10 Jul QUESTION 63 GOVERNMENT PURCHASES ARE DETERMINED BY THE POLITICAL PROCESS.
why a decrease in taxes causes real Gross Domestic Product (GDP) Show more The multiplier helps explain why a decrease in taxes causes real Gross Domestic Product (GDP) to fall by more than the amount of the decrease in taxes. why a fall in investment cause real Gross Domestic Product (GDP) to rise by more than the amount of the decrease in investment. why a rise in government expenditures causes real Gross Domestic Product (GDP) to rise by more than the amount of the increase in government spending. why an increase in disposable income causes real Gross Domestic Product (GDP) to rise by less than the amount of the increase in disposable income. If the marginal propensity to save (MPS) increases the multiplier decreases. can either increase or decrease depending on what happens to the marginal propensity to consume (MPC). stays the same. increases. QUESTION 60 The investment function will shift when there is a change in the opportunity cost of retained earnings. firms profit expectations. the cost of borrowing. the interest rate. 1.43 points QUESTION 61 In the Keynesian model whenever planned saving exceeds planned investment there will be unplanned inventory accumulation. real GDP will not be influenced. the interest rate will remain unchanged. there will be unplanned inventory depletion. 1.43 points QUESTION 62 In the Keynesian model whenever planned saving is less than planned investment there will be unplanned inventory depletion. the interest rate will remain unchanged. there will be unplanned inventory accumulation. real GDP will not be influenced. 1.43 points QUESTION 63 Government purchases are determined by the political process. are determined by the public. are influenced by interest rates. are determined by suppliers. 1.43 points QUESTION 64 If at some level of output total planned real expenditures are less than real Gross Domestic Product (GDP) real GDP will either fall or remain unchanged depending on the MPC. real GDP will rise. real GDP remains unchanged. unplanned inventories will increase and real GDP will fall. 1.43 points QUESTION 65 When the economy is operating at the equilibrium level of GDP we know that total planned real expenditures equal real GDP. real net exports equal inventory changes. planned real investment spending equals real net exports of zero. total planned real consumption expenditures equal real GDP. 1.43 points QUESTION 66 One divided by the marginal propensity to save (MPS) is the formula for the inverse of the multiplier. the multiplier. one minus the multiplier. autonomous consumption. Thinking as an economist would which is true of investment? Investment represents spending on capital goods. Investment is a stock concept. Investment is putting money into stocks and bonds. It is the portion of disposable income that is not used for consumption or saving. Other things being equal if input prices rise in a country then there would be cost-push inflation. demand-pull inflation. cost-push deflation. more production and a lower price level. In the short run if the price level rises then the overall economy can temporarily produce beyond its nominal capacity. One reason for this is that existing capital equipment can be used more intensively. wage rates rise almost simultaneously with the price level. the unemployment rate usually rises dramatically along with the price level. workers can be switched from counted to uncounted production. Show less
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