Question : 51) Desired investment expenditure will generally fall as a result : 1384369

51) Desired investment expenditure will generally fall as a result of which of the following changes?

A) a decrease in business confidence

B) a decrease in interest rates

C) an increase in government purchases

D) an increase in sales volume

E) an increase in business confidence

52) In the simple macro model, desired investment is assumed to be autonomous with respect to national income. Which of the following will cause a shift of the investment function?

1) a decrease in interest rates

2) an increase in firms’ optimism about the economy

3) an expectation of a downturn in future economic activity

A) 1 and 2

B) 2 and 3

C) 1 and 3

D) 1, 2, and 3

E) 1 only

53) Investment expenditure is the ________ volatile component of GDP, and changes in investment are ________ associated with business-cycle fluctuations.

A) most; strongly

B) most; weakly

C) least; strongly

D) least; weakly

E) least; not

54) A rise in the real rate of interest ________ the opportunity cost of holding an inventory of a given size, and therefore ________ desired investment expenditure.

A) increases; increases

B) increases; decreases

C) decreases; increases

D) decreases; leaves unaffected

E) decreases; decreases

55) In Canada, as in many other countries, the largest component of domestic investment expenditure is

A) plant and equipment.

B) residential housing.

C) inventories.

D) financial assets.

E) savings.

56) Other things being equal, higher real interest rates tend to

A) increase every component of desired investment expenditure.

B) reduce every component of desired investment expenditure.

C) reduce every component of desired investment expenditure except residential housing.

D) reduce every component of desired investment expenditure except inventories.

E) reduce every component of desired investment expenditure except plant and equipment.

57) In the simplest macroeconomic model, with a closed economy and no government, the aggregate expenditure (AE) function is the sum of

A) saving and desired investment.

B) consumption and disposable income.

C) desired consumption and desired investment.

D) consumption and saving.

E) actual consumption and actual investment.

58) Consider the simplest macroeconomic model, with a closed economy and no government. If we assume that desired investment is autonomous with respect to national income, then the investment function (which graphs desired investment against actual national income) will be

A) negatively sloped.

B) positively sloped and relatively steep.

C) positively sloped and relatively flat.

D) vertical.

E) horizontal.

59) The schedule that relates the level of desired total expenditures to the level of actual national income is called the

A) consumption function.

B) desired aggregate demand function.

C) aggregate expenditure function.

D) dissaving function.

E) equilibrium function.

60) The increase in aggregate planned expenditures divided by the change in national income that brought it about is called the

A) average propensity to consume.

B) average propensity to save.

C) marginal propensity to spend.

D) marginal propensity to save.

E) marginal propensity to consume.