Table: Disposable Income and Consumption Data in $ Billions
Disposable Income Consumption Saving Marginal Propensity to Consume or MPC Marginal Propensity to Save or MPS
$0 $100
100 175
200 250
300 325
400 400
500 475
600 550
1) As shown in table, autonomous consumption spending is:
(a) $75 billion
(b) $100 billion
(c) $175 billion
(d) $275 billion
2) As shown in table, if disposable income is $600 billion, saving is:
(a) $0
(b) $-50 billion
(c) $100 billion
(d) None of the above
3) As shown in Table, if disposable income is $100 billion, the MPC is:
(a) 0.25
(b) 0.75
(c) 1.50
(d) 0.45
4) As shown in Table, suppose disposable income in Q#30 increases by an additional $300b, the MPC would be:
(a) 0.80
(b) 0.85
(c) 0.75
(d) 2.00
5) As shown in Table. what is the MPS, when disposable income is $500 billion?
(a) 0.75
(b) 0.50
(c) 0.25
(d) 1.75
6) What is the value of the numerical value of the multiplier in Q above?
(a) 3
(b) 4
(c) 7
(d) None of the above
7) Suppose you were told that autonomous consumption spending is now $80b, the MPC is 0.50 and autonomous investment expenditures are $120b in a simple Keynesian model, which of the following would be the equilibrium level of GDP or national income?
(a) $150 billion
(b) $300 billion
(c) $450 billion
(d) None of the above
8) Suppose there is a $75 billion increase in autonomous investment, given the multiplier for the multiplier in the cited Keynesian economy in Q#34, by how much would the GDP increase in the economy?
(a) By $75 billion
(b) By $175 billion
(c) By $150 billion
(d) By $350 billion
9) Which of the following pairs of countries is classified as a newly industrialized nation?
(a) South Africa and Albania
(b) South Korea and Brazil
(c) Peru and Taiwan
(d) None of the above
10) Economic development in any society encompasses:
(a) Distribution of income
(b) Legal system
(c) Education
(d) All of the above
11) Suppose the rate of GDP growth expressed in constant dollars is 8.4 percent annually and the rate of population growth is 5.2 percent annually during the period 1990-2005, then the rate of constant GDP per capita growth during the cited period is:
(a) 1.2 percent
(b) 3.2 percent
(c) 2.2 percent
(d) More information needed
12) According to the Rule of 70, the rate of real GDP growth for the economy referenced inQ#38 will take ____________________to double.
(a) 6.3 years
(b) 8.3 years
(c) 9.5 years
(d) 12 years
13) Which of the following pairs is a likely contributor to the vicious cycle in LDCs?
(a) Hunger and malnutrition
(b) The internet and ATM machines
(c) Low income and low investment
(d) High per capita GDP growth rate and low population growth rate
14) Which of the following statements is true? The international trade policy known as protectionism is:
(a) A policy tool for development in and developing countries
(b) Employed by governments to protect young industries from foreign competition
(c) An explicitly anti-free trade development policy
(d) All of the above
15) Which of the following statements is true?
(a) David Humes is a 19th century classical economist
(b) A moral Malthusian check to control the growth of population is famines
(c) Paul Romer is a 20th century new growth theorist
(d) None of the above
16) The US and Germany were able to achieve relatively rapid industrial development because of:
(a) Anti-free trade industrial policies
(b) Strong protectionist policies
(c) Strong interventionist fiscal policies such as subsidies and tax breaks
(d) All of the above
17) Which of the following statements is false? A quota is known as a:
(a) An anti-free trade growth and development policy
(b) Quantitative restriction on imports of a good
(c) A non-tariff barrier
(d) None of the above
18) Which of the following statements is false? The classical economists believed that:
(a) Population growth was a threat to economic progress
(b) Sexual abstinence and diseases were positive Malthusian checks on population growth
(c) Technological progress was relatively insignificant for economic growth