A.   level of income.

B.   level of bank credit.

C.   interest rate.

D.   price level.

A.   save is three-fifths.

B.   consume is three-fifths.

C.   consume is one-half.

D.   consume is two-fifths.

A.   all the points where the MPC is constant.

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

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

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

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

B.   that the MPC increases in proportion to GDP.

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

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

A.   change in income/change in consumption.

B.   change in consumption/change in income.

C.   consumption/income.

D.   income/consumption.

A.   the slope of the consumption schedule or line.

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

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

D.   the slope of the savings schedule or line.

A.   A decrease in stock prices.

B.   An increase in consumer indebtedness.

C.   An increase in stock prices.

D.   A decrease in disposable income.

A.   saving exceeds consumption.

B.   saving exceeds income.

C.   consumption exceeds income.

D.   income exceeds consumption.

A.   the MPC equals 1.

B.   saving is zero.

C.   saving equals income.

D.   the APC is zero.

A.   -0.9

B.   1.1

C.   0.1

D.   1

A.   9

B.   mone of these

C.   10

D.   1

A.   wealth effect.

B.   multiplier effect.

C.   interest-rate effect.

D.   Keynes effect.

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

B.   A currently low level of household debt.

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

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

A.   an upward shift of the consumption schedule.

B.   a movement down along a stable consumption function.

C.   a downshift of the saving schedule.

D.   an upward shift of the saving schedule.

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

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

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

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

A.   80 percent.

B.   8 percent.

C.   2 percent.

D.   20 percent.

A.   increase the amount of investment spending.

B.   shift the investment demand curve to the left.

C.   shift the investment demand curve to the right.

D.   shift the investment schedule downward.

A.   level of saving and the real interest rate.

B.   interest rate and the expected price level.

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

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

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

B.   decrease the market price of real capital goods.

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

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

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

B.   also called the after-tax interest rate.

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

D.   usually higher than the nominal interest rate.

A.   12 percent.

B.   24 percent.

C.   18 percent.

D.   6 percent.

A.   decrease in nominal wages.

B.   low nominal interest rate.

C.   low rate of growth of nominal GDP.

D.   high nominal interest rate.

A.   innovation occurs at an irregular pace.

B.   expected profits are highly variable.

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.   level of business inventories.

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

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

D.   full-employment unemployment rate

A.   firms were optimistic about future sales.

B.   the investment demand curve shifted inward.

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

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

A.   Economic expansion of the 1920s

B.   Great Depression.

C.   Spectacular economic growth during World War II.

D.   Bank panic of 1907

A.   Prices are fully flexible.

B.   The economy is at full employment.

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

D.   Prices are fixed.

A.   declined by 27 percent; rose to 25 percent

B.   declined by 21 percent; rose to 27 percent

C.   increased by 21 percent; fell to 2 percent

D.   declined by 40 percent; rose to 50 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.   domestic output will increase.

B.   the business sector will lay off workers.

C.   the aggregate level of saving will decline.

D.   the price level will fall.

A.   upward and increase aggregate expenditures.

B.   upward and decrease aggregate expenditures.

C.   downward and increase aggregate expenditures.

D.   downward and decrease aggregate expenditures.

A.   saving.

B.   exports.

C.   consumption.

D.   investment.

A.   a country's net exports to fall.

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

C.   the multiplier to decrease.

D.   a country's net exports to rise.

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

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

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

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

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

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

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

D.   vertical under conditions of full employment.

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

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

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

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

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

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

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

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

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

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

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

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

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

B.   explain shifts in the aggregate demand curve.

C.   include input prices and resource productivity.

D.   explain why the aggregate demand curve is downsloping.

A.   A change in the price level.

B.   An increase in personal income tax rates.

C.   Depreciation of the international value of the dollar.

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

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

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

C.   An increase in personal income tax rates.

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

A.   Increased government spending on military equipment.

B.   Increased consumer optimism regarding future economic conditions.

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

D.   A reduced amount of excess capacity.

A.   60

B.   85

C.   75

D.   40

A.   A reduction in business taxes.

B.   Deregulation of industry.

C.   An increase in the price of imported resources.

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

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

B.   the amount of capital goods used per worker.

C.   real output per unit of input

D.   per-unit production costs.

A.   slopes downward and to the right.

B.   slopes upward and to the right.

C.   is horizontal.

D.   is vertical.

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

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

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

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

A.   leftward shift of the AS curve.

B.   rightward shift of the AS curve.

C.   leftward shift of the AD curve.

D.   rightward shift of the AD curve.

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

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

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

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

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

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

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

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