A.   price level.

B.   interest rate.

C.   level of income.

D.   level of bank credit.

A.   save is three-fifths.

B.   consume is three-fifths.

C.   consume is one-half.

D.   consume is two-fifths.

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

B.   all the points where the MPC is constant.

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

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

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

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

C.   that the MPC increases in proportion to GDP.

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

A.   change in income/change in consumption.

B.   consumption/income.

C.   income/consumption.

D.   change in consumption/change in income.

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

B.   the slope of the savings schedule or line.

C.   the slope of the consumption schedule or line.

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

A.   An increase in stock prices.

B.   A decrease in disposable income.

C.   An increase in consumer indebtedness.

D.   A decrease in stock prices.

A.   income exceeds consumption.

B.   saving exceeds consumption.

C.   saving exceeds income.

D.   consumption exceeds income.

A.   the MPC equals 1.

B.   saving equals income.

C.   saving is zero.

D.   the APC is zero.

A.   -0.9

B.   1

C.   0.1

D.   1.1

A.   1

B.   10

C.   9

D.   mone of these

A.   wealth effect.

B.   multiplier effect.

C.   Keynes effect.

D.   interest-rate 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.   an upward shift of the saving schedule.

B.   a movement down along a stable consumption function.

C.   a downshift of the saving schedule.

D.   an upward shift of the consumption schedule.

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

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

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

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

A.   80 percent.

B.   2 percent.

C.   20 percent.

D.   8 percent.

A.   increase the amount of investment spending.

B.   shift the investment demand curve to the right.

C.   shift the investment demand curve to the left.

D.   shift the investment schedule downward.

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

B.   interest rate and the expected price level.

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

D.   level of saving and the real interest rate.

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

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 right.

A.   also called the after-tax interest rate.

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

C.   usually higher than the nominal interest rate.

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

A.   12 percent.

B.   6 percent.

C.   18 percent.

D.   24 percent.

A.   high nominal interest rate.

B.   low rate of growth of nominal GDP.

C.   low nominal interest rate.

D.   decrease in nominal wages.

A.   capital goods are durable.

B.   expected profits are highly variable.

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

D.   innovation occurs at an irregular pace.

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

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

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

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

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

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

C.   full-employment unemployment rate

D.   level of business inventories.

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

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

C.   firms were optimistic about future sales.

D.   the investment demand curve shifted inward.

A.   Bank panic of 1907

B.   Great Depression.

C.   Economic expansion of the 1920s

D.   Spectacular economic growth during World War II.

A.   Prices are fully flexible.

B.   Prices are fixed.

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

D.   The economy is at full employment.

A.   declined by 27 percent; rose to 25 percent

B.   declined by 40 percent; rose to 50 percent

C.   increased by 21 percent; fell to 2 percent

D.   declined by 21 percent; rose to 27 percent

A.   does not respond to changes in interest rates.

B.   does not change when real GDP changes.

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

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

A.   the business sector will lay off workers.

B.   the price level will fall.

C.   the aggregate level of saving will decline.

D.   domestic output will increase.

A.   upward and decrease aggregate expenditures.

B.   upward and increase aggregate expenditures.

C.   downward and increase aggregate expenditures.

D.   downward and decrease aggregate expenditures.

A.   investment.

B.   saving.

C.   consumption.

D.   exports.

A.   the multiplier to decrease.

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

C.   a country's net exports to rise.

D.   a country's net exports to fall.

A.   have no perceptible impact on 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.   cause inflation in the U.S. economy.

A.   vertical under conditions of full employment.

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

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

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

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

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

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

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

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

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

C.   increase U.S. imports and decrease 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.   include input prices and resource productivity.

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

A.   Depreciation of the international value of the dollar.

B.   A change in the price level.

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

D.   An increase in personal income tax rates.

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

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

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

D.   An increase in personal income tax rates.

A.   A reduced amount of excess capacity.

B.   Increased consumer optimism regarding future economic conditions.

C.   Increased government spending on military equipment.

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

A.   40

B.   60

C.   75

D.   85

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

B.   Deregulation of industry.

C.   A reduction in business taxes.

D.   An increase in the price of imported resources.

A.   the amount of capital goods used per worker.

B.   real output per unit of input

C.   per-unit production costs.

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

A.   is horizontal.

B.   slopes upward and to the right.

C.   slopes downward and to the right.

D.   is vertical.

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

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

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

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

A.   rightward shift of the AD curve.

B.   leftward shift of the AD curve.

C.   leftward shift of the AS curve.

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

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

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

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

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

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