shifts in the aggregate demand curve.

B.   explain why the aggregate demand curve is downsloping.

C.   demonstrate why real output and the price level are inversely related.

D.   include input prices and resource productivity.

A.   An increase in personal income tax rates.

B.   A change in the price level.

C.   Depreciation of the international value of the dollar.

D.   A decline in the interest rate at each possible price level.

A.   An increase in personal income tax rates.

B.   An increase in stock prices that increases consumer wealth.

C.   Increased fear that a recession will cause workers to lose their jobs.

D.   A reduction in household borrowing because of tighter lending practices.

A.   An appreciation of the U.S. dollar.

B.   Increased government spending on military equipment.

C.   Increased consumer optimism regarding future economic conditions.

D.   A reduced amount of excess capacity.

A.   40

B.   85

C.   60

D.   75

A.   Deregulation of industry.

B.   A reduction in business taxes.

C.   Production bottlenecks occurring when producers near full plant capacity.

D.   An increase in the price of imported resources.

A.   per-unit production costs.

B.   real output per unit of input

C.   the amount of capital goods used per worker.

D.   the changes in real wealth caused by price level changes.

A.   slopes upward and to the right.

B.   is horizontal.

C.   is vertical.

D.   slopes downward and to the right.

A.   leftward shift of the AS curve along a downsloping AD curve.

B.   rightward shift of the AD curve along an upsloping AS curve.

C.   leftward shift of the AS curve along an upsloping AD curve.

D.   rightward shift of the AD curve along a downsloping AS curve.

A.   rightward shift of the AS curve.

B.   leftward shift of the AS curve.

C.   rightward shift of the AD curve.

D.   leftward shift of the AD curve.

A.   leftward shift of the aggregate demand curve and a leftward shift of the aggregate supply curve.

B.   rightward shift of the aggregate supply curve along a fixed aggregate demand curve.

C.   rightward shift of the aggregate demand curve and a rightward shift of the aggregate supply curve.

D.   rightward shift of the aggregate demand curve along a fixed aggregate supply curve.

A.   reduce the price level by more than real output.

B.   increase the price level by more than real output.

C.   reduce real output by more than the price level.

D.   increase real output by more than the price level.