ECON 2010 Exam 3 - Test Bank
1. Dave's Mirror Company expects to sell $1,000,000 worth of mirrors and to
produce $1,250,000 worth of mirrors in the coming year. The company
purchases $300,000 worth of new equipment during the year. Sales for the
year turn out to be $900,000. Actual investment by Dave's Mirror Company
equals ______ and planned investment equals _______.
A. $250,000; $150,000
B. $300,000; $200,000
C. $550,000; $450,000
D. $650,000; $550,000: D. $650,000; $550,000
2. When actual investment is greater than planned investment:
A. firms sold less output than expected.
B. firms sold more output than expected.
C. the quantity of output sold is the amount the firm expected to sell.
D. the economy produces short-run equilibrium output.: A. firms sold less
output than expected.
3. Data on after-tax income and consumption spending for the Adam Smith
family are given below:
Based on these data, the Adam Smith family has a marginal propensity to
consume of:
A. 0.9.
, ECON 2010 Exam 3 - Test Bank
B. 0.8.
C. 0.75.
D. 0.6.: A. 0.9
4. 48.
In Macroland autonomous consumption equals 100, the marginal propensity
to consume equals 0.75, net taxes are fixed at 40, planned investment is
fixed at 50, government purchases are fixed at 150, and net exports are fixed
at 20. Autonomous expenditure equals:
A. 320.
B. 320 + 0.25Y.
C. 290.
D. 290 + 0.75Y.: C. 290.
5. 82.
Refer to the figure above. Based on the figure, if the economy is in short-run
equilibrium with output equal to 16,000, then there is a(n) ______ gap and a
______ in autonomous expenditures could return the economy to potential
output (Y*).
A. expansionary; decrease of 1,000
B. expansionary; decrease of 4,000
C. recessionary; increase of 1,000
D. recessionary; increase of 4,000: C. recessionary; increase of 1,000
1. Dave's Mirror Company expects to sell $1,000,000 worth of mirrors and to
produce $1,250,000 worth of mirrors in the coming year. The company
purchases $300,000 worth of new equipment during the year. Sales for the
year turn out to be $900,000. Actual investment by Dave's Mirror Company
equals ______ and planned investment equals _______.
A. $250,000; $150,000
B. $300,000; $200,000
C. $550,000; $450,000
D. $650,000; $550,000: D. $650,000; $550,000
2. When actual investment is greater than planned investment:
A. firms sold less output than expected.
B. firms sold more output than expected.
C. the quantity of output sold is the amount the firm expected to sell.
D. the economy produces short-run equilibrium output.: A. firms sold less
output than expected.
3. Data on after-tax income and consumption spending for the Adam Smith
family are given below:
Based on these data, the Adam Smith family has a marginal propensity to
consume of:
A. 0.9.
, ECON 2010 Exam 3 - Test Bank
B. 0.8.
C. 0.75.
D. 0.6.: A. 0.9
4. 48.
In Macroland autonomous consumption equals 100, the marginal propensity
to consume equals 0.75, net taxes are fixed at 40, planned investment is
fixed at 50, government purchases are fixed at 150, and net exports are fixed
at 20. Autonomous expenditure equals:
A. 320.
B. 320 + 0.25Y.
C. 290.
D. 290 + 0.75Y.: C. 290.
5. 82.
Refer to the figure above. Based on the figure, if the economy is in short-run
equilibrium with output equal to 16,000, then there is a(n) ______ gap and a
______ in autonomous expenditures could return the economy to potential
output (Y*).
A. expansionary; decrease of 1,000
B. expansionary; decrease of 4,000
C. recessionary; increase of 1,000
D. recessionary; increase of 4,000: C. recessionary; increase of 1,000
