A.   price level.

B.   level of income.

C.   interest rate.

D.   level of bank credit.

A.   consume is one-half.

B.   consume is two-fifths.

C.   consume is three-fifths.

D.   save is three-fifths.

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

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

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

D.   all the points where the MPC is constant.

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.   income/consumption.

B.   change in consumption/change in income.

C.   change in income/change in consumption.

D.   consumption/income.

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.   An increase in consumer indebtedness.

B.   An increase in stock prices.

C.   A decrease in stock prices.

D.   A decrease in disposable income.

A.   income exceeds consumption.

B.   consumption exceeds income.

C.   saving exceeds consumption.

D.   saving exceeds income.

A.   the APC is zero.

B.   saving equals income.

C.   saving is zero.

D.   the MPC equals 1.

A.   -0.9

B.   1.1

C.   0.1

D.   1

A.   9

B.   1

C.   10

D.   mone of these

A.   Keynes effect.

B.   wealth effect.

C.   interest-rate effect.

D.   multiplier effect.

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

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

C.   A currently low level of household debt.

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

A.   an upward shift of the saving schedule.

B.   an upward shift of the consumption schedule.

C.   a downshift of the saving schedule.

D.   a movement down along a stable consumption function.

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

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

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

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

A.   8 percent.

B.   2 percent.

C.   20 percent.

D.   80 percent.

A.   shift the investment schedule downward.

B.   increase the amount of investment spending.

C.   shift the investment demand curve to the right.

D.   shift the investment demand curve to the left.

A.   marginal propensity to consume 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.   level of saving and the real interest rate.

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

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

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

D.   decrease the market price of real capital goods.

A.   also called the after-tax interest rate.

B.   usually higher than the nominal interest rate.

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

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

A.   24 percent.

B.   12 percent.

C.   6 percent.

D.   18 percent.

A.   decrease in nominal wages.

B.   low rate of growth of nominal GDP.

C.   low nominal interest rate.

D.   high nominal interest rate.

A.   expected profits are highly variable.

B.   capital goods are durable.

C.   innovation occurs at an irregular pace.

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

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

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

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

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

A.   full-employment unemployment rate

B.   level of business inventories.

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

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

A.   the investment demand curve shifted inward.

B.   firms were optimistic about future sales.

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.   Bank panic of 1907

C.   Spectacular economic growth during World War II.

D.   Great Depression.

A.   The economy is at full employment.

B.   Prices are fully flexible.

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

D.   Prices are fixed.

A.   declined by 40 percent; rose to 50 percent

B.   declined by 27 percent; rose to 25 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.   changes by less in percentage terms than changes in real GDP.

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

D.   does not change when real GDP changes.

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.   downward and increase aggregate expenditures.

C.   downward and decrease aggregate expenditures.

D.   upward and decrease aggregate expenditures.

A.   exports.

B.   investment.

C.   consumption.

D.   saving.

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

B.   a country's net exports to 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 of the interest-rate, real-balances, and foreign purchases effects.

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

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

D.   vertical under conditions of full employment.

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.   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 increase the demand for money, increase interest rates, and decrease 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.   decrease both U.S. imports and U.S. exports.

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

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

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

A.   explain shifts in the aggregate demand curve.

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

C.   explain why the aggregate demand curve is downsloping.

D.   include input prices and resource productivity.

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

B.   A change in the price level.

C.   Depreciation of the international value of the dollar.

D.   An increase in personal income tax rates.

A.   An increase in personal income tax rates.

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

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

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

A.   Increased consumer optimism regarding future economic conditions.

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

C.   A reduced amount of excess capacity.

D.   Increased government spending on military equipment.

A.   85

B.   60

C.   75

D.   40

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

B.   A reduction in business taxes.

C.   An increase in the price of imported resources.

D.   Deregulation of industry.

A.   real output per unit of input

B.   the amount of capital goods used per worker.

C.   per-unit production costs.

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

A.   is vertical.

B.   is horizontal.

C.   slopes upward and to the right.

D.   slopes downward and to the right.

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.   leftward shift of the AS curve.

B.   rightward 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 demand curve along a fixed aggregate supply curve.

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

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

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

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

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

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