Basic Macroeconomic Ralationships Review Questions with complete Solutions Rated A+
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Macroeconomics
Institution
Macroeconomics
Basic Macroeconomic Relationships Review Questions with complete Solutions Rated A+
If production technology improved, the investment demand curve would shift to the __________ because increased efficiency ___________ production costs. - Answers right, reduces
When the economy is under-stocked wi...
Basic Macroeconomic Ralationships Review Questions with complete Solutions Rated A+
If production technology improved, the investment demand curve would shift to the __________
because increased efficiency ___________ production costs. - Answers right, reduces
When the economy is under-stocked with production facilities and when firms are selling their output as
fast as they can produce it, the expected rate of return on new investment ________ and the
investment demand curve shifts ________. - Answers increases, rightward
A firm expects slower future sales and reduces inventory. If in reality stay brisk, the difference in
expected sales and actual sales will be accounted for as: - Answers unplanned inventory changes
A large ______ causes increases in consumption to decline slowly resulting in a cumulative large change
in income. - Answers mpc
Households generally consume a portion and save a portion of additional __________ resulting from
__________, causing both the consumption and saving functions to shift upward. - Answers disposable
income, lower taxes
Considering gross investment as a percentage of GDP, where does the US stand in comparison to Japan?
- Answers Lower percentage
The economy supports repetitive, continuous flows of ________ and income through which dollars
spent by Smith and received as income by Chin and then spent by Chin and received as income by
Gonzalez, and so on. - Answers spending
Historical swings in __________ have been the greatest of the four spending components that make up
GDP. - Answers investment
The paying of taxes drains off some of the additional consumption spending created by the increases in
________. - Answers income
Profitable new products ________ investment demand? - Answers increase
___________ expectations can change quickly when some event suggests a significant possible change
in future conditions. - Answers Business
Businesses invest in capital goods that are expected to make a(n) ___________. - Answers profit
If the economy has unused production facilities and excessive inventories of finished goods that are not
being consumed, what happens to the expected rate of return on new investment? - Answers It declines
The consumption and saving schedules move in _________ directions when influenced by wealth,
expectations, debt, and/or interest rates. - Answers opposite
Household spend a(n) ____________ proportion of a small disposable income than of a large disposable
income. - Answers larger
, The effects of the lower ___________ rates on consumption and saving are modest. - Answers interest
What acquisition, maintenance, and operating costs ________, the expected rate of return from
prospective investment projects declines. - Answers rise
If business executives become more optimistic about future sales, costs, and profits, the investment
demand curve will - Answers shift to the right
If ________ is $15 billion and disposable income is $450 billion, the average propensity to save is 0.03. -
Answers saving
When a firm uses money from savings to make an investment, it incurs a(n) ____________ cost because
it forgoes the interest income it could have earned by lending the funds to someone else. - Answers
opportunity
The most significant factor for determining a nation's level of __________ of _________ is disposable
income. - Answers consumption; savings
Major innovations and technological progress tend to be - Answers irregular
Firms have greater incentive and means to invest in capital when they are experiencing: - Answers
expanding profits
Disposable income rises 10% and, die to the relationship between consumption and disposable income,
households __________ their spending. - Answers increase
When households save more, the saving schedule does what? - Answers Shifts up
If firms are planning to increase their inventories, the investment demand curve shifts to the: - Answers
right
If household expectations are of a recession and thus lower income in the future, what will happen to
the consumption schedule? - Answers Shift down
In the figure, what is the break-even level of disposable Income? - Answers $390 billion
A(n) __________ in business taxes shifts the investment demand curve to the left. - Answers increase
Investment decisions are what kind of decisions? - Answers Marginal-benefit, marginal-cost
Spending on ____________ drains off some of the additional consumption created by the increase in
income. - Answers - taxes
- imports
Based on the following figure, which amount of disposable income would result in dissaving? - Answers
Less than $390 billion
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