ECON 110 EXAM 3 COMPLETE QUESTIONS AND 100% CORRECT ANSWERS

ECON 110 EXAM 3 COMPLETE QUESTIONS AND 100% CORRECT ANSWERS .If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP, then A. the MPC is 0.5 B. the MPC is 0.75 C. the MPC is 0.8 D. the MPC is 0.9 - ANSWERS-C. the MPC is 0.8 .The general formula for the multiplier is A. 1/(1-MPS) B. 1/(MPC) C. 1/(MPS) D. 1/(MPC-1) - ANSWERS-C. 1/(MPS) .All of the following are true statement about the multiplier except A. the formula for the multiplier overstates the real world multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate B. the larger the MPC, the larger the multiplier C. the multiplier is the ratio of the change in real GDP to the change in autonomous expenditure D. the multiplier makes the economy less sensitive to changes in autonomous expenditure - ANSWERS-D. the multiplier makes the economy less sensitive to changes in autonomous expenditure .____ consumption is consumption that does not depend upon the level of GDP A. autonomous B. induced C. voluntary D. disposable - ANSWERS-A. autonomous .H0w does a decrease in government spending affect the aggregate expenditure line? A. it shifts the aggregate expenditure line upward B. it shifts the aggregate expenditure line downward C. it increase the slope of the aggregate expenditure line D. it decreases the slope of the aggregate expenditure line - ANSWERS-B. it shifts the aggregate expenditure line downward .Economies where goods and series are traded directly for other goods are called ____ economies A. trade B. barter C. direct D. seigniorage - ANSWERS-B. barter .Fiat money has A. little to no intrinsic value but is backed by the quantity of gold held by the central bank B. little to no intrinsic value is authorized by the central bank or governmental body C. value, because it can be redeemed for gold by the use of the central bank D. a great intrinsic value that is independent of its use as money - ANSWERS-B. little to no intrinsic value is authorized by the central bank or governmental body .The largest proportion of M1 is made up of A. currency B. checking account deposits C. traveler's checks D. savings account deposits - ANSWERS-B. checking account deposits .Bank reserves include A. vault cash and deposits with the Federal Reserve B. loans to bank customers and deposits with the Federal Reserve C. vault cash and loans to bank customers D. customer checking accounts and vault cash - ANSWERS-A. vault cash and deposits with the Federal Reserve