1.Provide any one criticism that John Maynard Keynes makes against Classical Theory.

2.According to Keynes, what is the most important determinant on household spending on goods and services?

3.When household marginal propensity to save (MPS) increases what happens to the size of the spending multiplier?

4.If Annie's MPC is 0.75, what would she do with an additional dollar?

5.Refer to the data. What is the marginal propensity to save (MPS)?

Disposable income $0 $10 $20 $30 $40 $50

Consumption 5 12 19 26 33 40

6.Refer to the table. At what level of GDP is the economy at equilibrium.

GDP $100 $200 $300 $400 $500 $600 $700

Consumption 150 210 270 330 390 450 510

Savings -50 -10 30 70 110 150 190

Gross Investments 70 70 70 70 70 70 70

7.If the real interest rates should decrease, what effect would this have on investment spending?

8.If housing values should show a large increase, according to the wealth effect, what would happen to consumer spending in the economy?

9.If a business is expecting earnings of $100 when they make an investment of $1,000 and the real interest rates are at 11 percent level, will the business make the $1,000 investment spending?