# MACROECONOMICS- Business & Finance

QUESTIONS 1-13: Use the data from the STUDY GUIDE page 124 #3:

question #3=

For a given nation, suppose the table shows the relationship between real consumption and real disposable income (real GDP):

If the investment schedule is $60 at each level of output, the equilibrium level of real GDP will be (a) $320 (b) $360 (c) $400 (d) $440

For a given nation, suppose the table shows the relationship between real consumption and real disposable income (real GDP):

What is the value of the average propensity to consume at $200 real GDP?

What is the value of the average propensity to consume at $400 real GDP?

What is the value of the average propensity to save at $200 real GDP?

What is the value of the average propensity to save at $400 real GDP?

What is the value of the marginal propensity to consume?

What is the value of the marginal propensity to save?

If this nation consumes $50 more at each level of real GDP than shown in the table, is this a SHIFT in the consumption function or a MOVEMENT ALONG the consumption function?

If the nation’s level of real GDP decreases from $440 to $280, is this a SHIFT in the consumption function or a MOVEMENT ALONG the consumption function?

Compute the value of the Keynesian spending multiplier.

Give the amount of the change in the equilibrium level of Real GDP due to a $6 increase in investment expenditures.

Give the amount of the change in the equilibrium level of Real GDP due to a $4 decrease in consumption expenditures.

Give the amount of the change in the equilibrium level of Real GDP due to a $6 increase in investment expenditures.

Give the amount of the change in the equilibrium level of Real GDP due to a $4 decrease in consumption expenditures and a $6 increase in investment expenditures at the same time.

Suppose the equilibrium level of Real GDP decreases by $20. What was the amount of the change in autonomous expenditures which caused this to happen?

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Use shifts of the AD and AS curves to explain the cost-push inflation of the 1970s.

What is the mathematical term to describe the relationship between real consumption and real GDP?

What is the mathematical term to describe the relationship between real saving and real GDP?

What happens to the value of the APC as real GDP decreases?

What happens to the value of the APS as real GDP decreases?

APC + APS = MPC + MPS: TRUE OR FALSE?

Briefly summarize Say’s Law.

Briefly summarize the Classical view of how the economy works.

What historical event caused a change in thinking about the way the economy works?

Briefly summarize the Keynesian view of how the economy works.

What is the difference between the investment demand curve for a business and the investment schedule for an economy?

What is the difference between the equilibrium level of real GDP and the full-employment level of real GDP in the Keynesian model?

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