ASAD Model and Multipliers

Question 1

The most volatile component of aggregate demand is

Accepted Answer

I

Question 2

Which of the following would occur if the value of the US Dollar decreased?

Accepted Answer

US exports would rise

Question 3

If exports fall by 40, gov. spending increases by 20, and MPS is .2, what happens to income?

Accepted Answer

It falls by 100

Question 4

In the multiplier model, if exports fall by 40 and the MPC is .5, what happens to GDP?

Accepted Answer

It falls by 80

Question 5

Spending affects AD more than a tax cut. This fact is seen in the

Accepted Answer

balanced budget multiplier

Question 6

Which of the following would most likely lead to a decrease in aggregate demand?

Accepted Answer

Increase in savings

Question 7

If real GDP declines by $160 million after a decline in I of $40 million then the MPC equals

Accepted Answer

0.75

Question 8

If MPS = .25, the spending multiplier would be

Accepted Answer

4

Question 9

The aggregate supply curve

Accepted Answer

shows real output produced at each pricelevel

Question 10

If personal taxes were decreased and productivity increased simultaneously, the equilibrium

Accepted Answer

output would rise

Question 11

A $300 increase in savings with a $5,000 increase in disposable income means MPS equals

Accepted Answer

0.06

Question 12

What is the largest component of GDP?

Accepted Answer

C

Question 13

If MPS = .25 the tax multiplier would be

Accepted Answer

-3

Question 14

Which of the following will occur as a result of an improvement in productivity?

Accepted Answer

AS increase

Questions 14