Question 1

As the MPS decreases, the multiplier will

Accepted Answer

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

Question 2

If aggregate output is greater than planned spending, then

Accepted Answer

A)  unplanned inventory investment is zero. 
B)  unplanned inventory investment is negative. 
C)  unplanned inventory investment is positive. 
D)  actual investment equals planned investment. 
A)  unplanned inventory investment is zero. 
B)  unplanned inventory investment is negative. 
C)  unplanned inventory investment is positive. 
D)  actual investment equals planned investment.

Question 3

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. In this economy, if income is $200 aggregate saving will be

Accepted Answer

A)  $0. 
B)  $130. 
C)  $200. 
D)  $270. 
A)  $0. 
B)  $130. 
C)  $200. 
D)  $270.

Question 4

The Jackson Tool Company manufactures only tools. In 2016 Jackson Tools manufactured 20,000 tools, but sold 21,000 tools. In 2016 Jackson Tools' change in inventory was

Accepted Answer

A)  -2,000 tools. 
B)  -1,000 tools. 
C)  1,000 tools. 
D)  3,000 tools. 
A)  -2,000 tools. 
B)  -1,000 tools. 
C)  1,000 tools. 
D)  3,000 tools.

Question 5

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. An increase in the MPC

Accepted Answer

A)  makes the consumption function flatter. 
B)  makes the saving function flatter. 
C)  shifts the consumption function upward. 
D)  shifts the saving function downward. 
A)  makes the consumption function flatter. 
B)  makes the saving function flatter. 
C)  shifts the consumption function upward. 
D)  shifts the saving function downward.

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. This household saves -$300 at an income level of

Accepted Answer

A)  $400. 
B)  $300. 
C)  $250. 
D)  $125. 
A)  $400. 
B)  $300. 
C)  $250. 
D)  $125.

Question 7

Assuming no government or foreign sector, the formula for the multiplier is

Accepted Answer

A)  1/MPC. 
B)  1/MPS. 
C)  1/(1 + MP
C) . 
D)  1 - MPC. 
A)  1/MPC. 
B)  1/MPS. 
C)  1/(1 + MP
C) . 
D)  1 - MPC.

Question 8

If unplanned business investment is $45 million and planned investment is $45 million, then actual investment is

Accepted Answer

A)  $90 million. 
B)  $45 million. 
C)  zero. 
D)  -$45 million. 
A)  $90 million. 
B)  $45 million. 
C)  zero. 
D)  -$45 million.

Question 9

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 increase in investment changes equilibrium output to

Accepted Answer

A)  $240 million. 
B)  $225 million. 
C)  $175 million. 
D)  $90 million. 
A)  $240 million. 
B)  $225 million. 
C)  $175 million. 
D)  $90 million.

Question 10

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. For this society, aggregate saving is positive if aggregate income is

Accepted Answer

A)  above zero. 
B)  between $0 and $150 billion. 
C)  equal to $200 billion. 
D)  above $200 billion. 
A)  above zero. 
B)  between $0 and $150 billion. 
C)  equal to $200 billion. 
D)  above $200 billion.

Question 11

If S = -50 + 0.4Y and I = 70, then the equilibrium level of income is

Accepted Answer

A)  180. 
B)  300. 
C)  420. 
D)  450. 
A)  180. 
B)  300. 
C)  420. 
D)  450.

Question 12

The Slippery Slope Company manufactures only snow skis. In 2016 Slippery Slope manufactured 10,000 snow skis, but sold 12,000 snow skis. In 2016 Slippery Slope's change in inventory was ________ snow skis.

Accepted Answer

A)  -8,000 
B)  -2,000 
C)  2,000 
D)  22,000 
A)  -8,000 
B)  -2,000 
C)  2,000 
D)  22,000

Question 13

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. $200 million is

Accepted Answer

A)  the break even income. 
B)  the equilibrium income. 
C)  where saving equals consumption. 
D)  where saving equals aggregate expenditures. 
A)  the break even income. 
B)  the equilibrium income. 
C)  where saving equals consumption. 
D)  where saving equals aggregate expenditures.

Question 14

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. Suppose the consumption function for C1 = 10 + 0.8Y, the consumption function that best fits C2 is

Accepted Answer

A)  C2 = 20 + 0.8Y. 
B)  C2 = 10 + 0.4Y. 
C)  C2 = 40 + 0.5Y. 
D)  C2 = 20 + 0.1Y. 
A)  C2 = 20 + 0.8Y. 
B)  C2 = 10 + 0.4Y. 
C)  C2 = 40 + 0.5Y. 
D)  C2 = 20 + 0.1Y.

Question 15

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 equation for this household's saving function is

Accepted Answer

A)  S = -200 + 0.8Y. 
B)  S = -300 + 0.25Y. 
C)  S = -500 + 0.5Y. 
D)  S = -1,000 + 0.8Y. 
A)  S = -200 + 0.8Y. 
B)  S = -300 + 0.25Y. 
C)  S = -500 + 0.5Y. 
D)  S = -1,000 + 0.8Y.

Question 16

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. At an aggregate output level of $4,000 million, the unplanned inventory change is

Accepted Answer

A)  $1,200 million. 
B)  $400 million. 
C)  $0. 
D)  -$400 million. 
A)  $1,200 million. 
B)  $400 million. 
C)  $0. 
D)  -$400 million.

Question 17

If the MPC is 0.8, then the multiplier is 0.2

Accepted Answer

A) True 
 B)False

Question 18

If Inventory investment is lower 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 19

Refer to the information provided in Table 23.1 below to answer the question(s) that follow.
Table 23.1  
-Refer to Table 23.1. The equation for the aggregate consumption function is

Accepted Answer

A)  C = 80 + 0.95Y. 
B)  C = 80 + 0.9Y. 
C)  C = 80 + 0.75Y. 
D)  C = -80 + 0.45Y. 
A)  C = 80 + 0.95Y. 
B)  C = 80 + 0.9Y. 
C)  C = 80 + 0.75Y. 
D)  C = -80 + 0.45Y.

Question 20

The smaller the MPS, the larger the multiplier.

Accepted Answer

A) True 
 B)False

Exam 23: Aggregate Expenditure and Equilibrium Output

As the MPS decreases, the multiplier will

If aggregate output is greater than planned spending, then

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. In this economy, if income is $200 aggregate saving will be

The Jackson Tool Company manufactures only tools. In 2016 Jackson Tools manufactured 20,000 tools, but sold 21,000 tools. In 2016 Jackson Tools' change in inventory was

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. An increase in the MPC

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 saves -$300 at an income level of

Assuming no government or foreign sector, the formula for the multiplier is

If unplanned business investment is $45 million and planned investment is $45 million, then actual investment is

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 increase in investment changes equilibrium output to

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. For this society, aggregate saving is positive if aggregate income is

If S = -50 + 0.4Y and I = 70, then the equilibrium level of income is

The Slippery Slope Company manufactures only snow skis. In 2016 Slippery Slope manufactured 10,000 snow skis, but sold 12,000 snow skis. In 2016 Slippery Slope's change in inventory was ________ snow skis.

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. $200 million 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. Suppose the consumption function for C1 = 10 + 0.8Y, the consumption function that best fits C2 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. The equation for this household's saving 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. At an aggregate output level of $4,000 million, the unplanned inventory change is

If the MPC is 0.8, then the multiplier is 0.2

If Inventory investment is lower than firms planned

Refer to the information provided in Table 23.1 below to answer the question(s) that follow. Table 23.1 -Refer to Table 23.1. The equation for the aggregate consumption function is

The smaller the MPS, the larger the multiplier.

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. Suppose the consumption function for C₁ = 10 + 0.8Y, the consumption function that best fits C₂ is