Exam 13: Consumption and the Aggregate Expenditures Model

The notion that a change in autonomous aggregate expenditures produces a larger change in equilibrium real GDP in the aggregate expenditures model is called the

Figure 13-6 -Refer to Figure 13-6. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous. The equilibrium level of real GDP is

Figure 13-1 -Refer to Figure 13-1. When disposable personal income is $2,000 billion,

The multiplier effect is triggered by a shift in the aggregate expenditures curve.

An increase in the price level, all other things unchanged, will

In a graph with real GDP on the horizontal axis and aggregate expenditures on the vertical axis, induced aggregate expenditures are represented by

The amount of consumption that would take place if real GDP were zero is called

Figure 13-6 -Refer to Figure 13-6. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous. What is the marginal propensity to consume?

Table 13-2 -Refer to Table 13-2. Consider a simple economy that is made up of only two sectors, households and firms, and that all investment is autonomous. Further, disposable personal income = real GDP and the economy is currently producing at its level of potential real GDP. What is the marginal propensity to consume in this economy?

An increase in the price level, all other things unchanged, shifts the aggregate expenditures Jcurve upwards.

Disposable personal income is

Figure 13-2 -Refer to Figure 13-2. If real GDP is $4 trillion, consumption equals

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, suppose when autonomous aggregate expenditures rise by $1,000 billion, equilibrium real GDP increases by $2,500 billion. Which of the following statements is true?

Figure 13-2 -Refer to Figure 13-2. If real GDP were $12 trillion, consumption equals

The relationship between aggregate expenditures and real GDP is shown by the

The consumption function shows

The sum of planned levels of consumption, investment, government purchases, and net exports, at a given price level, is called

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the slope of the aggregate expenditures curve is 0.8?

Table 13-2 -Refer to Table 13-2. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment. Consider a simple economy that is made up of only two sectors, households and firms, and that all investment is autonomous. Further, disposable personal income = real GDP. Suppose autonomous investment rises by $50 billion. In the short run, this will cause

A change in aggregate demand causes a change in income, which in turn induces a Jchange in consumption.