Question : 101) Consider an exogenous increase in the real interest rate : 1384374

101) Consider an exogenous increase in the real interest rate in the simple macro model. This will tend to cause ________ in desired consumption and ________ in desired investment.

A) an increase; an increase

B) an increase; a decrease

C) a decrease; a decrease

D) a decrease; no change

E) a decrease; an increase

102) Consider a simple macro model with a constant price level and demand-determined output. In such a model, a downward shift of the saving function causes equilibrium national income to

A) fall because the AE function shifts downward simultaneously.

B) rise because the AE function shifts upward simultaneously.

C) remain constant but consist of more consumption and less investment.

D) remain constant but consist of less consumption and more investment.

E) remain constant because it does not affect desired aggregate expenditure.

103) Consider the simplest macro model with a constant price level and demand-determined output. In such a model, an upward shift of the saving function causes equilibrium national income to

A) fall because the AE function shifts downward simultaneously.

B) rise because the AE function shifts upward simultaneously.

C) remain constant but consist of more consumption and less investment.

D) remain constant but consist of less consumption and more investment.

E) remain constant because it does not affect desired aggregate expenditure.

104) Refer to Figure 21-3. A shift in the aggregate expenditure function from AE0 to AE1 could be caused by

A) a rise in the multiplier.

B) a fall in the marginal propensity to consume.

C) a rise in the marginal propensity to consume.

D) an increase in desired investment expenditures.

E) a decrease in desired investment expenditures.

105) Refer to Figure 21-3. A shift in the aggregate expenditure function downward from AE1 to AE0 could be caused by

A) a rise in the multiplier.

B) a fall in the marginal propensity to consume.

C) a rise in the marginal propensity to consume.

D) an increase in autonomous desired saving.

E) a decrease in autonomous desired saving.

106) Refer to Figure 21-3. The simple multiplier could be measured by the ratio

A) /0A.

B) /0B.

C) /AB.

D) BA/Y1.

E) 1/(Y2 – Y1).

107) Consider the simplest macro model with demand-determined output. Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million. The marginal propensity to spend in this economy is 0.75. What is the increase in expenditure in this economy during the initial first round of spending?

A) $75 million

B) $25 million

C) $100 million

D) $400 million

E) $500 million

108) Consider the simplest macro model with demand-determined output. Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million. The marginal propensity to spend in this economy is 0.75. What is the increase in expenditure in this economy during the second round of spending?

A) $25 million

B) $100 million

C) $400 million

D) $75 million

E) $500 million

109) Consider the simplest macro model with demand-determined output. Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million. The marginal propensity to spend in this economy is 0.75. What is the eventual total new expenditure in this economy due to the increase in investment?

A) $75 million

B) $100 million

C) $25 million

D) $500 million

E) $400 million

110) The simple multiplier, which applies to short-run situations in which the price level is constant, describes changes in

A) investment induced by changes in equilibrium income.

B) saving caused by changes in investment.

C) the equilibrium level of national income caused by changes in autonomous expenditure.

D) the rate of interest caused by increased demand for credit.

E) employment induced by changes in equilibrium income.