Question 1

If S = -200 + 0.2Y and I = 100, then the equilibrium level of income is

Accepted Answer

A)  1,200. 
B)  1,500. 
C)  3,000. 
D)  4,000. 
A)  1,200. 
B)  1,500. 
C)  3,000. 
D)  4,000.

Question 2

A multiplier of 1 means the MPS is equal to 1.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the information provided in Table 23.9 below to answer the question(s) that follow.
Table 23.9  
-Refer to Table 23.9. At an aggregate output level of $200 billion, planned expenditure equals

Accepted Answer

A)  $160 billion. 
B)  $220 billion. 
C)  $260 billion. 
D)  $410 billion. 
A)  $160 billion. 
B)  $220 billion. 
C)  $260 billion. 
D)  $410 billion.

Question 4

Refer to the information provided in Figure 23.11 below to answer the question(s) that follow.   Figure 23.11
-Refer to Figure 23.11. A $10 million decrease in autonomous consumption

Accepted Answer

A)  changes equilibrium expenditure to $160 million. 
B)  changes equilibrium output to $120 million. 
C)  increases the MPC. 
D)  increases the MPS. 
A)  changes equilibrium expenditure to $160 million. 
B)  changes equilibrium output to $120 million. 
C)  increases the MPC. 
D)  increases the MPS.

Question 5

An increase in the MPC, reduces the multiplier.

Accepted Answer

A) True 
 B)False

Question 6

Refer to the information provided in Table 23.7 below to answer the question(s) that follow.
Table 23.7  
-Refer to Table 23.7. Planned investment equals actual investment at

Accepted Answer

A)  all income levels. 
B)  all income levels above $600 billion. 
C)  all income levels below $600 billion. 
D)  $1,000 billion. 
A)  all income levels. 
B)  all income levels above $600 billion. 
C)  all income levels below $600 billion. 
D)  $1,000 billion.

Question 7

If C = 1,200 + 0.8Y and I = 600, then planned saving equals planned investment at aggregate output level of

Accepted Answer

A)  6,800. 
B)  7,200. 
C)  9,000. 
D)  10,200. 
A)  6,800. 
B)  7,200. 
C)  9,000. 
D)  10,200.

Question 8

Refer to the information provided in Figure 23.7 below to answer the question(s) that follow.   Figure 23.7
-Refer to Figure 23.7. In Spiceland, income does not vary with planned investment. Spiceland's planned investment function is represented by

Accepted Answer

A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D. 
A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D.

Question 9

Refer to the information provided in Figure 23.12 below to answer the question(s) that follow.   Figure 23.12
-Refer to Figure 23.12. Suppose AE1, AE2 and AE3 are parallel. What is the value of Point B?

Accepted Answer

A)  $750 million 
B)  $800 million 
C)  $900 million 
D)  cannot be determined from the given information 
A)  $750 million 
B)  $800 million 
C)  $900 million 
D)  cannot be determined from the given information

Question 10

[Yd - C] equals

Accepted Answer

A)  spending. 
B)  the MPC. 
C)  saving. 
D)  the MPS. 
A)  spending. 
B)  the MPC. 
C)  saving. 
D)  the MPS.

Question 11

Aggregate output will decrease if there is a(n)

Accepted Answer

A)  increase in saving. 
B)  unplanned rise in inventories. 
C)  unplanned fall in inventories. 
D)  decrease in consumption. 
A)  increase in saving. 
B)  unplanned rise in inventories. 
C)  unplanned fall in inventories. 
D)  decrease in consumption.

Question 12

Refer to the information provided in Figure 23.9 below to answer the question(s) that follow.   Figure 23.9
-Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million?

Accepted Answer

A)  AE line shifts down, increasing equilibrium output and equilibrium expenditure. 
B)  AE line shifts up, increasing equilibrium output and equilibrium expenditure. 
C)  AE line shifts down, decreasing equilibrium output and equilibrium expenditure. 
D)  AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure. 
A)  AE line shifts down, increasing equilibrium output and equilibrium expenditure. 
B)  AE line shifts up, increasing equilibrium output and equilibrium expenditure. 
C)  AE line shifts down, decreasing equilibrium output and equilibrium expenditure. 
D)  AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure.

Question 13

Refer to the information provided in Figure 23.11 below to answer the question(s) that follow.   Figure 23.11
-Refer to Figure 23.11. The value of the multiplier is

Accepted Answer

A)  2. 
B)  2.5. 
C)  3. 
D)  4. 
A)  2. 
B)  2.5. 
C)  3. 
D)  4.

Question 14

Refer to the information provided in Figure 23.1 below to answer the question(s) that follow.   Figure 23.1
-Refer to Figure 23.1. This household's consumption function is

Accepted Answer

A)  C = 200 + 0.2Y. 
B)  C = 300 + 0.75Y. 
C)  C = 500 + 0.5Y. 
D)  C = 1,000 + 0.2Y. 
A)  C = 200 + 0.2Y. 
B)  C = 300 + 0.75Y. 
C)  C = 500 + 0.5Y. 
D)  C = 1,000 + 0.2Y.

Question 15

Refer to the information provided in Table 23.4 below to answer the question(s) that follow.
Table 23.4  
-Refer to Table 23.4. The equation for the aggregate saving function is

Accepted Answer

A)  S = -100 + 0.75Y. 
B)  S = -200 + 0.15Y. 
C)  S = -200 + 0.25Y. 
D)  S = -100 + 0.2Y. 
A)  S = -100 + 0.75Y. 
B)  S = -200 + 0.15Y. 
C)  S = -200 + 0.25Y. 
D)  S = -100 + 0.2Y.

Question 16

Refer to the information provided in Table 23.9 below to answer the question(s) that follow.
Table 23.9  
-Refer to Table 23.9. Planned saving equals planned investment at an aggregate output level of

Accepted Answer

A)  $500 billion. 
B)  $400 billion. 
C)  $300 billion. 
D)  $200 billion. 
A)  $500 billion. 
B)  $400 billion. 
C)  $300 billion. 
D)  $200 billion.

Question 17

Firms would reduce output as a reaction to

Accepted Answer

A)  unplanned inventory increases. 
B)  increased demand for output. 
C)  unplanned inventory reductions. 
D)  decreases in costs of resources. 
A)  unplanned inventory increases. 
B)  increased demand for output. 
C)  unplanned inventory reductions. 
D)  decreases in costs of resources.

Question 18

Over which component of investment do firms have the least amount of control?

Accepted Answer

A)  purchases of new equipment 
B)  construction of new factories 
C)  changes in inventories 
D)  building new machines 
A)  purchases of new equipment 
B)  construction of new factories 
C)  changes in inventories 
D)  building new machines

Question 19

Refer to the information provided in Figure 23.4 below to answer the question(s) that follow.   Figure 23.4
-Refer to Figure 23.4. If income is Y1, aggregate consumption is the smallest when the aggregate consumption function is

Accepted Answer

A)  C3. 
B)  C2. 
C)  C1. 
D)  cannot be determined from the figure. 
A)  C3. 
B)  C2. 
C)  C1. 
D)  cannot be determined from the figure.

Question 20

Assuming there is no government or foreign sector, if the multiplier is 5, the MPC is

Accepted Answer

A)  0.4. 
B)  0.5. 
C)  0.8. 
D)  5. 
A)  0.4. 
B)  0.5. 
C)  0.8. 
D)  5.

Exam 23: Aggregate Expenditure and Equilibrium Output

If S = -200 + 0.2Y and I = 100, then the equilibrium level of income is

A multiplier of 1 means the MPS is equal to 1.

Refer to the information provided in Table 23.9 below to answer the question(s) that follow. Table 23.9 -Refer to Table 23.9. At an aggregate output level of $200 billion, planned expenditure equals

Refer to the information provided in Figure 23.11 below to answer the question(s) that follow. Figure 23.11 -Refer to Figure 23.11. A $10 million decrease in autonomous consumption

An increase in the MPC, reduces the multiplier.

Refer to the information provided in Table 23.7 below to answer the question(s) that follow. Table 23.7 -Refer to Table 23.7. Planned investment equals actual investment at

If C = 1,200 + 0.8Y and I = 600, then planned saving equals planned investment at aggregate output level of

Refer to the information provided in Figure 23.7 below to answer the question(s) that follow. Figure 23.7 -Refer to Figure 23.7. In Spiceland, income does not vary with planned investment. Spiceland's planned investment function is represented by

Refer to the information provided in Figure 23.12 below to answer the question(s) that follow. Figure 23.12 -Refer to Figure 23.12. Suppose AE1, AE2 and AE3 are parallel. What is the value of Point B?

[Yd - C] equals

Aggregate output will decrease if there is a(n)

Refer to the information provided in Figure 23.9 below to answer the question(s) that follow. Figure 23.9 -Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million?

Refer to the information provided in Figure 23.11 below to answer the question(s) that follow. Figure 23.11 -Refer to Figure 23.11. The value of the multiplier is

Refer to the information provided in Figure 23.1 below to answer the question(s) that follow. Figure 23.1 -Refer to Figure 23.1. This household's consumption function is

Refer to the information provided in Table 23.4 below to answer the question(s) that follow. Table 23.4 -Refer to Table 23.4. The equation for the aggregate saving function is

Refer to the information provided in Table 23.9 below to answer the question(s) that follow. Table 23.9 -Refer to Table 23.9. Planned saving equals planned investment at an aggregate output level of

Firms would reduce output as a reaction to

Over which component of investment do firms have the least amount of control?

Refer to the information provided in Figure 23.4 below to answer the question(s) that follow. Figure 23.4 -Refer to Figure 23.4. If income is Y1, aggregate consumption is the smallest when the aggregate consumption function is

Assuming there is no government or foreign sector, if the multiplier is 5, the MPC is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: The Labor and Land Markets

Input Demand: The Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Refer to the information provided in Figure 23.12 below to answer the question(s) that follow. Figure 23.12 -Refer to Figure 23.12. Suppose AE₁, AE₂ and AE₃ are parallel. What is the value of Point B?

[Y_d - C] equals

Refer to the information provided in Figure 23.4 below to answer the question(s) that follow. Figure 23.4 -Refer to Figure 23.4. If income is Y₁, aggregate consumption is the smallest when the aggregate consumption function is