Question 1

If Earl received an $800 bonus and his MPS is 0.25, his consumption rises by $________ and his saving rises by $________.

Accepted Answer

A)  825; 125 
B)  600; 200 
C)  400; 250 
D)  800; 250 
A)  825; 125 
B)  600; 200 
C)  400; 250 
D)  800; 250

Question 2

Suppose consumption is $7,500 when income is $4,000 and the MPS equals 0.4. When income increases to $6,000, consumption is

Accepted Answer

A)  $8,050. 
B)  $8,300. 
C)  $8,700. 
D)  $9,500. 
A)  $8,050. 
B)  $8,300. 
C)  $8,700. 
D)  $9,500.

Question 3

Refer to the information provided in Table 23.2 below to answer the question(s) that follow.
Table 23.2  
-Refer to Table 23.2. Assuming society's MPC is constant, at an aggregate income of $1,200 aggregate saving would be

Accepted Answer

A)  $0. 
B)  $20. 
C)  $55. 
D)  $150. 
A)  $0. 
B)  $20. 
C)  $55. 
D)  $150.

Question 4

Assuming no government or foreign sector, [1 / MPS] represents

Accepted Answer

A)  the multiplier. 
B)  negative saving. 
C)  autonomous income. 
D)  the consumption function. 
A)  the multiplier. 
B)  negative saving. 
C)  autonomous income. 
D)  the consumption function.

Question 5

Which of the following is not considered investment?

Accepted Answer

A)  the acquisition of capital goods 
B)  the purchase of government bonds 
C)  the increase in planned inventories 
D)  the construction of a new factory 
A)  the acquisition of capital goods 
B)  the purchase of government bonds 
C)  the increase in planned inventories 
D)  the construction of a new factory

Question 6

Assuming there is no government or foreign sector, the economy will be in equilibrium if, and only if, planned investment equals actual investment.

Accepted Answer

A) True 
 B)False

Question 7

If autonomous consumption increases, 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.

Question 8

If the MPS is 0.1, then the multiplier is 10.

Accepted Answer

A) True 
 B)False

Question 9

A firm's inventory is the orders for goods that have yet to be produced.

Accepted Answer

A) True 
 B)False

Question 10

Suppose consumption is $5,000 when income is $8,000 and the MPC equals 0.9. When income increases to $10,000, consumption is

Accepted Answer

A)  $2,700. 
B)  $4,500. 
C)  $6,800. 
D)  $7,200. 
A)  $2,700. 
B)  $4,500. 
C)  $6,800. 
D)  $7,200.

Question 11

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. The equation for the aggregate consumption function is

Accepted Answer

A)  C = 200 + 0.3Y. 
B)  C = 200 + 0.75Y. 
C)  C = 200 + 0.8Y. 
D)  C = -200 + 0.2Y. 
A)  C = 200 + 0.3Y. 
B)  C = 200 + 0.75Y. 
C)  C = 200 + 0.8Y. 
D)  C = -200 + 0.2Y.

Question 12

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 decreases if the interest rate

Accepted Answer

A)  drops from 8% to 4%. 
B)  rises from 4% to 8%. 
C)  remains at 8%. 
D)  remains at 4%. 
A)  drops from 8% to 4%. 
B)  rises from 4% to 8%. 
C)  remains at 8%. 
D)  remains at 4%.

Question 13

Uncertainty about the future is likely to

Accepted Answer

A)  decrease current saving. 
B)  have no impact on current saving. 
C)  increase current saving. 
D)  either increase or decrease current saving. 
A)  decrease current saving. 
B)  have no impact on current saving. 
C)  increase current saving. 
D)  either increase or decrease current saving.

Question 14

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. At an aggregate output level of $600 billion, the unplanned inventory change is

Accepted Answer

A)  -$100 billion. 
B)  -$50 billion. 
C)  $0. 
D)  $50 billion. 
A)  -$100 billion. 
B)  -$50 billion. 
C)  $0. 
D)  $50 billion.

Question 15

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. Assuming society's MPC is constant at an aggregate of income of $300, aggregate consumption would be

Accepted Answer

A)  $425. 
B)  $350. 
C)  $325. 
D)  $305. 
A)  $425. 
B)  $350. 
C)  $325. 
D)  $305.

Question 16

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 not parallel. What is the value of Point B?

Accepted Answer

A)  $900 million 
B)  $800 million 
C)  $700 million 
D)  cannot be determined from the given information 
A)  $900 million 
B)  $800 million 
C)  $700 million 
D)  cannot be determined from the given information

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. Suppose the consumption function for C1 is [C1 = 15 + 0.4Y]. The consumption function that best fits C3 is

Accepted Answer

A)  C3 = 20 + 0.8Y. 
B)  C3 = 30 + 0.25Y. 
C)  C3 = 15 + 0.75Y. 
D)  C3 = 20 + 0.4Y. 
A)  C3 = 20 + 0.8Y. 
B)  C3 = 30 + 0.25Y. 
C)  C3 = 15 + 0.75Y. 
D)  C3 = 20 + 0.4Y.

Question 18

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. Jerry's saving is positive along the line segment

Accepted Answer

A)  BD. 
B)  DA. 
C)  BA. 
D)  AC. 
A)  BD. 
B)  DA. 
C)  BA. 
D)  AC.

Question 19

Refer to the information provided in Figure 23.5 below to answer the question(s) that follow.   Figure 23.5
-Refer to Figure 23.5. Aggregate saving is -100 billion when aggregate income is ________ billion.

Accepted Answer

A)  -$50 
B)  $400 
C)  $800 
D)  $900 
A)  -$50 
B)  $400 
C)  $800 
D)  $900

Question 20

Reducing the interest rate, ceteris paribus, is likely to reduce the level of planned investment spending.

Accepted Answer

A) True 
 B)False

Exam 23: Aggregate Expenditure and Equilibrium Output

If Earl received an $800 bonus and his MPS is 0.25, his consumption rises by $________ and his saving rises by $________.

Suppose consumption is $7,500 when income is $4,000 and the MPS equals 0.4. When income increases to $6,000, consumption is

Refer to the information provided in Table 23.2 below to answer the question(s) that follow. Table 23.2 -Refer to Table 23.2. Assuming society's MPC is constant, at an aggregate income of $1,200 aggregate saving would be

Assuming no government or foreign sector, [1 / MPS] represents

Which of the following is not considered investment?

Assuming there is no government or foreign sector, the economy will be in equilibrium if, and only if, planned investment equals actual investment.

If autonomous consumption increases, the size of the multiplier would

If the MPS is 0.1, then the multiplier is 10.

A firm's inventory is the orders for goods that have yet to be produced.

Suppose consumption is $5,000 when income is $8,000 and the MPC equals 0.9. When income increases to $10,000, consumption 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. The equation for the aggregate consumption function is

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 decreases if the interest rate

Uncertainty about the future is likely to

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. At an aggregate output level of $600 billion, the unplanned inventory change is

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. Assuming society's MPC is constant at an aggregate of income of $300, aggregate consumption would be

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 not parallel. What is the value of Point B?

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 is [C1 = 15 + 0.4Y]. The consumption function that best fits C3 is

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. Jerry's saving is positive along the line segment

Refer to the information provided in Figure 23.5 below to answer the question(s) that follow. Figure 23.5 -Refer to Figure 23.5. Aggregate saving is -100 billion when aggregate income is ________ billion.

Reducing the interest rate, ceteris paribus, is likely to reduce the level of planned investment spending.

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

If Earl received an $800 bonus and his MPS is 0.25, his consumption rises by $ and his saving rises 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 not parallel. What is the value of Point B?

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 is [C₁ = 15 + 0.4Y]. The consumption function that best fits C₃ is