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A simple Keynesian study of the economy assumes that:
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| Aggregate output and aggregate income are the same. |
| Aggregate output and aggregate quantity supplied are the same. |
| Aggregate output refers to quantities of goods and services produced, not the dollars circulating in the economy. |
| Economic activity is divided into single periods in which output is produced, income is generated, and spending takes place. |
| All of the above. |
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Refer to the graph below. When the consumption function is above the 45° line: 
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| Consumption exceeds income and saving is negative. |
| Consumption is less than income and saving is negative. |
| Consumption exceeds income and saving is positive. |
| Consumption is less than income and saving is negative. |
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Refer to the graph below. What is the value of the marginal propensity to consume (MPC) ? 
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| 1,000 |
| 1.25 |
| 0.2 |
| 0.8 |
| There is not sufficient information to estimate the value of the marginal propensity to consume. |
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Refer to the graph below. At what level of disposable income is consumption equal to disposable income?
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| $1,250 |
| $5,000 |
| $1,000 |
| $800 |
| $4,200 |
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Refer to the graph below. What is the level of saving when Yd = $1,000?
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| $1,800 |
| $1,200 |
| - $200 |
| - $800 |
| - $1,200 |
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Refer to the graph below. The consumption function is C = 50 + 0.6Yd. What is the value of Y0? 
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| Since the value of saving equals zero at that point, the value of income cannot be estimated. |
| 50 |
| 80 |
| 125 |
| There is not sufficient data to answer the question. |
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Refer to the graph below. How much is the level of saving when the level of income equals 50?
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| - $20. |
| - $30. |
| - $80. |
| $0 |
| $20 |
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Refer to the graph below. When the level of output exceeds Y1 this period, which of the following is true? 
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| Aggregate expenditure is greater than aggregate income. |
| Saving is less than planned investment. |
| Inventories will rise. |
| Firms will probably plan to increase output and employment in the next period. |
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Refer to the graph below. Fill in the blanks. For any level of income less than Y1, business firms will undergo __________ and will plan to __________ production in future periods.
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| inventory depletion; decrease |
| inventory depletion; increase |
| inventory build-up; increase |
| inventory build-up; decrease |
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Refer to the graph below. Between the levels of output Y0 and Y1, the relationship between actual investment, planned investment, and unplanned investment is as follows:
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| Planned investment is greater than actual investment, and unplanned investment is negative. |
| Planned investment is less than actual investment, and unplanned investment is negative. |
| Planned investment is greater than actual investment, and unplanned investment is positive. |
| Planned investment is less than actual investment, and unplanned investment is positive. |
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Refer to the graph below. What is the value of the marginal propensity to consume (MPC)? 
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| 1.66 |
| 1.5 |
| 7.5 |
| 0.6 |
| 2.5 |
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Refer to the graph below. What is the value of the multiplier?
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| 2.5 |
| 0.4 |
| 0.6 |
| 1.66 |
| 100 |
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Refer to the graph below. What is the value of (C + I) at point b?
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| There is insufficient information to arrive at an answer. |
| 400 |
| 666.66 |
| 1,250 |
| 450. |
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Refer to the graph below. In order to double equilibrium output from 250 to 500, we can: 
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| Double the amount of autonomous consumption. |
| Double the amount of autonomous planned investment. |
| Increase either the amount of either autonomous consumption or the amount of autonomous planned investment but by less than double. |
| Decrease the marginal propensity to consume. |
| Increase either the amount of either autonomous consumption or the amount of autonomous planned investment but by more than double. |
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Refer to the graph below. To get from point c to point b, there must be:
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| An increase in the marginal propensity to consume. |
| An increase in income. |
| An increase in the value of autonomous expenditures (a + I). |
| An increase in the value of aggregate expenditure for every level of income. |
| An increase in the value of the multiplier. |
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Refer to the graph below. To get from point b to point a, there must be:
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| An increase in the marginal propensity to consume. |
| An increase in income. |
| An increase in the value of autonomous expenditures (a + I). |
| An increase in the value of aggregate expenditure for every level of income. |
| An increase in the value of the multiplier. |
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Refer to the graph below. What could have caused the shift in aggregate expenditure, from (C + I)0 to (C + I)1? 
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| An increase in disposable income. |
| A decrease in household wealth. |
| The expectation of lower future prices. |
| A decrease in the interest rate. |
| Pessimistic changes in household and business expectations. |
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The paradox of thrift explains how:
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| An increase in consumption leads to a decrease in saving, an increase in income, and even greater saving than anticipated. |
| An increase in saving may increase income but not consumption. |
| An increase in saving, which requires a decrease in consumption, may result in a decrease in income, and consequently no greater saving than before. |
| An increase in investment can compensate for a decrease in saving; thus, with higher investment, it is possible to achieve a higher level of income with a higher level of saving. |
