Chapter 10 – Basic Macroeconomic Relationships
58. A change in the amount saved due to a change in income is represented by a:
The table shows a consumption schedule.
59. Refer to the above data. At the $300 level of disposable income:
Chapter 10 – Basic Macroeconomic Relationships
10–22
60. Refer to the above data. The marginal propensity to consume is:
61. Refer to the above data. If disposable income is $550, we would expect consumption to
The disposable income (DI) and consumption (C) schedules are for a private, closed
economy. All figures are in billions of dollars.
Chapter 10 – Basic Macroeconomic Relationships
62. Refer to the above data. If plotted on a graph, the slope of the consumption schedule
would be:
63. Refer to the above data. The marginal propensity to save in this economy is:
64. Refer to the above data. At the $320 billion level of disposable income, the average
propensity to save is:
Chapter 10 – Basic Macroeconomic Relationships
65. Refer to the above data. If consumption increases by $10 billion at each level of
disposable income, the marginal propensity to consume will:
66. The graph above shows the relationship between consumption and income. Which of the
following statements is correct?
Chapter 10 – Basic Macroeconomic Relationships
67. Refer to the consumption schedule above. The marginal propensity to consume is
represented by:
68. Refer to the consumption schedule above. The average propensity to save at income level
B is represented by:
Chapter 10 – Basic Macroeconomic Relationships
69. Refer to the consumption schedule above. If disposable income is $42,000, then saving is:
70. Refer to the consumption schedule above. The marginal propensity to consume is:
Chapter 10 – Basic Macroeconomic Relationships
71. Refer to the consumption schedule above. If disposable income were $34,000, then the
average propensity to save would be about:
72. Refer to the above figures with consumption schedules in figure (A) and saving schedules
in figure (B), which correspond to each other across different levels of disposable income. If,
in figure (A), line A2 shifts to A3 because of the so-called wealth effect, then in figure (B),
line:
Chapter 10 – Basic Macroeconomic Relationships
73. Refer to the above figures with consumption schedules in figure (A) and saving schedules
in figure (B), which correspond to each other across different levels of disposable income. If,
in figure (A), consumption increases along line A2 then in figure (B) there would be:
74. The Great Recession of 2007-2009 altered the prior behavior of consumers in the
economy by:
75. The so-called Paradox of Thrift that became quite obvious in the Great Recession of 2007-
2009 refers to all of the following, except:
Chapter 10 – Basic Macroeconomic Relationships
76. Two basic determinants of investment spending are:
77. An investment demand curve shows the varying amounts of investment that would be
undertaken at various levels of:
78. Given the expected rate of return on all possible investment opportunities in the economy,
a(n):
Chapter 10 – Basic Macroeconomic Relationships
79. If the real interest rate increases:
80. Suppose that new computer software for accounting and analysis at a business has a useful
life of only one year and costs $200,000 before it needs to be upgraded to a new version. The
revenue generated by this software is expected to be $250,000. The expected rate of return
from this new computer software is:
81. Assume there are no investment projects that will produce an expected rate of return of 8
percent or more. There are, however, $2 billion worth of investment projects with an expected
rate of return at 7 percent, an additional $2 billion for every drop of the interest rate by 1
percent. If the real interest rate is 3 percent in this economy, the cumulative amount of
investment at the 3 percent or higher rate of return is:
Chapter 10 – Basic Macroeconomic Relationships
82. A firm invests in a new machine that costs $2,000 a year but which is expected to produce
an increase in total revenue of $2,200 a year. The current real rate of interest is 8 percent. The
firm should:
83. A firm invests in a new machine that costs $5,000 a year but which is expected to produce
an increase in total revenue of $5,200 a year. The current real rate of interest is 7 percent. The
firm should:
Chapter 10 – Basic Macroeconomic Relationships
84. The nominal rate of interest is 8.5 percent and the real rate is 5 percent. The expected rate
of return on an investment is 8 percent. The firm should:
85. According to the cumulative investment table above:
Chapter 10 – Basic Macroeconomic Relationships
86. According to the cumulative investment table above, if the real interest rate is 20%, then:
87. The investment demand curve is drawn with the amount of investment on the:
Chapter 10 – Basic Macroeconomic Relationships
88. Refer to the above graph. Which of the following would shift the investment demand
curve from ID2 to ID1?
89. Refer to the above graph. Which of the following would shift the investment demand
curve from ID2 to ID3?
90. Refer to the above graph. Which of the following would shift the investment demand
curve from ID2 to ID1?
Chapter 10 – Basic Macroeconomic Relationships
91. Refer to the above graph. Which of the following would shift the investment demand
curve from ID2 to ID3?
92. Which of the following factors would decrease investment demand?
93. If businesses feel more optimistic about the state of the economy, then this change is
likely to:
Chapter 10 – Basic Macroeconomic Relationships
94. The investment demand curve will shift to the left as the result of:
95. The following factors help explain the instability of investment, except:
96. The variability of business profits: