A.F. ECONOMICS

MACRO Unit 4 Team Assessment












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Name: _______________________


  1. Use the table below to answer the following questions.
IncomeConsumptionNet exportsInvestmentGovernmentAggregate Expenditures
0 
10
100
110
 
100 
10
100
110
 
200 
10
100
110
 
300 
10
100
110
 
400 
10
100
110
 
500 
10
100
110
 
600 
10
100
110
 
    1. If the consumption function is 120 + .8Y, fill in the table above.

      2.  

        
        
        
       

    2. What is the equilibrium level of expenditures?

      3.  

        
        
        
        
        
        
        
        
        
       

    3. Calculate the multiplier.

      4.  

        
        
        
        
        
       

    4. If investment falls to 80, what is the change in equilibrium expenditure?

  
  
  
  
  
  
 
  1. Describe the impact of each of the following on the consumption function and aggregate demand:
    1. The tanking stock market wipes out 30% of stock market wealth.

      2.  

        
        
        
        
        
        
        
       

    2. Bankruptcy legislation makes it easier to get a credit card after declaring bankruptcy.

      3.  

        
        
        
        
        
        
       

    3. Interest rates fall.

      
      
      
      
      
      
      
      
     
  2. Contrast the views of Keynes with those of the Classical economists about the nature of and remedies for business cycles.