Question 1

Which of the following best represents the savings function?

Group of answer choices

Savings = Autonomous Consumption + marginal propensity to save x disposable income

Savings = Autonomous savings + marginal propensity to save x disposable income

Savings = Autonomous savings+ marginal propensity to consume x disposable income

Savings = Autonomous Consumption + marginal propensity to consume x disposable income

Question 2

An increase in autonomous expenditure will do what to the planned expenditure schedule?

Group of answer choices

do not shift the planned expenditure graph up (left)

shift the planned expenditure graph up (left)

shift the y= x (45 degree line) up (left)

shift the y= x (45 degree line) up (left)

Question 3

Which of the following is a transfer payment?

Group of answer choices

Income earned from a babysitting job that is not reported

Sales taxes

Student loans

social security supplemental benefit received

Question 4

For question 4, 5, and 6 answer using the planned expenditure scheduleFigure 1 below.

4)If the initial level of GDP is at Y2, firms will ___________ production until equilibrium is reached at ________

Figure 1

Group of answer choices

increase production, Y1

decrease production, Y1

decrease production, Y3

increase production, Y3

Question 5

Refer to Figure 1 from question 4.

If the level of GDP is at Y3, then production is ___________ then spending, and Inventories will _______________

Group of answer choices

more, rise

more, fall

less, rise

less, fall

Question 6

Refer to figure 1 from question 4.

If the level of GDP is at Y1, then production is ___________ spending, and Inventories will _______________

Group of answer choices

more than, not change

equal, rise

less than, fall

equal, not change

Question 7

If mpc = 0.75, a decrease from 700 to 660 billion n government spending, will decrease GDP by

Group of answer choices

40 billion

10 billion

160 billion

20 billion

Question 8 1 pts

On the AD/AS model (graphs), a contractionary fiscal policy to increase business tax would cause AS to _______________

Group of answer choices

Increase

Decrease

Stay the same

Movement along the AS graph

Flag this Question Question 9 1 pts

Expansionary fiscal policy would involve _______________________, wheres contractionary fiscal policy would involve _______________________

Group of answer choices

decreasing income tax rates, decreasing government purchases

increasing income tax rates, increasing government purchases

decreasing transfer, decreasing government purchases

decreasing income tax rates, increasing government purchases

Flag this Question Question 10 1 pts

On the aggregate expenditure model, the 45-degree line shows

Group of answer choices

The amount of autonomous expenditure

The amount of output

Points where output exceeds expenditure

Points where output equal expenditure

Flag this Question Question 11 1 pts

A simultaneous 50 billion dollar increase both in government spending and taxation would ____________

Group of answer choices

No net effect on GDP

Decrease equilibrium GDP

Increase equilibrium GDP

No enough information to determine

Flag this Question Question 12 1 pts

If Congress extends the tax cuts that were initiated last year, it would be engaging in

Group of answer choices

Monetary Policy

Discretionary Fiscal Policy

Contractionary Fiscal Policy

Automatic Stabilizer type policy

Flag this Question Question 13 1 pts

For question 13,and 14, please refer to table 1below, where

Rec. isrecessionary gap, $ Y Gap refers to change in GDP (gap amount), Em is the simple expenditure multiplier, NTm is the tax multiplier, and Fiscal policy action is the changes inG (government spending) andT (taxes) required to close the gap.

Table 1:

Gap$ YgapEmNTmFiscal Policy (change G, change T)

Row 1Rec.10032___,____

Row 2___50010_____,Decrease by 5

Question 13 - In the first row of the table, what are the two fiscal policy for a change in G and change in T respectively to close the gap (rounded off to the closest decimal)?

Group of answer choices

increase G $33.4, increase T $50

decrease G $300, decrease T $200

increase G $33.4, decrease T $50

increase G $300, decrease T $200

Flag this Question Question 14 1 pts

From row 2 of the table, what type of gap is the economy facing?

Group of answer choices

Neutral

Recessionary

Inflationary

No gap

Flag this Question Question 15 1 pts

The largest component of aggregate expenditure is

Group of answer choices

Net Exports

Investment Expenditure

Consumption Expenditure

Government Purchases

Flag this Question Question 16 1 pts

If mpc is 0.8, and the tax rate is 20%, a $200 increase in autonomous investment will increase equilibrium income by

Group of answer choices

$32

$1,250

$76

$555

Flag this Question Question 17 1 pts

Which of the following is true for an increase in income tax rates?

Group of answer choices

autonomous consumption will decrease

autonomous consumption will increase

there is no change in autonomous consumption

cannot be determined from the information given

Flag this Question Question 18 1 pts

For question 18, 19,and 20, please refer to figure 2 below

19)If the real current equilibrium GDP at Yc is $650 billion,theand mpc is 0.5, and the difference between PE1 and PE2 represents a $200 billion decreased inplanned investment spending, the real full employment equilibrium GDP at Yf will be equal to______ billion

Figure 2:

Group of answer choices

$100

$250

$400

$325

Flag this Question Question 19 1 pts

Refer to Figure 2 from question 19.

The unemployment rate in the economy at Yf is expected to be ________ compared to the unemployment rate at Yc

Group of answer choices

smaller

larger

Equal

Cannot be determined

Flag this Question Question 20 1 pts

Given the economy represented by Figure 2, which of these fiscal policies would be most effective to reach full employment.

Group of answer choices

Increase government purchases

Decrease Taxes

Decrease government purchases

Increase Transfer Payments

Flag this Question Question 21 1 pts

If the economy begins to fall into a recession, one would expect Congress and the president to conduct ________ policy.

Group of answer choices

Expansionary Fiscal Policy

Contractionary Fiscal Policy

Expansionary Monetary Policy

Contractionary Monetary Policy

Flag this Question Question 22 1 pts

During a recession consumption falls, causing the aggregate demand curve (AD)to shift to the ________. In response, the government can increase government spending to shift the ________

Group of answer choices

left; AD curve to the left.

right; AD curve to the right

left; AD curve to the right

right; AD curve to the left

Flag this Question Question 23 1 pts

A cut in net taxes tends to

Group of answer choices

expand the economy less than an increase in government purchases.

contract the economy more than an increase in government purchases.

contract the economy less than an increase in government purchases.

expand the economy more than an increase in government purchases.

Flag this Question Question 24 1 pts

The part of total consumption expenditure that is independent of disposable income is

Group of answer choices

the consumption schedule.

average propensity to consume.

marginal propensity to consume.

autonomous consumption.

Flag this Question Question 25 1 pts

The expenditure multiplier increases as

Group of answer choices

the income of individuals decreases.

the income of individuals increases.

the savings of individuals decreases.

the savings of individuals increases.

Flag this Question Question 26 1 pts

The planned expenditure schedule will shift up (increase) when

Group of answer choices

autonomous taxes decrease.

the marginal tax rate increases.

autonomous taxes increase.

the marginal tax rate decreases.

Flag this Question Question 27 1 pts

If E_m is 5, then marginal propensity to consume is,Em is the expenditure multiplier

Group of answer choices

1

0.5

0.2

0.8

Flag this Question Question 28 1 pts

Marginal Propensity to consume + Marginal Propensity to Save is always equal to

Group of answer choices

identical

0

1

varies

Flag this Question Question 29 1 pts

If the government engages in expansionary fiscal policy it would __________________, and if it engages in contractionary fiscal policy it would__________________________

Group of answer choices

increase taxes, increase government purchases

decrease taxes, decrease government purchases

increase taxes, decrease government purchases

decrease taxes, increase government purchases

Flag this Question Question 30 1 pts

Which of the following will decrease SRAS (short run Aggregate Supply), and increase AD

Group of answer choices

decrease in wages, increase in consumption

decrease in physical capital stock, increase in net exports

advancement in technology, decrease in government purchases

decrease in prices, increase in quantity