Practice Determination Of Income And Employment (4) - Determination of Income and Employment

Practise this section

9 questions

Flashcard drill
2 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
3 questions · about 2 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
Define 'Aggregate Demand'.
Show hintHide hint
Think about what consumers and businesses require in an economy.
Question 2.
What does MPC stand for?
Show hintHide hint
What does propensity mean in general usage?
3Question 3.
What is Aggregate Demand?
- Planned spending only
- Total demand for goods and services
- Total supply of goods
Show hintHide hint
Think about what drives the economic engine.
4Question 4.
True or False: The Paradox of Thrift suggests that saving more will always increase overall savings.
- True
- False
Show hintHide hint
Consider the implications of consumer behavior.
Question 5.
Given an economy where consumption function is C = 50 + 0.7Y and investment I = 30, calculate the equilibrium level of income.
Show hintHide hint
Set aggregate demand to equal aggregate supply and solve for Y.
Question 6.
If savings increase by 20, and the MPC drops to 0.5, analyze the long-term effects on national income using the concept of the Paradox of Thrift.
Show hintHide hint
Consider cycles of spending and saving in your analysis.

5 more questions in this section. Enroll free to practise them all.