Please solve questions 4-10 4. f the post-World War II baby boomers begin to sav
ID: 1154762 • Letter: P
Question
Please solve questions 4-10
4. f the post-World War II baby boomers begin to save more in anticipation of retirement. what will happen to consumption? a. A downward shift of the consumption function and a drop in GDP b. An upward shift of the consumption function and an increase in GDP c. A movement to the right along the consumption function and an increase in GDP d. A movement to the left along the consumption function and a decrease in GDP 5. Which of the following would be least likely to cause an increase (rightward shift) irn the aggregate supply curve? a. A reduction in the corporate income tax b. A reduction in the price of oil c. An increase in the social security benefits paid to retirees d. An increase in the nation's physical or human capital resources 6. A decrease in the wealth of consumers resulting, for example, from a stock market crash initially causes a. an upward movement along the consumption function b. a downward movement along the consumption function c. an upward shift of the consumption function d. a downward shift of the consumption function 7. An increase in the marginal propensity to consume will a. increase the value of the multiplier b. decrease the value of the multiplier c. have no effect on the multiplier d. affect the multiplier, if at all, in ways which cannot be determined 8. Keynes criticized classical economists for believing that wages and prices are flexible and adjust quickly to clear markets believing that dollars saved by households necessarily went into business investments underestimating the potentially positive role of government in the economy believing that unemployment could be "cured" by a decrease in wages all of the above a. b. c. d. e. 9. Which of the following is not true about classical economists? They advocated more savings to promote economic growth They believed the economy would naturally tend toward full employment They believed prices and wages slowly react to market changes They discouraged government intervention in markets a. b. c. d. 10. Keynes emphasized which of the following as a major factor in determining the level of investment spending? a. Immediate past sales of product b. Current profitability c. Average profit over the past five years d. Business confidence in the future state of the economyExplanation / Answer
4) There would be a downward shift of the consumption function and a drop in GDP (consumption falls)
5) An increase in the social security benefits paid to retirees (this would affect demand side)
6) A downward shift of the consumption function
7) Increase the value of the multipler (multiplier = 1/(1 - MPC)
8) All of the above are true
9) They believed prices and wages slowly react to market changes
10) Business confidence in the future state of the economy