Question

1. Keynesian economics developed in response to:

A) the Great Depression of the 1930s.
B) the inflation following World War II.
C) economic growth during the 1950s.
D) the Vietnam War.
E) the oil embargo in the 1970s.

2.

A key assumption of the Keynesian model of macroeconomics is a fixed _____.

A) interest rate
B) price level
C) exchange rate
D) real GDP
E) unemployment level

3.

The sum of consumption and saving is called _____.

A) net investment
B) net income
C) personal income
D) disposable income
E) transfer income

4.

The income net of taxes is called _____.

A) real income
B) disposable income
C) nominal income
D) taxable income.
E) personal income.

5.

The part of the disposable income that is not consumed by households is:

A) given away in the form of taxes.
B) given away as charity.
C) saved.
D) deducted as a depreciation cost.
E) spent on imports.

6.

Which of the following is a stock variable?

A) Government spending
B) Investment
C) Daily household consumption
D) Saving
E) Wealth

7.

Which of the following variables is a flow concept?

A) Gross domestic product
B) Assets
C) Wealth
D) Money supply
E) Saving

8.

The consumption function illustrates that:

A) saving increases as disposable income decreases.
B) consumption increases as saving increases.
C) consumption increases as disposable income increases.
D) consumption increases as disposable income decreases.
E) consumption increases as investment increases.

9.

The 45-degree line used in a consumption function represents:

A) the saving function.
B) all points at which saving equals disposable income.
C) all points at which consumption equals saving.
D) all points at which all disposable income is consumed.
E) the aggregate income of the economy.

Answer 1

1)d

2)d

3)a

4)b

5)d

6)a

7)b

8)a

9)b