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# Economics Questions and Answers **Question 4:** In a country, when real disposable income increases by $50,000, real consumption spending increases by $40,000 on average. What is the country's simple expenditure multiplier? Possible answers: a. 5 b. 4 c. 1.25 d. 0.8 e. 0.2 **Question 5:** Su...

# Economics Questions and Answers **Question 4:** In a country, when real disposable income increases by $50,000, real consumption spending increases by $40,000 on average. What is the country's simple expenditure multiplier? Possible answers: a. 5 b. 4 c. 1.25 d. 0.8 e. 0.2 **Question 5:** Suppose the economy is in equilibrium and exports decrease by $50 billion. What would the most likely effect on equilibrium real GDP be, according to the Keynesian model? Possible answers: a. It would decrease by $35 billion if the MPC is 0.7. b. It would decrease by $50 billion. c. It would decrease by more than $50 billion. d. It would decrease, but by less than $50 billion. e. There would be no effect on real GDP because exports do not influence aggregate spending. **Question 6:** If income taxes increase, which of the following would most likely occur? Possible answers: a. Disposable income decreases, consumption at any income level increases, and aggregate demand shifts rightward. b. Disposable income increases, labor productivity increases, and short-run aggregate supply shifts rightward. c. Disposable income increases, consumption at any income level increases, and aggregate demand shifts rightward. d. Disposable income increases, consumption at any income level increases, and aggregate demand shifts leftward. e. Disposable income decreases, consumption at any income level decreases, and aggregate demand shifts leftward. **Question 7:** In the context of the AD/AS model, which of the following would most likely lead to a decrease in US real GDP and an increase in the US price level? Possible answers: a. A decreased mood of optimism about the nation's economic prospects b. An increase in the price of crude oil c. A US dollar depreciation d. An increase in real interest rate e. A decrease in production costs **Question 8:** What is money, according to the Federal Reserve System? What are examples of money? Money is the means of payment in the economy. Examples include: a. currency in circulation, checking account balances, and credit card limits b. currency in circulation and credit card limits c. travelers' checks, currency in circulation, and reserves d. currency in circulation and demand deposit balances e. currency in the vaults and ATM of banks and checking account balances **Question 9:** [The text is truncated, so I cannot answer.] **Diagram:** A diagram of Aggregate Supply (AS) and Aggregate Demand (AD) curves is present. The diagram shows an upward sloping AS curve intersecting a downward sloping AD curve at a point. The diagram also shows a shift in AS to the left.