Ch 10

Question 0

If the real rate of interest is 6% and expected real return on 10 million is between 9.1% to 12% and additional 10 billion will yield expected real return of 6.1 to 9% how much is the desired investment spending

Answer 0

20 billion

Question 1

the consumption of disposable income are equal at a particular level of income

Answer 1

Savings must be zero at this point

Question 2

Investment demand curve will shift to the left if

Answer 2

Business taxes increase

Question 3

What would cause a shift up for the consumption schedule

Answer 3

An increase in household wealth

Question 4

Suppose that MPC is three fourths. If investment spending falls by 10 billion the level of GDP will

Answer 4

Fall by 40 billion. The multiplier is 1/ (1-3/4) or 4. a drop in spending of 10 billion is multiplied by four to determine the change in GDP

Question 5

The slope of the consumption line is .8

Answer 5

Then the MPC is .8

Question 6

If the MPC is .63 multiplier is

Answer 6

1 / .37

Question 7

All else equal if the interest rate rises

Answer 7

The investment demand curve will shift upward

Question 8

The consumption schedule is

Answer 8

A direct relationship between the consumption and disposable income

Question 9

Along a particular saving schedule, each change in disposable income 15 billion generates an additional 3 billion in savings therefore

Answer 9

MPS is .2. (3/15)