41. The values of MPC and MPS always add up to 1 because a. Any two marginal quantities add up to 1 b. Both MPC and MPS schedules are straight lines c. Every P1 of the national income is either saved or used for consumption d. The level of investment in the economy is assumed to be constant. 42. If a multiplier is 1, then a. Consumers save all of their income b. There is no multiplier effect c. The aggregate demand is practically nonexistent d. All of the above 43. The recessionary gap is likely to have a stronger impact on the economy when a. MPS is small b. MPS is small c. MCS is large 44. In determining the government's fiscal posture, one should look at a. The actual surplus or deficit b. The full-employment budget surplus or deficit c. The personal income tax d. The inflationary impact which the automatic stabilizers have in full employment economy 45. Economists are in general agreement that discretionary fiscal policy will stabilize the economy most when a. The budget is balanced each year b. Budget deficits are continuously incurred c. Deficits are incurred during recessions and surpluses during inflation d. Deficits are incurred during inflation and surpluses during recessions. 46. The value of money depends on a. The cost of producing it b. The amount of gold the government backs each peso with c. How much each peso will buy d. What the goverment says each peso is worth 47. The money supply in the country is backed by a. Government bonds . Gold in the Central Bank c. Gold, silver, and commodities d. The governments ability to keep the peso value stable by controlling the money supply. 48. A tighter money supply a. Increases the value of bonds b. Activates private investment c. Causes the interest rate to rise d. Raises the price of bonds 49. Commercial banks tend to a. Just fulfill the reserve ratio requirements b. Often fall below the legal ratio c. Create reserves in excess of legal requirements for safety purposes d. Accept new deposits reluctantly in times of inflation50. Lower discount rates a. Increase the bank's willingness to lend, as they usually accompany the policy of easing the money supply b. Tend to reduce economic activity 0. Act in the same way as a higher legal reserve ratio d. Always result in a reduction in the price of bonds 51. The higher the legal reserve ratio a. The more prone the lending banks are b. The larger is the money supply in the economy c. The harder it is for commercial banks to create new money d. The more likely ination is 52. As the market interest rate rises a. Government bonds fall in value b. Government bonds grow in value c. Government bond prices are not aected d. People want to hold as mum money as possible 53. By \"cost-push (or sellers') ination," economists are referring to a. Attempts by labor and industry to set prices and wages that will give them together more than 100% of the available product. b. Rising prices due to excessive levels of government spending financed by open-market operations through the government c. Rising prices due to excessive levels of aggregate demand d. The rise in total sales revenue attributable to price-tag changes rather than real volume changes