SOLVED

71) An expected permanent tax increase is likely to increase current spending. 72) The marginal propensity to consume is the change in consumption per change in income. 73) If the marginal propensity to consume is 0.8, the marginal propensity to save is 8. 8.2Â Â Planned Investment (I) versus Actual Investment 1) The Tiny Tots Toy Company manufactures only sleds. In 2012 Tiny Tots manufactured 10,000 sleds, but sold only 8,000 sleds. In 2012 Tiny Tots’ change in inventory was A) -2,000 sleds. B) 1,000 sleds. C) 2,000 sleds. D) 3,000 sleds. 2) The Jackson Tool Company manufactures only tools. In 2012 Jackson Tools manufactured 20,000 tools, but sold 21,000 tools. In 2012 Jackson Tools’ change in inventory was A) -2,000 tools. B) -1,000 tools. C) 1,000 tools. D) 3,000 tools. 3) Which of the following is NOT considered investment? A) the acquisition of capital goods B) the purchase of government bonds C) the increase in planned inventories D) the construction of a new factory 4) Which of the following is an investment? A) the purchase of a new printing press by a business B) the purchase of a corporate bond by a household C) the purchase of a share of stock by a household D) a leveraged buyout of one corporation by another 5) Over which component of investment do firms have the least amount of control? A) purchases of new equipment B) construction of new factories C) changes in inventories D) building new machines 6) Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is A) -$20 billion. B) -$10 billion. C) $70 billion. D) $140 billion. 7) Assume that in Jabara, planned investment is $30 billion, but actual investment is $45 billion. Unplanned inventory investment is A) -$75 billion. B) -$15 billion. C) $15 billion. D) $75 billion.