If Americans' home equity falls substantially, it would ____ wealth and consumer confidence, ____ ...

If Americans' home equity falls substantially, it would ____ wealth and consumer confidence, ____ consumption, and ____ aggregate demand.
 a. increase, decrease, increase
  b. decrease, decrease, decrease
  c. increase, increase, increase
  d. increase, increase, decrease

Question 2

If equilibrium income is 500 billion, MPC = 0.8, MPI = 0.2 and autonomous government spending increases by 20 billion, the new equilibrium income will be _____.
 a. 600 billion
  b. 550 billion
  c. 525 billion
  d. 520 billion
  e. 500 billion

Question 3

Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises. This relationship between price and quantity demanded is referred to as
 a. equilibrium.
 b. the law of demand.
 c. the relationship between demand and income.
  d. the definition of a normal good.

Question 4

If the stock market continues a steady climb upwards, this ____ consumer confidence and wealth, leading to ____ consumption, and ____ aggregate demand.
 a. increases, decreased, increased
  b. decreases, decreased, decreased
  c. increases, increased, increased
  d. increases, increased, decreased

Question 5

Consider an economy that is in equilibrium with real GDP = 5,000 . MPS = 1/4 and MPI = 1/5 . What will be the new equilibrium level of income if planned investment spending increases by 500?
 a. 15,000
  b. 7,000
  c. 6,111
  d. 5,500
  e. 5,000

Question 6

A decrease in the price of a good would
 a. increase the supply of the good.
 b. increase the quantity demanded of the good.
 c. give producers an incentive to produce more to keep profits from falling.
  d. shift the supply curve for the good to the left.

Question 7

Pierre is French Canadian, and like many Canadians he is experiencing booming good economic times. His good fortune is likely to impact U.S. aggregate demand in what way?
 a. Positively, because he prefers to make all his purchases in Canada from Canadian firms.
  b. Negatively, because he prefers to make all his purchases in Canada from Canadian firms.
  c. Negatively, since we are all members of North American Free Trade Zone.
 d. Positively, since he will be in a better position to purchase U.S.-made goods.

Question 8

What is the value of the spending multiplier when MPC = 0.85 and MPI = 0.3?
 a. 1.82
  b. 0.85
  c. 2.22
  d. 1.18
  e. 2.50

Question 9

When the price of a good or service changes
 a. the supply curve shifts in the opposite direction.
  b. the demand curve shifts in the opposite direction.
  c. the demand curve shifts in the same direction.
 d. there is a movement along a given demand curve.

Question 10

Investment will decrease if business taxes ____, real interest rates ____, or if business confidence ____.
 a. increase, increase, increases
  b. decrease, decrease, decreases
  c. increase, increase, decreases
  d. decrease, decrease, increases

Question 11

If MPS is equal to 0.15 and MPI is equal to 0.10, an initial change of 19,000 in government expenditure would result in a total change of _____ in income.
 a. 19,000
  b. 16,150
  c. 20,000
  d. 76,000
  e. 126,667

Question 12

An increase in the price of a good will
 a. increase demand.
 b. decrease demand.
 c. increase quantity demanded.
  d. decrease quantity demanded.

Question 13

Investment will increase if business taxes ____, real interest rates ____, or if business confidence ____.
 a. increase, increases, increases
  b. decrease, decrease, decreases
  c. increase, increases, decreases
  d. decrease, decrease, increases