Question 1

Suppose consumption is $20,000 when income is $32,000 and the MPC equals 0.8. When income increases to $40,000, consumption is

Accepted Answer

A)  $26.400. 
B)  $28,000. 
C)  $32,000. 
D)  $72,000. 
A)  $26.400. 
B)  $28,000. 
C)  $32,000. 
D)  $72,000.

Question 2

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. If aggregate output equals ________, there will be a $20 billion unplanned decrease in inventories.

Accepted Answer

A)  $100 billion 
B)  $200 billion 
C)  $300 billion 
D)  $400 billion 
A)  $100 billion 
B)  $200 billion 
C)  $300 billion 
D)  $400 billion

Question 3

Refer to the information provided in Figure 23.10 below to answer the question(s) that follow.   Figure 23.10
-Refer to Figure 23.10. What is the equation for the aggregate expenditure function (AE)?

Accepted Answer

A)  AE = 600 + 0.1Y. 
B)  AE = 200 + 0.8Y. 
C)  AE = 550 + 0.8Y. 
D)  AE = 100 + 0.9Y. 
A)  AE = 600 + 0.1Y. 
B)  AE = 200 + 0.8Y. 
C)  AE = 550 + 0.8Y. 
D)  AE = 100 + 0.9Y.

Question 4

Refer to the information provided in Figure 23.2 below to answer the question(s) that follow.   Figure 23.2
-Refer to Figure 23.2. An increase in Jerry's income is represented by

Accepted Answer

A)  an upward shift in Jerry's consumption function. 
B)  an increase in the slope of Jerry's consumption function. 
C)  a movement from Point B to A. 
D)  none of the above. 
A)  an upward shift in Jerry's consumption function. 
B)  an increase in the slope of Jerry's consumption function. 
C)  a movement from Point B to A. 
D)  none of the above.

Question 5

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 $2,000 million, planned expenditure equals

Accepted Answer

A)  $2,200. 
B)  $2,500. 
C)  $2,700. 
D)  $4,700. 
A)  $2,200. 
B)  $2,500. 
C)  $2,700. 
D)  $4,700.

Question 6

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. At income level ________, this household's saving is greater than zero and this household's consumption is greater than zero.

Accepted Answer

A)  -$200 
B)  $800 
C)  $1,000 
D)  $1,500 
A)  -$200 
B)  $800 
C)  $1,000 
D)  $1,500

Question 7

If Inventory investment is higher than firms planned

Accepted Answer

A)  actual and planned investment are equal. 
B)  actual investment is less than planned investment. 
C)  actual investment is greater than planned investment. 
D)  actual investment must be negative. 
A)  actual and planned investment are equal. 
B)  actual investment is less than planned investment. 
C)  actual investment is greater than planned investment. 
D)  actual investment must be negative.

Question 8

Refer to the information provided in Figure 23.2 below to answer the question(s) that follow.   Figure 23.2
-Refer to Figure 23.2. The line segment ________ represents Jerry's consumption when income equals zero.

Accepted Answer

A)  BA 
B)  DA 
C)  BC 
D)  BD 
A)  BA 
B)  DA 
C)  BC 
D)  BD

Question 9

Y = C + I even when the economy is not in equilibrium.

Accepted Answer

A) True 
 B)False

Question 10

If unplanned inventory investment is positive, then

Accepted Answer

A)  planned investment must be zero. 
B)  planned aggregate spending must be greater than aggregate output. 
C)  planned aggregate spending must be less than aggregate output. 
D)  planned aggregate spending must equal aggregate output. 
A)  planned investment must be zero. 
B)  planned aggregate spending must be greater than aggregate output. 
C)  planned aggregate spending must be less than aggregate output. 
D)  planned aggregate spending must equal aggregate output.

Question 11

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. The ________ for this household is 0.5 and the ________ is also 0.5.

Accepted Answer

A)  MPC; MPS 
B)  MPC; consumption function 
C)  MPS; saving function 
D)  consumption function; saving function 
A)  MPC; MPS 
B)  MPC; consumption function 
C)  MPS; saving function 
D)  consumption function; saving function

Question 12

The multiplier is the ratio of the change in ________ to a change in ________.

Accepted Answer

A)  the MPC; the MPS 
B)  the equilibrium level of output; some autonomous variable 
C)  the level of saving; the level of consumption 
D)  autonomous consumption; induced consumption 
A)  the MPC; the MPS 
B)  the equilibrium level of output; some autonomous variable 
C)  the level of saving; the level of consumption 
D)  autonomous consumption; induced consumption

Question 13

As interest rates rise, spending decreases.

Accepted Answer

A) True 
 B)False

Question 14

Firms' investments include inventories.

Accepted Answer

A) True 
 B)False

Question 15

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 A?

Accepted Answer

A)  $450 million 
B)  $510 million 
C)  $540 million 
D)  cannot be determined from the given information 
A)  $450 million 
B)  $510 million 
C)  $540 million 
D)  cannot be determined from the given information

Question 16

If the consumption function is below the 45-degree line

Accepted Answer

A)  consumption is less than income and saving is positive. 
B)  consumption is less than income and saving is negative. 
C)  consumption exceeds income and saving is positive. 
D)  consumption exceeds income and saving is negative. 
A)  consumption is less than income and saving is positive. 
B)  consumption is less than income and saving is negative. 
C)  consumption exceeds income and saving is positive. 
D)  consumption exceeds income and saving is negative.

Question 17

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. Which of the following statements is false?

Accepted Answer

A)  At an output level $2,000, there is a $200 million unplanned inventory decrease. 
B)  If aggregate output equals $2,000 million, then aggregate saving equals $700 million. 
C)  The MPC for this economy is 0.75. 
D)  At an output level of $3,600 million, there is a $200 million unplanned inventory increase. 
A)  At an output level $2,000, there is a $200 million unplanned inventory decrease. 
B)  If aggregate output equals $2,000 million, then aggregate saving equals $700 million. 
C)  The MPC for this economy is 0.75. 
D)  At an output level of $3,600 million, there is a $200 million unplanned inventory increase.

Question 18

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 Farley, planned investment varies inversely with income. Farley'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 19

Refer to the information provided in Figure 23.3 below to answer the question(s) that follow.   Figure 23.3
-Refer to Figure 23.3. [60 + 0.7Y] is this society's

Accepted Answer

A)  MPC. 
B)  MPS. 
C)  saving function. 
D)  consumption function. 
A)  MPC. 
B)  MPS. 
C)  saving function. 
D)  consumption function.

Question 20

If autonomous consumption decreases, the size of the multiplier would

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  either increase or decrease depending on the size of the change in autonomous consumption. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  either increase or decrease depending on the size of the change in autonomous consumption.

Exam 23: Aggregate Expenditure and Equilibrium Output

Suppose consumption is $20,000 when income is $32,000 and the MPC equals 0.8. When income increases to $40,000, consumption 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. If aggregate output equals ________, there will be a $20 billion unplanned decrease in inventories.

Refer to the information provided in Figure 23.10 below to answer the question(s) that follow. Figure 23.10 -Refer to Figure 23.10. What is the equation for the aggregate expenditure function (AE)?

Refer to the information provided in Figure 23.2 below to answer the question(s) that follow. Figure 23.2 -Refer to Figure 23.2. An increase in Jerry's income is represented by

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 $2,000 million, planned expenditure equals

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. At income level ________, this household's saving is greater than zero and this household's consumption is greater than zero.

If Inventory investment is higher than firms planned

Refer to the information provided in Figure 23.2 below to answer the question(s) that follow. Figure 23.2 -Refer to Figure 23.2. The line segment ________ represents Jerry's consumption when income equals zero.

Y = C + I even when the economy is not in equilibrium.

If unplanned inventory investment is positive, then

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. The ________ for this household is 0.5 and the ________ is also 0.5.

The multiplier is the ratio of the change in ________ to a change in ________.

As interest rates rise, spending decreases.

Firms' investments include inventories.

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 A?

If the consumption function is below the 45-degree line

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. Which of the following statements is false?

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 Farley, planned investment varies inversely with income. Farley's planned investment function is represented by

Refer to the information provided in Figure 23.3 below to answer the question(s) that follow. Figure 23.3 -Refer to Figure 23.3. [60 + 0.7Y] is this society's

If autonomous consumption decreases, the size of the multiplier would

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 23.1 below to answer the question(s) that follow. Figure 23.1 -Refer to Figure 23.1. The for this household is 0.5 and the is also 0.5.

The multiplier is the ratio of the change in to a change in .

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 A?