Select one or more: O a. Households smooth their income to match their volatile consumption. O b. Borrowing allows all households to raise their consumer spending given an anticipated rise in income. O c. Weak-willed households save in the face of an anticipated temporary fall income. O d. Households smooth their consumption to match their volatile income.

Select one or more: O a. Households smooth their income to match their volatile consumption. O b. Borrowing allows all households to raise their consumer spending given an anticipated rise in income. O c. Weak-willed households save in the face of an anticipated temporary fall income. O d. Households smooth their consumption to match their volatile income.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 8 Which of these is positively related to the size of the multiplier? O a. The marginal propensity to consume O b. The marginal utility of money OC. The marginal tax propensity Od. The marginal propensity to save
Suppose that due ot a fiscal stimulus, there is an increase in disposable incomes of $100 billion in the first round. Then, $33 billion was spent in consumption from this initial change of the disposable incomes. Following the same marginal propensity to consume, how much is the change in consumption spending in the next round from the $33 billion?
b. Using the model from this chapter, explain the effect on GDP from an increase in G by $5 billion. An increase in spending by $5 billion will add A. directly to Eisposable income by this amount and cause an increase in national income equal to less than $5 billion due to the multiplier effect. O B. directly to aggregate demand by this amount and lead to an eventual change in national income equal to $5 billion times the simple multiplier. O C. indirectly to aggregate demand and cause an eventual change in national income equal to $5 billion. OD. indirectly to disposable income, only a fraction of which (determined by the MPC) will then be spent, ie. national income will change by less than $5 billion.
A Moving to another question will save this response. Question 6 If a lump-sum income tax of $35 billion is levied and the MPS is 0.40, the consumption schedule will shift O A. upward by $21 billion. O B. downward by $14 billion. OC, downward by $21 billion. O D. downward by $35 billion. A Moving to another question will save this response.
Which of the following statements are correct? Select one or more: O a. Households smooth their income to match their volatile consumption. O b. Borrowing allows all households to raise their consumer spending given an anticipated rise in income. O c. Weak-willed households save in the face of an anticipated temporary fall income. Od. Households smooth their consumption to match their volatile income.
The transfer payment multiplier is smaller than the expenditure multiplier by the: O a. Transfer payment O b. Aggregate demand O c. Marginal propensity to consume O d. Marginal propensity to save
Which of the following is INCORRECT? a. The multiplier dampens the increase in income that occurs during expansions and brings the economy to a new equilibrium GDP. O b. Firms experience unplanned decreases in inventories as expansions begin. C. Firms increase production in response to unplanned decreases in inventories. O d. Expansions usually begin with an increase in autonomous spending.
2. Assuming that the aggregate price level is constant, the interest rate is fixed, and there are no taxes and no foreign trade, what will be the change in GDP if the fol- lowing events occur? a. There is an autonomous increase in consumer spending of $25 billion; the marginal propensity to consume is 2/3. b. Firms reduce investment spending by $40 billion; the marginal propensity to consume is 0.8. c. The government increases its purchases of military equipment by $60 billion; the marginal propensity to consume is 0.6.
All of the following are true when there is an unplanned decrease in inventories, except: O a. Actual investment is greater than planned investment O b. Real GDP will be rising O c. GDP is less than aggregate expenditures O d. Saving is less than planned investment
Suppose Ausland's spending for the year can be described by the table below: Construction of New Housing $50 Private Consumption $650 Government Spending on Public $400 Private Acquisition of Capital Goods $160 Goods and Services Exports $100 GST Revenue $20 Imports $80 Marginal Propensity to Consume 0.6 Marginal Tax Rate 0.25 Marginal Propensity to Import 0.05 What is the value of Ausland's Investment (1) expenditure? Select one: O a. $50 O b. $350 O c. $160 O d. $210
What is the formula for the marginal propensity to expend? A aggregate expenditures/A national income O b. A autonomous expenditures/A national income O a. O c. A consumption/A national income O d. A national income/A induced expenditures
Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending? OA. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to a decrease in induced spending OB. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to a decrease in induced spending OC. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to an increase in induced spending OD. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to an increase in induced spending