ECONOMICS QUESTIONS AND GRADED ANSWERS, 100%
GUARANTEE
1. Refer to the above diagrams. Other things equal, curve B will shift upward when:
A. the level of GDP increases.
B. the interest rate increases.
C. curve A shifts to the left.
D. curve A shifts to the right. - D. curve A shifts to the right.
2. Refer to the above diagrams. Other things equal, an interest rate decrease will:
A. shift curve A to the right and shift curve B upward.
B. shift curve A to the left and shift curve B downward.
C. leave curve A in place but shift curve B downward.
D. leave curve A in place but shift curve B upward. - D. leave curve A in place but shift
curve B upward.
3. In the data above for a private closed economy, if gross investment is $12 billion, equilibrium
GDP is:
A. $380.
B. $370.
C. $360.
D. $350. - C. $360.
4. In the above diagram for a private closed economy, at the equilibrium level of GDP,
investment and saving are both:
A. $50.
B. $100.
C. $20.
D. $40. - A. $50.
,5. For a private closed economy, an unintended decline in inventories suggests that:
A. aggregate expenditures are less than the business sector expected them to be.
B. aggregate expenditures exceed production.
C. actual investment exceeds saving.
D. planned investment is greater than consumption. - B. aggregate expenditures exceed
production.
6. In the above diagram for a private closed economy, equilibrium GDP is:
A. $60 billion.
B. $180 billion.
C. between $60 and $180 billion.
D. $60 billion at all levels of GDP. - B. $180 billion.
7. In the above diagram for a private closed economy, investment:
A. decreases as GDP increases.
B. increases as GDP increases.
C. is $40 billion at all levels of GDP.
D. is $60 billion at all levels of GDP. - C. is $40 billion at all levels of GDP.
8. The equilibrium level of income (Y) is:
A. 360.
B. 225.
C. 200.
D. 135. - B. 225.
9. In equilibrium the level of consumption spending will be:
A. 170.
,B. 270.
C. 160.
D. 195. - D. 195.
10. In the aggregate expenditures model, technological progress will shift the investment
schedule:
A. downward and increase aggregate expenditures.
B. downward and decrease aggregate expenditures.
C. upward and increase aggregate expenditures.
D. upward and decrease aggregate expenditures. - C. upward and increase aggregate
expenditures.
11. In the above diagram for a private closed economy, the upward shift of the aggregate
expenditures schedule from (C + Ig)1 to (C + Ig)2 reflects:
A. an increase in investment expenditures.
B. a decrease in consumption expenditures.
C. an increase in the MPC.
D. an increase in the APS. - A. an increase in investment expenditures.
12. In the above diagram for a private closed economy, the multiplier is:
A. GF/DE.
B. GF/GB.
C. FE/GF.
D. AB/GF. - D. AB/GF.
13. For the open economy shown above the equilibrium GDP and the multiplier are:
A. $300 and 2.5.
B. $450 and 5.
C. $400 and 4.
, D. $400 and 5. - D. $400 and 5.
14. An upward shift of the aggregate expenditures schedule might be caused by:
A. a decrease in exports, with no change in imports.
B. a decrease in imports, with no change in exports.
C. an increase in exports, with an equal decrease in investment spending.
D. an increase in imports, with no change in exports. - B. a decrease in imports, with no
change in exports.
15. Other things equal, serious recession in the economies of U.S. trading partners will:
A. have no perceptible impact on the U.S. economy.
B. cause inflation in the U.S. economy.
C. depress real output and employment in the U.S. economy.
D. stimulate real output and employment in the U.S. economy. - C. depress real output
and employment in the U.S. economy.
16. Assume the MPC is .8. If government were to impose $50 billion of new taxes on household
income, consumption spending would initially decrease by:
A. $100 billion.
B. $90 billion.
C. $40 billion.
D. $50 billion. - C. $40 billion.
17. If the MPC is 2/3, the initial impact of an increase of $12 billion in lump-sum taxes will be to
cause:
A. a rightward shift in the investment demand schedule.
B. an $8 billion downshift in the consumption schedule.
C. a $4 billion upshift in the consumption schedule.
GUARANTEE
1. Refer to the above diagrams. Other things equal, curve B will shift upward when:
A. the level of GDP increases.
B. the interest rate increases.
C. curve A shifts to the left.
D. curve A shifts to the right. - D. curve A shifts to the right.
2. Refer to the above diagrams. Other things equal, an interest rate decrease will:
A. shift curve A to the right and shift curve B upward.
B. shift curve A to the left and shift curve B downward.
C. leave curve A in place but shift curve B downward.
D. leave curve A in place but shift curve B upward. - D. leave curve A in place but shift
curve B upward.
3. In the data above for a private closed economy, if gross investment is $12 billion, equilibrium
GDP is:
A. $380.
B. $370.
C. $360.
D. $350. - C. $360.
4. In the above diagram for a private closed economy, at the equilibrium level of GDP,
investment and saving are both:
A. $50.
B. $100.
C. $20.
D. $40. - A. $50.
,5. For a private closed economy, an unintended decline in inventories suggests that:
A. aggregate expenditures are less than the business sector expected them to be.
B. aggregate expenditures exceed production.
C. actual investment exceeds saving.
D. planned investment is greater than consumption. - B. aggregate expenditures exceed
production.
6. In the above diagram for a private closed economy, equilibrium GDP is:
A. $60 billion.
B. $180 billion.
C. between $60 and $180 billion.
D. $60 billion at all levels of GDP. - B. $180 billion.
7. In the above diagram for a private closed economy, investment:
A. decreases as GDP increases.
B. increases as GDP increases.
C. is $40 billion at all levels of GDP.
D. is $60 billion at all levels of GDP. - C. is $40 billion at all levels of GDP.
8. The equilibrium level of income (Y) is:
A. 360.
B. 225.
C. 200.
D. 135. - B. 225.
9. In equilibrium the level of consumption spending will be:
A. 170.
,B. 270.
C. 160.
D. 195. - D. 195.
10. In the aggregate expenditures model, technological progress will shift the investment
schedule:
A. downward and increase aggregate expenditures.
B. downward and decrease aggregate expenditures.
C. upward and increase aggregate expenditures.
D. upward and decrease aggregate expenditures. - C. upward and increase aggregate
expenditures.
11. In the above diagram for a private closed economy, the upward shift of the aggregate
expenditures schedule from (C + Ig)1 to (C + Ig)2 reflects:
A. an increase in investment expenditures.
B. a decrease in consumption expenditures.
C. an increase in the MPC.
D. an increase in the APS. - A. an increase in investment expenditures.
12. In the above diagram for a private closed economy, the multiplier is:
A. GF/DE.
B. GF/GB.
C. FE/GF.
D. AB/GF. - D. AB/GF.
13. For the open economy shown above the equilibrium GDP and the multiplier are:
A. $300 and 2.5.
B. $450 and 5.
C. $400 and 4.
, D. $400 and 5. - D. $400 and 5.
14. An upward shift of the aggregate expenditures schedule might be caused by:
A. a decrease in exports, with no change in imports.
B. a decrease in imports, with no change in exports.
C. an increase in exports, with an equal decrease in investment spending.
D. an increase in imports, with no change in exports. - B. a decrease in imports, with no
change in exports.
15. Other things equal, serious recession in the economies of U.S. trading partners will:
A. have no perceptible impact on the U.S. economy.
B. cause inflation in the U.S. economy.
C. depress real output and employment in the U.S. economy.
D. stimulate real output and employment in the U.S. economy. - C. depress real output
and employment in the U.S. economy.
16. Assume the MPC is .8. If government were to impose $50 billion of new taxes on household
income, consumption spending would initially decrease by:
A. $100 billion.
B. $90 billion.
C. $40 billion.
D. $50 billion. - C. $40 billion.
17. If the MPC is 2/3, the initial impact of an increase of $12 billion in lump-sum taxes will be to
cause:
A. a rightward shift in the investment demand schedule.
B. an $8 billion downshift in the consumption schedule.
C. a $4 billion upshift in the consumption schedule.
