-If disposable income is $900 billion when the average propensity to consume is 0.

9, it can be
concluded that:
Saving is $90 billion
-Assume that an increase in a household's disposable income from $40,000 to $48,000 leads to an
increase in consumption from $35,000 to $41,000, then the:
Slope of the consumption schedule is .75
-If the consumption schedule is a straight line, it can be concluded that the:
MPC is constant at various levels of income
-Refer to the data above. If disposable income is $550, we would expect consumption to be:

$460

-Refer to the data above. If plotted on a graph, the slope of the consumption schedule would be:

.9

-Refer to the data above. The marginal propensity to save in this economy is:

.1

-Refer to the data above. At the $320 billion level of disposable income, the average propensity to

save is: .075

-With a marginal propensity to save of .4, the marginal propensity to consume will be:
1.0 minus .4.
-As disposable income goes up, the:
average propensity to consume falls.
-A decline in disposable income:
decreases consumption by moving downward along a specific consumption schedule.
-The consumption schedule is such that:
the MPC is constant and the APC declines as income rises.
-If Trent's MPC is .80, this means that he will:
spend eight-tenths of any increase in his disposable income.
-Suppose a family's consumption exceeds its disposable income. This means that its:
APC is greater than 1.
-Dissaving occurs where:
consumption exceeds income.
-Refer to the given data. The marginal propensity to consume is:

.80.

-Refer to the given data. At the $200 level of disposable income:

dissaving is $5.

-Refer to the given data. If disposable income was $325, we would expect consumption to be:

$305.
-The relationship between the real interest rate and investment is shown by the:
investment demand schedule.
-The investment demand curve will shift to the right as a result of:
technological progress.
-If 100 percent of any change in income is spent, the multiplier will be:
infinitely large.
-The size of the multiplier is equal to the:
reciprocal of the slope of the saving schedule.
-If the MPC is .70 and investment increases by $3 billion, the equilibrium GDP will:
increase by $10 billion.
-If, in an economy, a $200 billion increase in consumption spending creates $200 billion of new
income in the first round of the multiplier process and $160 billion in the second round, the marginal
propensity to consume and the multiplier are, respectively:
0.8 and 5.0
-Assume the marginal propensity to consume is 0.8. If consumer spending increases by $20 billion,
then real GDP will:
Increase by $100 billion
-Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by:
$20 billion
-In the aggregate expenditures model, it is assumed that investment:
Does not change when real GDP changes.
-Refer to the diagram for a private closed economy. The equilibrium level of GDP is:

$300.

-Refer to the diagram for a private closed economy. At the equilibrium level of GDP, investment and
saving are both:

$50.

-Refer to the diagram for a private closed economy. The $400 level of GDP is:

unstable because aggregate expenditures are less than GDP.

-In a private closed economy, when aggregate expenditures exceed GDP:
business inventories will fall.
-Assume that in a private closed economy consumption is $240 billion and investment is $50 billion,
both at the $280 billion level of domestic output. Thus:
unplanned decreases in inventories of $10 billion will occur.
-Refer to the diagram for a private closed economy. The MPC and MPS are:

both .5.
-Suppose that the level of GDP increased by $100 billion in a private closed economy where the
marginal propensity to consume is .5. Aggregate expenditures must have increased by:
$50 billion.
-Other things equal, if a change in the tastes of American consumers causes them to purchase
more foreign goods at each level of U.S. GDP, then:
U.S. real GDP will fall.
-If the multiplier in an economy is 5, a $20 billion increase in net exports will:
increase GDP by $100 billion.
-Assume the MPC is .8. If government were to impose $50 billion of new taxes on household
income, consumption spending would initially decrease by:
$40 billion.
-If a lump-sum income tax of $25 billion is levied and the MPS is .20, the:
consumption schedule will shift downward by $20 billion.
-A $1 increase in government spending on goods and services will have a greater impact on the
equilibrium GDP than will a $1 decline in taxes because:
a portion of a tax cut will be saved.
-The following schedule contains data for a private closed economy. All figures are in billions. Use
these data in answering the question.

Refer to the data. If gross investment is $10 at all levels of GDP, the equilibrium GDP will
be:
$220.
-The following schedule contains data for a private closed economy. All figures are in billions. Use
these data in answering the question.

Refer to the data. If a lump-sum tax of $20 is imposed, the consumption schedule will
become:

-In a mixed closed economy:

taxes and savings are leakages, while investment and government purchases are injections.
-The following information is for a closed economy:

Refer to the information. If both government spending and taxes are zero, the
equilibrium level of GDP is:
$300.
-The following information is for a closed economy:

Refer to the information. If government now spends $80 billion at each level of
GDP and taxes remain at zero, the equilibrium GDP:
will rise to $500.
 -The following information is for a closed economy:

Refer to the information. The introduction of $80 billion of government spending

would:
have no effect on the size of the multiplier.

-The following information is for a closed economy:

Refer to the information. If government spends $80 billion at each level of GDP,
and imposes a lump-sum tax of $100:
equilibrium GDP will now be $350.

-Money functions as:

all of these
-If you are estimating your total expenses for school next semester, you are using money primarily
as:
a unit of account.
-If you place a part of your summer earnings in a savings account, you are using money primarily as
a:
store of value.
-If you write a check on a bank to purchase a used Honda Civic, you are using money primarily
as:
a medium of exchange.
-The paper money used in the United States is:
Federal Reserve Notes.
-Currency held in the vault of First National Bank is:
not counted as part of the money supply.
-To say that coins are "token money" means that:
their face value is greater than their intrinsic value.
-Which of the following is not part of the M2 money supply?
Large-denominated time deposits.
-Assuming no other changes, if checkable deposits decrease by $40 billion and balances in
money market mutual funds increase by $40 billion, the:
M1 money supply will decline and the M2 money supply will remain unchanged.
-Small-denominated time deposits, by definition:
are less than $100,000.
-The purchasing power of money and the price level vary:
inversely.
-The Federal Reserve System was created in:
1913
-In the U.S. economy, the money supply is controlled by the:
Federal Reserve System.
-As it relates to Federal Reserve activities, the acronym FOMC describes the:
Federal Open Market Committee.
-The Federal Open Market Committee (FOMC) is made up of:
the seven members of the Board of Governors of the Federal Reserve System along
with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank
presidents on a rotating basis.
-Which one of the following is true about the U.S. Federal Reserve System?
There are 12 regional Federal Reserve Banks.
-Which of the following statements best describes the 12 Federal Reserve Banks?
They are privately owned and publicly controlled central banks whose basic goal is to
control the money supply and interest rates in promoting the general economic welfare.

-The seven members of the Board of Governors of the Federal Reserve System are:
appointed by the president with the confirmation of the Senate.
-Commercial banks and thrift institutions:
have become increasingly similar in recent years.
-(Consider This) Credits cards are:
not money, as officially defined.
-Which of the following are all assets to a commercial bank?
Vault cash, property, and reserves.
-The reserves of a commercial bank consist of:
deposits at the Federal Reserve Bank and vault cash.
-The primary purpose of the legal reserve requirement is to:
provide a means by which the monetary authorities can influence the lending ability of
commercial banks.
-The ABC Commercial Bank has $5,000 in excess reserves and the reserve ratio is 30 percent.
This information is consistent with the bank having:
$90,000 in checkable deposit liabilities and $32,000 in reserves.
-When a check is drawn and cleared, the
bank against which the check is cleared loses reserves and deposits equal to the amount
of the check.
-Suppose the ABC bank has excess reserves of $4,000 and outstanding checkable deposits of
$80,000. If the reserve requirement is 25 percent, what is the size of the bank's actual
reserves?
$24,000.
-Excess reserves refer to the:
difference between actual reserves and required reserves.
-A reserve requirement of 20 percent means a bank must have $1,000 of reserves if its
checkable deposits are:
$5,000
-Assume the Continental National Bank's balance statement is as follows:

Assuming a legal reserve ratio of 20 percent, how

much in excess reserves would this bank have after a
check for $10,000 was drawn and cleared against it?
$6,000.
-Assume that Smith deposits $600 in currency into her checking account in the XYZ Bank. Later
that same day Jones negotiates a loan for $1,200 at the same bank. In what direction and by
what amount has the supply of money changed?
Increased by $1,200.
-A single commercial bank must meet a 25 percent reserve requirement. If the bank has no
excess reserves initially and $5,000 of cash is deposited in the bank, it can increase its
loans by a maximum of:
$3,750.
-Which of the following is correct?
Actual reserves minus required reserves equal excess reserves.
-Answer the question on the basis of the following balance sheet for the First National Bank
of Bunco. All figures are in millions.
Refer to the data. If this bank has excess reserves of $6 million, the legal reserve ratio must
be:
14 percent.
-When commercial banks use excess reserves to buy government securities from the public:
new money is created.
-Overnight loans from one bank to another for reserve purposes entail an interest rate called
the:
federal funds rate.
-The multiple by which the commercial banking system can expand the supply of money is
equal to the reciprocal of:
the reserve ratio.
-Suppose a commercial banking system has $100,000 of outstanding checkable deposits
and actual reserves of $35,000. If the reserve ratio is 20 percent, the banking system can
expand the supply of money by the maximum amount of:
$75,000.
-Answer the question on the basis of the following consolidated balance sheet for the
commercial banking system. Assume the required reserve ratio is 30 percent. All figures are
in billions.

Refer to the data. The commercial banking system has excess reserves of:
$9 billion.
-Answer the question on the basis of the following consolidated balance sheet for the
commercial banking system. Assume the required reserve ratio is 30 percent. All figures are in
billions.

Refer to the data. The maximum amount by which the commercial banking system can expand
the supply of money by lending is:
$30 billion.
-Answer the question on the basis of the following consolidated balance sheet for the
commercial banking system. Assume the required reserve ratio is 30 percent. All figures are in
billions.

Refer to the data. If the commercial banking

system actually loans the maximum amount it is
able to lend:
excess reserves will be reduced to zero.
-If the monetary authorities want to reduce the monetary multiplier, they should:
raise the required reserve ratio.
-If the reserve ratio is 100 percent, the value of the monetary multiplier is:
1.
-The greater the required reserve ratio, the:
lower is the monetary multiplier.
-Money is destroyed when:
loans are repaid.
-When a bank loan is repaid, the supply of money:
is decreased.