ECO 203 Week 3 Quiz | Assignment Help | Ashford University

ECO 203 Week 3 Quiz |  Assignment Help | Ashford University 


Week 3 – Quiz

 

Question 1

According to classical economists, the proper macroeconomic role of government is __________.

 

o   to regulate GDP    

o   to control the money supply

o   to control unemployment

o   to set prices

 

 

Question 2

In the Keynesian model, at the equilibrium level of income, which one of the following statements is NOT true?

 

o   Planned spending equals actual output.

o   The economy is at full employment.

o   There are no unplanned inventory changes.

o   There is no tendency for the output level to change.

 

 

Question 3

The marginal propensity to save (MPS) represents __________.

 

o   the slope of the saving function

o   the slope of the consumption function

o   total saving divided by total income

o   total consumption divided by total saving

 

 

 

Question 4

According to the authors, the lesson learned from Spain’s massive deficit during a 2012 recession was that debt reduction during an economic crisis will most likely __________.

 

o   deter economic growth

o   result in reduced taxes

o   produce inflation

o   encourage government spending

 

 

Question 5

According to the Keynesian view, why are voluntary changes in spending by the private sector NOT a reliable source of changes in aggregate expenditure?

 

o   because the theory of private sector spending is the weakest part of Keynesian theory

o   because what the private sector does in an economy is not factored into aggregate expenditure

o   because neither households nor businesses can be expected to act in the interest of society if such action conflicts with their self-interest

o   because the self-interested behavior of the private sector causes spending to increase during recessions and decrease during inflationary times

 

 

Question 6

Adding the foreign sector to the Keynesian model __________.

 

o   adds another injection only

o   adds another leakage only

o   increases income and output if net exports are negative

o   increases income and output if net exports are positive

 

 

 

 

Question 7

Say’s law states that supply creates its own demand because __________.

 

o   prices tell producers exactly how much to produce in the short run

o   production creates income sufficient to purchase all that is produced

o   there is always a buyer for every good purchased

o   supply prices are always equal to demand prices

       

 

Question 8

Regarding their national financial situations, what have Iceland and Argentina had in common?

 

o   Both nations have been bankrupt due to the number of their failed banks.

o   Both nations have been bankrupt due to their inability to repay foreign loans.

o   Neither nation has ever had national deficits.

o   Neither nation has ever had to take foreign loans.

 

 

Question 9

A decrease in net exports of soybeans would cause the AE curve to __________.

 

o   curve upward

o   curve downward

o   become vertical

o   remain unchanged

 

 

Question 10

The consumption function shows the relationship between the income received by households and __________.

 

o   the amount they plan to spend on currently produced final output

o   the amount they plan to save You Answered

o   the amount households and business firms plan to spend on investment

o   the taxes paid on personal income

 

 

 

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