Question

Each question has 6-7 parts, depending on the work. Please answer every part. Thank you.

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The downward slope of the Aggregate Demand curve is related to what goes on in the …

Group of answer choices

capital market.

labor market.

goods market.

money market.

none of the above.

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The value of net exports (NX) is …

Group of answer choices

none of the above.

the ratio of exports to imports.

exports minus imports.

the ratio of imports to exports.

imports minus exports.

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Net Domestic Product (NDP) is equal to …

Group of answer choices

GDP minus indirect business taxes.

GDP plus depreciation.

GDP minus depreciation.

GDP plus indirect business taxes.

none of the above.

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The natural rate of unemployment is generally thought of as …

Group of answer choices

the sum of frictional and structural unemployment.

the ratio of frictional unemployment to cyclical unemployment.

the sum of frictional and cyclical unemployment.

the sum of structural and cyclical unemployment.

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In the equation C = a + bY, the “a” stands for …

Group of answer choices

the amount of income one earns when consumption is equal to zero.

the Marginal Propensity to Consume (MPC).

autonomous consumption.

autonomous consumption AND the Marginal Propensity to Consume.

autonomous consumption AND the amount of consumption one earns when income is equal to zero.

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Suppose consumption (C) increases by $80 when income (Y) rises by $100. What is the Marginal Propensity to Consume (MPC) ?

Group of answer choices

1.20

180.0

0.20

0.80

20.0

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Suppose consumption (C) increases by $80 when income (Y) rises by $100. What is the Marginal Propensity to Save (MPS) ?

Group of answer choices

180.0

1.20

0.20

0.80

20.0

Answer 1

1) Answer is C. Goods Market.

Aggregate demand curve shows the relationship between demand and prices of the goods and services. So it is related to the goods market.

2) Answer is C. Net Export = Exports - Imports.

3) Answer is C. NDP = GDP - Depriciation.

4) Answer is A. Sum of frictional and structural unemployment.

Natural rate of unemployment includes frictional and structural unemployment, it does not include cyclical unemployment .

5) Answer is C. Autonomous Consumption.

here 'a' represents autonomous consumption.

6) Answer is D. 0.80

MPC = Change in consumption / change in income = 80 / 100 = 0.80.

7) Answer is C. 0.20

MPS = 1 - MPC = 1 - 0.80 = 0.20.

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