Other Economics Answers

The equilibrium level of income is …

[1] 60

[2] 120

[3] 300

[4] 90

The equation C = 70 + 0,65Y, where C is consumption and Y is disposable income, tells us

that …

[1] households will save R70 if their disposable income is zero and will consume 0,65 of

any increase in disposable income they receive.

[2] households will consume R70 if their disposable income is zero and will consume 0,65

of any increase in disposable income they receive.

[3] households earn R70 and spend three quarters of their income.

[4] households will consume 0,35 of whatever level of disposable income they receive.

An increase in the marginal propensity to consume …

[1] decreases the value of the multiplier

[2] does not affect the multiplier.

[3] increases the value of the multiplier.

[4] will not occur because the marginal propensity to consume is set by government.

Which of the following is not one of the factors that determines the firm’s decision to invest?

[1] consumption expenditure 

[2] expected return 

[3] cost of capital 

[4] interest rat

In the simple Keynesian model, which of the following is incorrect?

[1] I represents total investment spending

[2] Y represents income

[3] marginal propensity to consume together with the marginal propensity to save equals

one

[4] induced consumption is a fraction of income

Which of the following assumptions for the simple Keynesian model of a closed economy 

without a government are correct?

a) The economy consists of households and small firms only.

b) There is no foreign sector. 

c) Prices and wages fluctuate.

d) The stock of money supply and interest rates fluctuate.

[1] a and d

[2] b and c

[3] a and b

[4] c and 

The consumption function is based on the premise that as income increases, consumption

expenditure …

[1] increases by a larger amount.

[2] increases by the same amount.

[3] remains constant unless saving also changes.

[4] increases by a smaller amount.

Examine the impact on total revenue in terms of an elastic demand curve and inelastic demand curve. Use diagrams to motivate your answer.

A market survey shows that the best competitor's selling price for a product is determined to be $450 per unit. A company is expecting to sell 1000 units per month from this product at this price with a profit margin of 20%. The product's total manufacturing cost per unit is $400. The engineers decided that the material cost ($95 per unit) is high and should be reduced to meet the market target cost. What should the material cost per unit be so that the total manufacturing cost of this product becomes equal to the target cost?

1.$70

2.$50

3.$30

4.$25

8. Jones is a tool-and-die maker earning $30 an hour. He is suddenly laid off.

a) He frequents employment agencies, reads want ads, and follows up leads on tool-anddie–making jobs for two weeks. Is he unemployed (as officially defined) during this time?

b) At the end of two weeks, he is offered a job driving a bread truck that pays $9 an hour.

He turns it down. Is he unemployed?

c) He receives an offer of a job as a tool-and-die maker in a city 125 miles away. He turns it

down because his teenage children don’t want to change high schools. Is he unemployed?d) After three months of searching, Jones becomes discouraged and quits looking. Is he

unemployed?