Question 1

In macroeconomics, equilibrium is defined as that point at which

Accepted Answer

A)  saving equals consumption. 
B)  planned aggregate expenditure equals aggregate output. 
C)  planned aggregate expenditure equals consumption. 
D)  aggregate output equals consumption minus investment. 
A)  saving equals consumption. 
B)  planned aggregate expenditure equals aggregate output. 
C)  planned aggregate expenditure equals consumption. 
D)  aggregate output equals consumption minus investment.

Question 2

Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25. When income increases to $100,000, consumption is

Accepted Answer

A)  $90,250. 
B)  $85,000. 
C)  $70,000. 
D)  $67,500. 
A)  $90,250. 
B)  $85,000. 
C)  $70,000. 
D)  $67,500.

Question 3

Refer to the information provided in Figure 23.6 below to answer the question(s) that follow.   Figure 23.6
-Refer to Figure 23.6. Aggregate saving is 20 when aggregate income is

Accepted Answer

A)  $600. 
B)  $660. 
C)  $800. 
D)  $850. 
A)  $600. 
B)  $660. 
C)  $800. 
D)  $850.

Question 4

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 $100 billion, the unplanned inventory change is

Accepted Answer

A)  -$80 billion. 
B)  -$30 billion. 
C)  -$20 billion. 
D)  $120 billion. 
A)  -$80 billion. 
B)  -$30 billion. 
C)  -$20 billion. 
D)  $120 billion.

Question 5

In 2016, the Isle of Lucy's planned investment was $130 billion and its actual investment was $145 billion. In 2016, the Isle of Lucy's unplanned inventory change was

Accepted Answer

A)  $15 billion. 
B)  $30 billion. 
C)  $45 billion. 
D)  $275 billion. 
A)  $15 billion. 
B)  $30 billion. 
C)  $45 billion. 
D)  $275 billion.

Question 6

If planned investment is ________ to changes in the interest rate, the planned investment schedule is horizontal.

Accepted Answer

A)  positively related 
B)  negatively related 
C)  perfectly unresponsive 
D)  perfectly responsive 
A)  positively related 
B)  negatively related 
C)  perfectly unresponsive 
D)  perfectly responsive

Question 7

The ratio of the change in the equilibrium level of output to a change in some autonomous variable is the

Accepted Answer

A)  elasticity coefficient. 
B)  multiplier. 
C)  automatic stabilizer. 
D)  marginal propensity of the autonomous variable. 
A)  elasticity coefficient. 
B)  multiplier. 
C)  automatic stabilizer. 
D)  marginal propensity of the autonomous variable.

Question 8

Keynes used the phrase animal spirits to describe the feelings of entrepreneurs, and he argued that these feelings affect investment decisions.

Accepted Answer

A) True 
 B)False

Question 9

If C = 1,500 + 0.75Y and I = 500, then planned saving equals planned investment at aggregate output level of

Accepted Answer

A)  2,666.67. 
B)  8,000. 
C)  10,000. 
D)  20,000. 
A)  2,666.67. 
B)  8,000. 
C)  10,000. 
D)  20,000.

Question 10

In practice, the actual size of the ________ is about 2.

Accepted Answer

A)  MPC 
B)  MPS 
C)  multiplier 
D)  saving function 
A)  MPC 
B)  MPS 
C)  multiplier 
D)  saving function

Question 11

If consumption is $10,000 when income is $10,000, and consumption increases to $11,000 when income increases to $12,000, the MPS is

Accepted Answer

A)  0.10. 
B)  0.25. 
C)  0.50. 
D)  0.90. 
A)  0.10. 
B)  0.25. 
C)  0.50. 
D)  0.90.

Question 12

If actual investment is greater than planned investment, unplanned inventories decline.

Accepted Answer

A) True 
 B)False

Question 13

Related to the Economics in Practice on p. 466: Under the Save More Tomorrow retirement plans, employees can pre-commit to save more

Accepted Answer

A)  when the opt out of the social security system. 
B)  whenever they get a pay raise. 
C)  at the beginning of each fiscal year. 
D)  when income tax rates increase. 
A)  when the opt out of the social security system. 
B)  whenever they get a pay raise. 
C)  at the beginning of each fiscal year. 
D)  when income tax rates increase.

Question 14

When there is an unplanned draw down of inventories, firms will increase production.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the information provided in Table 23.10 below to answer the question(s) that follow.
Table 23.10  
-Refer to Table 23.10. At an aggregate output level of $3,200 million, the unplanned inventory change is

Accepted Answer

A)  -$1,100 million. 
B)  -$100 million. 
C)  $100 million. 
D)  $700 million. 
A)  -$1,100 million. 
B)  -$100 million. 
C)  $100 million. 
D)  $700 million.

Question 16

Refer to the information provided in Table 23.3 below to answer the question(s) that follow.
Table 23.3  
-Refer to Table 23.3. Society's MPS is

Accepted Answer

A)  0.2. 
B)  0.25. 
C)  0.7. 
D)  0.8. 
A)  0.2. 
B)  0.25. 
C)  0.7. 
D)  0.8.

Question 17

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 greatest 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 18

Refer to the information provided in Table 23.8 below to answer the question(s) that follow.
Table 23.8  
-Refer to Table 23.8. Which of the following statements is false?

Accepted Answer

A)  At an output level $4,000 million, there is a $400 million unplanned inventory decrease. 
B)  If aggregate output equals $4,000 million, then aggregate saving equals $1000 million. 
C)  The MPC for this economy is 0.8. 
D)  At an output level of $3,000 million, there is a $600 million unplanned inventory decrease. 
A)  At an output level $4,000 million, there is a $400 million unplanned inventory decrease. 
B)  If aggregate output equals $4,000 million, then aggregate saving equals $1000 million. 
C)  The MPC for this economy is 0.8. 
D)  At an output level of $3,000 million, there is a $600 million unplanned inventory decrease.

Question 19

Refer to the information provided in Figure 23.8 below to answer the question(s) that follow.   Figure 23.8
-Refer to Figure 23.8. The amount of planned investment ________ if the interest rate falls from 8% to 4%.

Accepted Answer

A)  drops by $150 billion 
B)  rises by $150 billion 
C)  remains at $275 billion 
D)  remains at $125 billion 
A)  drops by $150 billion 
B)  rises by $150 billion 
C)  remains at $275 billion 
D)  remains at $125 billion

Question 20

Refer to the information provided in Figure 23.6 below to answer the question(s) that follow.   Figure 23.6
-Refer to Figure 23.6. The MPS for this saving function is

Accepted Answer

A)  0.4. 
B)  0.25. 
C)  0.2. 
D)  0.1. 
A)  0.4. 
B)  0.25. 
C)  0.2. 
D)  0.1.

Exam 23: Aggregate Expenditure and Equilibrium Output

In macroeconomics, equilibrium is defined as that point at which

Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25. When income increases to $100,000, consumption is

Refer to the information provided in Figure 23.6 below to answer the question(s) that follow. Figure 23.6 -Refer to Figure 23.6. Aggregate saving is 20 when aggregate income 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. At an aggregate output level of $100 billion, the unplanned inventory change is

In 2016, the Isle of Lucy's planned investment was $130 billion and its actual investment was $145 billion. In 2016, the Isle of Lucy's unplanned inventory change was

If planned investment is ________ to changes in the interest rate, the planned investment schedule is horizontal.

The ratio of the change in the equilibrium level of output to a change in some autonomous variable is the

Keynes used the phrase animal spirits to describe the feelings of entrepreneurs, and he argued that these feelings affect investment decisions.

If C = 1,500 + 0.75Y and I = 500, then planned saving equals planned investment at aggregate output level of

In practice, the actual size of the ________ is about 2.

If consumption is $10,000 when income is $10,000, and consumption increases to $11,000 when income increases to $12,000, the MPS is

If actual investment is greater than planned investment, unplanned inventories decline.

Related to the Economics in Practice on p. 466: Under the Save More Tomorrow retirement plans, employees can pre-commit to save more

When there is an unplanned draw down of inventories, firms will increase production.

Refer to the information provided in Table 23.10 below to answer the question(s) that follow. Table 23.10 -Refer to Table 23.10. At an aggregate output level of $3,200 million, the unplanned inventory change is

Refer to the information provided in Table 23.3 below to answer the question(s) that follow. Table 23.3 -Refer to Table 23.3. Society's MPS is

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 greatest when the aggregate consumption function is

Refer to the information provided in Table 23.8 below to answer the question(s) that follow. Table 23.8 -Refer to Table 23.8. Which of the following statements is false?

Refer to the information provided in Figure 23.8 below to answer the question(s) that follow. Figure 23.8 -Refer to Figure 23.8. The amount of planned investment ________ if the interest rate falls from 8% to 4%.

Refer to the information provided in Figure 23.6 below to answer the question(s) that follow. Figure 23.6 -Refer to Figure 23.6. The MPS for this saving function 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 23.4 below to answer the question(s) that follow. Figure 23.4 -Refer to Figure 23.4. If income is Y₁, aggregate consumption is the greatest when the aggregate consumption function is