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When total expenditures are greater than total production, __________ is produced than
households want to buy, which leads to __________ in inventory, which signals firms that they
have __________, which causes firms to increase production.
1. less; decreases; underproduced
2. more; increases; underproduced
3. less; increases; underproduced
4. more; decreases; overproduced
When the MPC = 0.6, the multiplier is
1. 0.40.
2. 2.50.
3. 1.67.
4. 6.00.
The multiplier process following a drop in autonomous spending is
1. just as powerful as for a rise in autonomous spending.
2. more powerful than for a rise in autonomous spending.
3. less powerful than for a rise in autonomous spending.
4. nonexistent, because the multiplier applies only to a rise in autonomous spending.
Refer to Exhibit 10-3. The multiplier is
1. 4
2. 5
3. 10
4. 1
5. none of the above
Refer to Exhibit 10-8. The marginal propensity to consume (MPC) is
1. 0.90.
2. 0.10.
3. 0.80.
4. 0.95.
5. 0.75.
In the real world, we should expect the multiplier process to work itself out
1. almost instantaneously.
2. within a few days.
3. within about one month.
4. only over many months, perhaps even years.