A.   level of bank credit.

B.   price level.

C.   interest rate.

D.   level of income.

A.   consume is three-fifths.

B.   consume is one-half.

C.   save is three-fifths.

D.   consume is two-fifths.

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

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

C.   all the points where the MPC is constant.

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

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 consumption/change in income.

B.   consumption/income.

C.   income/consumption.

D.   change in income/change in consumption.

A.   the slope of the consumption schedule or line.

B.   1 divided by 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 savings schedule or line.

A.   A decrease in disposable income.

B.   An increase in consumer indebtedness.

C.   An increase in stock prices.

D.   A decrease in stock prices.

A.   income exceeds consumption.

B.   saving exceeds income.

C.   consumption exceeds income.

D.   saving exceeds consumption.

A.   saving equals income.

B.   the MPC equals 1.

C.   saving is zero.

D.   the APC is zero.

A.   -0.9

B.   0.1

C.   1.1

D.   1

A.   mone of these

B.   1

C.   9

D.   10

A.   interest-rate effect.

B.   multiplier effect.

C.   wealth effect.

D.   Keynes effect.

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

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

C.   A currently low level of household debt.

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 nominal interest rate and the level of investment spending..

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

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

A.   8 percent.

B.   2 percent.

C.   20 percent.

D.   80 percent.

A.   increase the amount of investment spending.

B.   shift the investment demand curve to the right.

C.   shift the investment schedule downward.

D.   shift the investment demand curve to the left.

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

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

C.   interest rate and the expected price level.

D.   level of saving and the real interest rate.

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

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

C.   decrease the market price of real capital goods.

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

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

B.   usually higher than the nominal interest rate.

C.   also called the after-tax interest rate.

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

A.   18 percent.

B.   6 percent.

C.   24 percent.

D.   12 percent.

A.   decrease in nominal wages.

B.   high nominal interest rate.

C.   low nominal interest rate.

D.   low rate of growth of nominal GDP.

A.   expected profits are highly variable.

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

C.   innovation occurs at an irregular pace.

D.   capital goods are durable.

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

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

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

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

A.   level of business inventories.

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

C.   full-employment unemployment rate

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

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

B.   firms were optimistic about future sales.

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

D.   the investment demand curve shifted inward.

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 fixed.

C.   Prices are fully flexible.

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

A.   declined by 21 percent; rose to 27 percent

B.   declined by 27 percent; rose to 25 percent

C.   declined by 40 percent; rose to 50 percent

D.   increased by 21 percent; fell to 2 percent

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

B.   does not change when real GDP changes.

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

D.   does not respond to changes in interest rates.

A.   the aggregate level of saving will decline.

B.   the business sector will lay off workers.

C.   the price level will fall.

D.   domestic output will increase.

A.   downward and decrease aggregate expenditures.

B.   downward and increase aggregate expenditures.

C.   upward and decrease aggregate expenditures.

D.   upward and increase aggregate expenditures.

A.   investment.

B.   exports.

C.   saving.

D.   consumption.

A.   the multiplier to decrease.

B.   a country's net exports to fall.

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

D.   a country's net exports to rise.

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

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

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

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

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

B.   vertical under conditions of full employment.

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

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

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

D.   a higher price level will decrease the real value of many financial assets and therefore reduce 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.   include input prices and resource productivity.

B.   explain shifts in the aggregate demand curve.

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

D.   explain why the aggregate demand curve is downsloping.

A.   An increase in personal income tax rates.

B.   Depreciation of the international value of the dollar.

C.   A change in the price level.

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.   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.   85

B.   60

C.   75

D.   40

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

B.   An increase in the price of imported resources.

C.   Deregulation of industry.

D.   A reduction in business taxes.

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.   is vertical.

B.   slopes downward and to the right.

C.   is horizontal.

D.   slopes upward and to the right.

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

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

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

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

A.   rightward shift of the AD curve.

B.   leftward shift of the AS curve.

C.   leftward shift of the AD curve.

D.   rightward shift of the AS curve.

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

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

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

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

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

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