A.   interest rate.

B.   level of income.

C.   level of bank credit.

D.   price level.

A.   save is three-fifths.

B.   consume is two-fifths.

C.   consume is one-half.

D.   consume is three-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 households consume more when interest rates are low.

B.   that the MPC increases in proportion to GDP.

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

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

A.   consumption/income.

B.   change in income/change in consumption.

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 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.   A decrease in disposable income.

C.   An increase in consumer indebtedness.

D.   An increase in stock prices.

A.   consumption exceeds income.

B.   saving exceeds consumption.

C.   saving exceeds income.

D.   income exceeds consumption.

A.   the MPC equals 1.

B.   saving is zero.

C.   the APC is zero.

D.   saving equals income.

A.   -0.9

B.   1

C.   1.1

D.   0.1

A.   1

B.   mone of these

C.   9

D.   10

A.   wealth effect.

B.   interest-rate effect.

C.   Keynes effect.

D.   multiplier effect.

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

B.   A currently low level of household debt.

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

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

A.   a downshift of the saving schedule.

B.   an upward shift of the saving schedule.

C.   a movement down along a stable consumption function.

D.   an upward shift of the consumption schedule.

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

A.   2 percent.

B.   80 percent.

C.   8 percent.

D.   20 percent.

A.   shift the investment demand curve to the left.

B.   shift the investment demand curve to the right.

C.   increase the amount of investment spending.

D.   shift the investment schedule downward.

A.   interest rate and the expected price level.

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

C.   level of saving and the real interest rate.

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

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

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 right.

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

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

C.   usually higher than the nominal interest rate.

D.   also called the after-tax interest rate.

A.   12 percent.

B.   6 percent.

C.   18 percent.

D.   24 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.   innovation occurs at an irregular pace.

B.   expected profits are highly variable.

C.   capital goods are durable.

D.   capital goods are durable, expected profits are highly variable, and 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.   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.   change in the rate of inflation from a change in the interest rate.

B.   full-employment unemployment rate

C.   level of business inventories.

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

A.   firms were optimistic about future sales.

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

C.   the investment demand curve shifted inward.

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

A.   Bank panic of 1907

B.   Spectacular economic growth during World War II.

C.   Great Depression.

D.   Economic expansion of the 1920s

A.   Prices are fixed.

B.   The economy is at full employment.

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

D.   Prices are fully flexible.

A.   increased by 21 percent; fell to 2 percent

B.   declined by 21 percent; rose to 27 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.   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.   the business sector will lay off workers.

B.   the price level will fall.

C.   domestic output will increase.

D.   the aggregate level of saving will decline.

A.   downward and increase aggregate expenditures.

B.   downward and decrease aggregate expenditures.

C.   upward and increase aggregate expenditures.

D.   upward and decrease aggregate expenditures.

A.   consumption.

B.   saving.

C.   exports.

D.   investment.

A.   a country's net exports to fall.

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

C.   a country's net exports to rise.

D.   the multiplier to decrease.

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

B.   have no perceptible impact on 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.   downsloping because of the interest-rate, real-balances, and foreign purchases effects.

B.   vertical under conditions of full employment.

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

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

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

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

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.   explain why the aggregate demand curve is downsloping.

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

A.   An increase in personal income tax rates.

B.   A change in the price level.

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

D.   Depreciation of the international value of the dollar.

A.   An increase in personal income tax rates.

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

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

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

A.   Increased consumer optimism regarding future economic conditions.

B.   A reduced amount of excess capacity.

C.   Increased government spending on military equipment.

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

A.   75

B.   85

C.   60

D.   40

A.   An increase in the price of imported resources.

B.   A reduction in business taxes.

C.   Deregulation of industry.

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

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

B.   real output per unit of input

C.   per-unit production costs.

D.   the amount of capital goods used per worker.

A.   slopes downward and to the right.

B.   is horizontal.

C.   slopes upward and to the right.

D.   is vertical.

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

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

C.   leftward shift of the AS curve.

D.   leftward shift of the AD curve.

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

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

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

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

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

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

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

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