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D. increases.
QUESTION 60
The investment function will shift when there is a change in
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A. the opportunity cost of retained earnings.
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B. firms' profit expectations.
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C. the cost of borrowing.
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D. the interest rate.
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1.43 points
QUESTION 61
In the Keynesian model, whenever planned saving exceeds planned investment,
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A. there will be unplanned inventory accumulation.
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B. real GDP will not be influenced.
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C. the interest rate will remain unchanged.
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D. there will be unplanned inventory depletion.
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1.43 points
QUESTION 62
In the Keynesian model, whenever planned saving is less than planned investment,
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A. there will be unplanned inventory depletion.
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B. the interest rate will remain unchanged.
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C. there will be unplanned inventory accumulation.
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D. real GDP will not be influenced.
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1.43 points
QUESTION 63
Government purchases
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A. are determined by the political process.
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B. are determined by the public.
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C. are influenced by interest rates.
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D. are determined by suppliers.
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1.43 points
QUESTION 64
If, at some level of output, total planned real expenditures are less than real Gross Domestic Product (GDP),
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A. real GDP will either fall or remain unchanged, depending on the MPC.
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B. real GDP will rise.
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C. real GDP remains unchanged.
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D. unplanned inventories will increase and real GDP will fall.
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1.43 points
QUESTION 65
When the economy is operating at the equilibrium level of GDP, we know that
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A. total planned real expenditures equal real GDP.
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B. real net exports equal inventory changes.
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C. planned real investment spending equals real net exports of zero.
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D. total planned real consumption expenditures equal real GDP.
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1.43 points
QUESTION 66
One divided by the marginal propensity to save (MPS) is the formula for
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A. the inverse of the multiplier.
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B. the multiplier.
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C. one minus the multiplier.
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D. autonomous consumption.
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QUESTION 67
Thinking like an economist would, which is true of investment?
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A. Investment represents spending on capital goods.
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B. Investment is a stock concept.
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C. Investment is putting money into stocks and bonds.
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D. It is the portion of disposable income that is not used for consumption or saving.
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QUESTION 68
Other things being equal, if input prices rise in a country, then there would be
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A. cost-push inflation.
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B. demand-pull inflation.
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C. cost-pull deflation.
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D. more production and a lower price level.
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QUESTION 69
In the short run, if the price level rises, then the overall economy can temporarily produce beyond its nominal capacity. One reason for this is that
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A. existing capital equipment can be used more intensively.
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B. wage rates rise almost simultaneously with the price level.
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C. the unemployment rate usually rises dramatically along with the price level.
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D. workers can be switched from counted to uncounted production.
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