Question

1.the text's analytical model assumes that the following are functions of current income

a. consumption

b. exports

c.imports

d. government expenditure

e. both consumption and imports

2. suppose that a hypothetical economy has consumption function of c=200+0.8Y, investment equal to 300, government purchases equal to 500, exports equal to 240 and in import function im=40+0.1Y. what is the level of income when the economy in equilibrium?

a.1800

b.4000

c.2000

d.4400

e.1400

3. An aggregate expenditure function illustrates that as national income rises

a. interest rates must also rise

b. prices rise

c. desired expenditure on currently produced goods will rise by a proportion of the increase in national income

d. desired expenditures on currently produced goods fall

e. employment rises

4. which of the following factors will cause an upward shift of the consumption function

a. an unexpected decrease in wealth

b. a sudden decrease in consumer confidence

c. a more negative attitude towards saving

d. an increase in the rate of interest

e. an increase in disposable income

Answer 1