Question : 121) Consider a simple macro model with demand-determined output. In : 1384376

 

121) Consider a simple macro model with demand-determined output. In such a model, the larger the marginal propensity to spend, the

A) larger the MPC.

B) smaller the MPS.

C) smaller the simple multiplier.

D) larger the simple multiplier.

E) greater is investment.

122) Consider a simple macro model with demand-determined output. In such a model, the smaller the marginal propensity to spend, the

A) smaller the MPS.

B) smaller the simple multiplier.

C) larger is investment.

D) larger the MPC.

E) larger the simple multiplier.

123) Consider a simple macro model with demand-determined output. In such a model, the multiplier is larger, the

A) higher the level of autonomous expenditures.

B) steeper is the AE function.

C) flatter is the AE function.

D) lower the APC.

E) lower the level of autonomous expenditures.

124) Consider a simple macro model with demand-determined output. Using such a model, if economists want to estimate the effect of a given change in desired investment on equilibrium national income, they would multiply the change in desired investment by the reciprocal of one minus

A) the average propensity to save.

B) the marginal propensity to save.

C) the equilibrium level of national income.

D) the marginal propensity not to spend.

E) the marginal propensity to spend.

125) Suppose aggregate output is demand-determined. If the business community decreases its planned investment expenditures by $4 billion, causing equilibrium national income to fall by $12 billion, the marginal propensity to spend must be

A) 2/5.

B) 1/3.

C) 1/2.

D) 2/3.

E) 4/5.

126) Suppose aggregate output is demand-determined. If the business community decreases its planned investment expenditures by $4 billion, causing equilibrium national income to fall by $20 billion, the marginal propensity to spend must be

A) 2/5.

B) 1/3.

C) 1/2.

D) 2/3.

E) 4/5.

127) Suppose aggregate output is demand-determined. If the business community decreases its planned investment expenditures by $4 billion, causing equilibrium national income to fall by $8 billion, the marginal propensity to spend must be

A) 2/5.

B) 1/3.

C) 1/2.

D) 2/3.

E) 4/5.

128) Consider the simplest macro model in which aggregate output is demand-determined. If autonomous consumption increases by $2 billion causing equilibrium national income to rise by $4 billion, the marginal propensity to save must be

A) 1.0.

B) 0.5.

C) 0.2.

D) 0.8.

E) 2.0.

129) Consider a simple macro model with a constant price level. If the AE function is horizontal, then we know the simple multiplier is

A) less than zero.

B) zero.

C) between zero and one.

D) exactly one.

E) greater than one.

130) Suppose aggregate output is demand-determined. If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending, then equilibrium income will ________ and the marginal propensity to spend must equal ________.

A) decrease by $40 billion; 0.75

B) decrease by $10 billion; 0.25

C) increase by $40 billion; 0.25

D) increase by $40 billion; 0.75

E) increase by $10 billion; 4.0

 

 

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