Macro Econ Final Review-quiz

19 Questions | Total Attempts: 139

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Macro Econ Final Review-quiz

Macro Econ Final Review-Quiz


Questions and Answers
  • 1. 
    What is the Marginal Propensity to Consume, or MPC?
    • A. 

      The fraction or proportion of any change in income that is saved

    • B. 

      The fraction or percentage of income consumed

    • C. 

      The fraction or proportion of any change in income that is consumed

    • D. 

      None of the above

  • 2. 
    How do you calculate Marginal Propensity to Consume, or MPC?
    • A. 

      MPC= change in consumption/ change in income

    • B. 

      MPC= change in savings/ change in income

    • C. 

      MPC= consumption/ income

    • D. 

      None of the above

  • 3. 
    What is the Marginal Propensity to Save, or MPS?
    • A. 

      The fraction or percentage of income consumed

    • B. 

      The fraction or proportion of any change in income that is consumed

    • C. 

      The fraction or proportion of any change in income that is saved

    • D. 

      The savings divided by the income

  • 4. 
    How do you calculate Marginal Propensity Savings, or MPS?
    • A. 

      MPS= change in savings/ income

    • B. 

      MPS= change in savings/ change in income

    • C. 

      MPS= change in consumption/ change in income

    • D. 

      MPS= savings/ income

  • 5. 
    What is the Average Propensity to Consume, or APC?
    • A. 

      The fraction or proportion of any change in income that is consumed

    • B. 

      The fraction or percentage of income saved

    • C. 

      The fraction or proportion of any change in income that is saved

    • D. 

      The fraction or percentage of income consumed

  • 6. 
    How do you calculate APC?
    • A. 

      APC= consumption/ income

    • B. 

      APC= change in consumption/ change in income

    • C. 

      APC= savings/ income

    • D. 

      APC can't be calculated

  • 7. 
    What is the Average Propensity to Save, or APS?
    • A. 

      The fraction or percentage of income consumed

    • B. 

      The fraction or proportion of any change in income that is saved

    • C. 

      The fraction or percentage of income saved

    • D. 

      None of the above

  • 8. 
    How do you calculate APS?
    • A. 

      APS= savings/ income

    • B. 

      APS= consumptions/ income

    • C. 

      APS= change in savings/ change in income

    • D. 

      APS= savings+consumption/ income

  • 9. 
    What are the non-income determinants of consumption?
    • A. 

      Wealth, inflation, taxation, household debts and investments

    • B. 

      Investments, wealth, household debt, consumption and expectations

    • C. 

      Household debt, expectations, inflation, savings and soncumption

    • D. 

      Wealth, expectations, real interest rates, household debt and taxation

  • 10. 
    If wealth increases, what will happen to the consumption and savings schedules?
    • A. 

      Consumption schedule will shift up and savings will shift down

    • B. 

      Consumption schedule will shift up and savings will shift up

    • C. 

      Consumption schedule will shift down and savings will shift up

    • D. 

      Consumption schedule will shift down and savings will shift down

  • 11. 
    What happens when interest rates decline?
    • A. 

      It decreases the incentive to borrow and consume and reduces the incentive to save.

    • B. 

      It increases the incentive to borrow and consume and reduces the incentive to save.

    • C. 

      It decreases the incentive to borrow and consume and increases the incentive to save.

    • D. 

      None of the above

  • 12. 
    Lower debt levels can:
    • A. 

      Shift the consumption schedule up and the saving schedule up

    • B. 

      Shift the consumption schedule up and the saving schedule down

    • C. 

      Shift the consumption schedule down and the saving schedule down

    • D. 

      Shift the consumption schedule down and the saving schedule up

  • 13. 
    Lower taxes will:
    • A. 

      Shift the consumption schedule down and the savings schedule up; vice versa for higher taxes

    • B. 

      Shift the consumption schedule up and the savings schedule down; vice versa for higher taxes

    • C. 

      Shift both schedules down since taxation affects both spending and saving; vice versa for higher taxes

    • D. 

      Shift both schedules up since taxation affects both spending and saving; vice versa for higher taxes

  • 14. 
    Expected rate of return:
    • A. 

      Determines the cost of investment

    • B. 

      The marginal benefit and the interest rate- the cost of borrowing funds- represents the marginal cost.

    • C. 

      Represents the cost of borrowed funds

    • D. 

      Represents the opportunity cost of investing your own funds

  • 15. 
    How do you calculate the expected rate of return?
    • A. 

      R= TR(total revenue) - TC (total cost) / investment

    • B. 

      R= TC(total cost) - TR (total revenue) / investment

    • C. 

      R= investment / TR(total revenue) - TC (total cost)

    • D. 

      None of the above

  • 16. 
    Real interest rate:
    • A. 

      Determines the cost of investment and represents either the cost of borrowed funds or the opportunity cost of investing your own funds

    • B. 

      Represents the marginal cost

    • C. 

      Can be found by comparing the expected economic profit

    • D. 

      None of the above

  • 17. 
    Investment is a very (blank) type of spending. I is more volatile than GDP.
  • 18. 
    What is the multiplier? 
    • A. 

      A non-rippling effect that generate large changes in real GDP

    • B. 

      Determines the what the initial change in spending is

    • C. 

      Determines how large the change between changes in spending and changes in real GDP will be.

    • D. 

      All of the above

  • 19. 
    How do you calculate the multiplier?
    • A. 

      Multiplier= 1 / MPS

    • B. 

      Multiplier= change in real GDP / initial change in spending

    • C. 

      Multiplier= 1 / (1-MPC)

    • D. 

      All the above

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