1. Suppose that real domestic output in an economy is 144 units, the quantity of inputs is 12, and the price of each input is $4. The level of productivity is

Multiple Choice

• 12.
• 144.
• 10.
• 24.

2. If the MPC is 0.7 and investment increases by $4 billion, the equilibrium GDP will

Multiple Choice

• increase by $13.3 billion.
• increase by $2.8 billion.
• decrease by $5.71 billion.
• increase by $5.71 billion.

3. Assume the MPC is 0.9. If government were to impose $100 billion of new taxes on household income, consumption spending would initially decrease by

Multiple Choice

• $90 billion.
• $100 billion.
• $10 billion.
• $9 billion.

4. If disposable income is $900 billion when the average propensity to consume is 0.8, it can be concluded that saving is

Multiple Choice

• $180 billion.
• $720 billion.
• $900 billion.
• $200 billion.

5. Suppose that an economy produces 2,400 units of output, employing 60 units of input, and the price of the input is $30 per unit. The level of productivity in this economy is

Multiple Choice

• 40.
• 10.
• 20.
• 30.

6. If the MPC is 0.6 and the equilibrium GDP is $30 billion below the full-employment GDP, then the size of the recessionary expenditure gap is

Multiple Choice

• $12 billion.
• $30 billion.
• $18 billion.
• $60 billion.

7. If the MPC in an economy is 0.80, government could close a recessionary expenditure gap of $100 billion by cutting taxes by

Multiple Choice

• $125 billion.
• $100 billion.
• $80 billion.
• $20 billion.

8. If investment increases by $5 billion and the economy's MPC is 0.75, the aggregate demand curve will shift

Multiple Choice

• rightward by $20 billion at each price level.
• rightward by $5 billion at each price level.
• leftward by $20 billion at each price level.
• leftward by $15 billion at each price level.

9. If investment decreases by $18 billion and the economy's MPC is 0.9, the aggregate demand curve will shift

Multiple Choice

• leftward by $180 billion at each price level.
• rightward by $18 billion at each price level.
• rightward by $180 billion at each price level.
• leftward by $9 billion at each price level.

10. MC Qu. 32-60 (Algo) The table gives information about the...

Input Quantity	Real Domestic Output
100	200
150	300
200	400

The table gives information about the relationship between input quantities and real domestic output in a hypothetical economy. If the price of each input is $12, the per-unit cost of production in the economy is

Multiple Choice

• $6.00.
• $2.00.
• $3.00.
• $0.12.

11. MC Qu. 30-124 (Algo) If the inflation rate is...

If the inflation rate is 2 percent and the real interest rate is 6 percent, the nominal interest rate is

Multiple Choice

• 8 percent.
• 4 percent.
• 0 percent.
• 2 percent.

12. If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the MPS in the economy is

Multiple Choice

• 0.2.
• 0.8.
• 0.1.
• 0.4.

13. MC Qu. 30-26 (Algo) (Advanced analysis) Assume the following consumption...

(Advanced analysis) Assume the following consumption schedule: C = 20 + 0.9Y, where C is consumption and Y is disposable income. At a(n) $500 level of disposable income, the level of saving is

Multiple Choice

• $30.
• $470.
• $180.
• $18

14. MC Qu. 30-123 (Algo) If the nominal interest rate is...

If the nominal interest rate is 18 percent and the real interest rate is 8 percent, the inflation rate is

Multiple Choice

• 10 percent.
• 18 percent.
• 26 percent.
• 8 percent.

15. MC Qu. 32-43 (Algo) Suppose that real domestic output in...

Suppose that real domestic output in an economy is 120 units, the quantity of inputs is 50, and the price of each input is $6. The per-unit cost of production in the economy described is

Multiple Choice

• $2.50.
• $25.
• $4.
• $20.

16. MC Qu. 31-163 (Algo) If the MPC in an...

If the MPC in an economy is 0.8, a $2 billion increase in government spending will ultimately increase consumption by

Multiple Choice

• $8 billion.
• $2 billion.
• $0.8 billion.
• $10 billion.

17. MC Qu. 30-103 (Algo) Assume a machine that has a...

Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,600. The expected rate of return on this machine is

Multiple Choice

• 30 percent.
• 60 percent.
• 20 percent.
• 6 percent.

18. MC Qu. 31-93 (Algo) If the multiplier in an...

If the multiplier in an economy is 5, a $20 billion increase in net exports will

Multiple Choice

• increase GDP by $100 billion.
• reduce GDP by $4 billion.
• decrease GDP by $100 billion.
• increase GDP by $20 billion.

19. MC Qu. 31-265 (Algo) In a private closed economy...

In a private closed economy where MPC = 0.8, if consumers reduce their spending by $20 billion and firms cut investments by $5 billion, then equilibrium GDP will decrease by

Multiple Choice

• $125 billion.
• $100 billion.
• $20 billion.
• $5 billion.

20. MC Qu. 32-48 (Algo) An economy is employing...

An economy is employing 1 units of capital, 5 units of raw materials, and 4 units of labor to produce its total output of 840 units. Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3. The per-unit cost of production in this economy is

Multiple Choice

• $0.05.
• $10.00.
• $0.40.
• $0.50.