Macro Economics Chapter 08 Quiz Flashcards
According to Say’s law, there cannot be overproduction of goods and services because:A: planned aggregate expenditures sometimes fall short of total output.B:prices and wages are “sticky” or inflexible in the downward direction.C: demand creates its own supply.D: supply creates its own demand.
D
The school of thought that emphasizes the natural tendency for an economy to move toward equilibrium full employment is known as the: A: Keynesian school.B: supply-side school.C: rational expectations school.D: classical school.
D
John Maynard Keynes and his followers argued that the Great Depression was primarily the result of: A: excessive government spending.B: large budget deficits.C: the perverse monetary policies of the Fed.D: insufficient aggregate spending on goods and services.
D
The consumption function shows the relationship between: A: planned consumption expenditures and disposable income.B: permanent income and savings.C: business inventory and real GDP.D: aggregate demand and aggregate consumption.
A
A movement along the consumption function is caused by a change in: A: consumption.B: expectations.C: aggregate supply.D: disposable income.
D
If people’s real assets increase, then the: A: economy will move to the right along the existing consumption function.B: economy will move to the left along the existing consumption function.C: consumption function will shift down.D: consumption function will shift up.E: investment demand curve will shift up.
D
That part of disposable income not spent on consumption is defined as: A: transitory disposable income.B: permanent disposable income.C: disposable income.D: autonomous consumption.E: saving.
E
The marginal propensity to consume is: A: the change in disposable income divided by the change in consumption.B: consumption spending divided by disposable income.C: disposable income divided by consumption spending.D: the change in consumption divided by the change in disposable income.E: the change in consumption divided by disposable income.
D
If the marginal propensity to consume = 0.75, then: A: the marginal propensity to save = 0.75.B: the marginal propensity to save = 1.33.C: the marginal propensity to save = 0.20.D: the marginal propensity to save = 0.25.E: since the marginal propensity to save and the marginal propensity to consume are unrelated, we cannot determine the marginal propensity to save from the information given.
D
The demand curve for investment in the economy as a function of interest rates is: A: vertical.B: horizontal.C: upward sloping.D: downward sloping.E: elliptical.
D
