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Part I 1. If income rises from $1,000 to $1,300 and consumption rises from $900 to $1,160, the marginal propensity to consume is percent. a. 80 b. 87 c. 30 d. 13 2. Keynes believed that saving is more responsive to changes in income than to changes in interest rates. less responsive to changes in income than to changes in interest rates. equally responsive to changes in income and to changes in interest rates. dependent only on changes in interest rates. 9.9 9"?\" 3. Which of the following statements is false? a. Real GDP is the quantity of goods and services valued in base-year prices or base-year dollars. b. "Aggre gate demand" and the "quantity demanded of Real GDP" are the same. 0. Real GDP is denominated in current-year prices. (1. Both b and c. 4. According to Say's law, in a money economy a reduction in consumption spending causes a shift of the saving curve and therefore a in the interest rate. a. leftward; rise b. leftward; fall 0. rightward; fall (1. rightward; risel 5. If the marginal propensity to save is 0.2, the simple multiplier is a. 1.125 b. 5 c. 4 d. 0.75 6. Equilibrium national income would be increased by all but which of the following? a. a rise in consumption b. an increase in net exports c. an increase in investment d. an increase in taxes 7. In the short run, a decrease in wage rates, ceteris paribus, shifts the a. AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase. b. SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. c. AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease. d. SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease. 8. A rise in aggregate demand and a fall in short-run aggregate supply will denitely a. raise the price level, but there is not enough information to know how Real GDP will change. b. lower Real GDP, but there is not enough information to know how the price level will change. c. raise the price level and Real GDP. (1. raise Real GDP, but there is not enough information to know how the price level will change. 0 0, azo3 0405 RealGDP 9. Refer to Graph 1. Which of the following is true at the Real GDP level of Q3? a. The unemployment rate is equal to its natural level. b The cyclical unemployment rate is zero. c. The economy is in long-run equilibrium. d all of the above 10. Refer to Graph 1. Assume the economy is currently in long-run equilibrium with the price level equal to P3. If foreigners begin to buy more US. goods, the economy will, in the short run, move to which of the following equilibrium combinations of price level and Real GDP? a. P2, Q4. b. P3, Q3. C. P4, Q2. d. P4, Q4. ll.When total expenditures are greater than total production, is produced than households want to buy, which leads to in inventory, which signals rms that they have , which causes lms to increase production. a. more; increases; underproduced b. less; decreases; underproduced c. less; increases; underproduced d. more; decreases; overproduced 12. Personal income taxes rise. This lowers , which lowers and the curve shifts . a. net exports; aggregate demand (AD); AD; leftward b. consumption; short-run aggregate supply (SRAS); SRAS; rightward e. government revenue; net exports; AD; rightward (1. consumption; aggregate demand (AD); AD; leftward