Multiple Choice Questions Circle the letter preceding the one alternative that b
ID: 1127920 • Letter: M
Question
Multiple Choice Questions Circle the letter preceding the one alternative that beat completes the statement or answers the question. Each question is worth 3 points. No explanation is needed. 1. If capital inflow is negative, this suggesta a country is A. borrowing more than it is lending to other countries. B. lending more than it is borrowing from other countries. C. experiencing balanced trade. D. experiencing a situation where its imports are greater than its exports 2. This year, Alan purchases a home built in the 1950s. Alan's purchase: A. counts as residential investment spending in this current year. B. counts as government spending in this current year C. does not count as investment spending in this current year. D. is considered business fixed invest ment in this current year. 3. Among financial intermediaries are all of the following except: A. mutual funds. B. pension funds. D. the New York Stock exchange. C. insurance companies. 4. If disposable income increases by $20 billion and consumer spending increases by $15 billion, the marginal propensity to consume is equal to: A. 20 C. 1.33 D. 0.75 5. Suppose you draw the aggregate consumption function with the level of aggregate consumption on the vertical axis and the level of disposable income on the horizontal axis. Which of the following will shift the aggregate consumption function upward? A. Disposable income rises. B. Consumer expectations turn more pessimistic about the future. C. The stock market is strong and wealth is rising. D. Disposable income falls. 6. Negative unplanned inventory investment occurs when A. actual depreciation is less than expected depreciation. B. actual sales are less than expected sales. C. actual depreciation is more than expected depreciation D. actual sales are more than expected sales. 7. According to the accelerator principle: A. higher budget deficits lead to even larger deficits. B. the more money people make, the faster they spend it. C. a higher growth rate of real GDP leads to higher planned investment spending D. a higher growth rate of real GDP causes immigration to increase.Explanation / Answer
1) B is correct
Capital inflow refers to the money coming from other countries. Negative capital inflow means country is sending more money than it is receiving. Thus lending is more than borrowing.
2) C is correct
Purchase of house is not counted as it was counted in 1950s only. Counting again will create double counting problem.
3) D is correct
New york stock exchange is not a financial intermediary.
4)D is correct
marginal propensity to consume = change in consumption / change in disposable income
= 15/20= 0.75
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