1. Suppose that an economy has a real GDP of $60000 with autonomous consumption

Question

1. Suppose that an economy has a real GDP of $60000 with autonomous consumption of $7000. If the marginal proposensity to consume (MPC) is 0.80, what would be the total consumption?

2. Suppose that a country has a GDP of $3 billion, no autonomous consumption, and total consumption of $2.55 billion. The marginal propensity to consume in this economy is

3. During the Great Recession, a major financial crisis followed the collapse of housing prices, which led to: Choose one: A. an increase in expected income. B. the decline in the health of many large financial firms and banks. C. a decrease in the money supply by the Federal Reserve. D. an increase in income tax rates to shrink the federal budget deficit. E. skyrocketing oil prices.

4. Classical economists believe that: Choose one: A. the economy can adjust back to full employment on its own. B. the short run is more significant than the long run. C. aggregate demand is more significant than aggregate supply. D. the economy needs help in moving back to full employment. E. prices are sticky.

5. Over the next 20 years, more and more Baby Boomers are expected to retire. Which of the U.S. government’s budget categories is likely to be most affected by this trend? Choose one: A. mandatory B. discretionary C. both discretionary and mandatory

6. Which of the following is the correct ranking of countries in descending order in terms of their publicly held debt-to-GDP ratios for 2013? Choose one: A. Japan > Greece > United States B. Greece > United States > Japan C. United States > Greece > Japan D. Greece > Japan > United States

7. Suppose you graduate with an accounting degree and then become a certified public accountant. You work for a big firm but are offered a chance to prepare tax documents for your city government as an independent contractor. The city offers to pay you a consulting fee of $10,000. When deciding whether to accept the additional work, the most important tax factor in your decision is: Choose one: A. the gross amount of the payment. B. your current tax bracket. C. your marginal tax rate. D. your new average tax rate. E. which political party controls the city government.

8. The United States had a ________ as recently as 2001. Choose one: A. balanced budget B. spending freeze C. budget deficit D. revenue surplus E. trade surplus

9. Prior to the creation of the income tax system in the United States, which tax was the primary source of revenue for the government? Choose one: A. import B. estate C. corporate D. marginal E. excise

Explanation / Answer

1) Since we know that the consumption fucntion = a + b(Yd)

where a = autonomous consumption

b = marginal propensity to consume

yd = disposable income.

So, Consumption = 7000 + 0.8 ( 60000)

C = 7000 + 48000 = 55000

So, the total Consumption = 55,000

question 2 and all remaing - ( please upload it again , it against chegg policy)

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