1			If actual spending is AED 5mn while planned spending is AED 5.5mn, the gap is adjusted for by:
			A)	A decrease in unplanned inventory expenditure by AED 0.5mn
			B)	An increase in planned inventory expenditure by AED 0.5mn
			C)	An increase in unplanned inventory expenditure by AED 0.5mn
			D)	A decrease in planned inventory expenditure by AED 0.5mn
2			Which of the following components of spending accounts for two-thirds of total spending?
			A)	Consumption
			B)	Investment
			C)	Government purchases
			D)	Net exports
3			Spending that is not related to the level of disposable income is called:
			A)	Marginal propensity to consume
			B)	Autonomous expenditure
			C)	Induced expenditure
			D)	Wealth effect
4			The slope of the consumption function is:
			A)	Marginal propensity to consume
			B)	Autonomous expenditure
			C)	Induced expenditure
			D)	Wealth effect
5			If the MPC is 0.75, then an initial increase in planned aggregate expenditure of $150bn will eventually increase the real GDP by:
			A)	$112.5bn
			B)	$200bn
			C)	$600bn
			D)	$750bn
6			To graph the relationship of the MPC and the income-expenditure multiplier, the curve would be:
			A)	Upward sloping
			B)	Downward sloping
			C)	Horizontal
			D)	Vertical
7			If an increase in planned investment of $80bn causes equilibrium output demanded to increase by $240, the value of the marginal propensity to consume is:
			A)	3
			B)	2/3
			C)	3/2
			D)	1/3
8			Given the consumption function C = $300bn + 0.70Yd, an increase in disposable income from $5,000 billion to $6,000 billion will increase consumption by:
			A)	$1,300bn
			B)	$1,100bn
			C)	$1,000bn
			D)	$700bn
9			If disposable income is $500bn, consumption spending is $420bn, and marginal propensity to consume is 0.6, the level of autonomous consumption for the economy is:
			A)	$80bn
			B)	$120bn
			C)	$200bn
			D)	$248bn

Use the following information to answer questions 10 and 11:

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10			Following the above figure, autonomous consumption amounts to:
			A)	$0
			B)	$1 trillion
			C)	$2 trillion
			D)	$2.5 trillion
11			The economy will be in equilibrium when the real disposable income amounts to:
			A)	$2.5 trillion
			B)	$3 trillion
			C)	$5 trillion
			D)	$7 trillion
12			Consider the following, C = 600 + 0.8(Y-150); I = 125, G = 250, NX = -50. At equilibrium, disposable income is equal to:
			A)	$4,025
			B)	$4,000
			C)	$3,025
			D)	$3,000
13			An expansionary fiscal policy:
			A)	Increases the money supply
			B)	Decreases the money supply
			C)	Decreases government spending, transfers, or taxes
			D)	Increases government spending, transfers, or taxes