Question 1

A change in inventory is equal to

Accepted Answer

A)  production + sales. 
B)  sales × production. 
C)  production - sales. 
D)  sales - production. 
A)  production + sales. 
B)  sales × production. 
C)  production - sales. 
D)  sales - production.

Question 2

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. Planned saving equals planned investment at an aggregate output level of

Accepted Answer

A)  $4,000 million. 
B)  $5,000 million. 
C)  $6,000 million. 
D)  $7,000 million. 
A)  $4,000 million. 
B)  $5,000 million. 
C)  $6,000 million. 
D)  $7,000 million.

Question 3

Related to the Economics in Practice on p. 476: According to the "paradox of thrift," as individuals decrease their saving

Accepted Answer

A)  income in the economy decreases because there is less money available for firms to invest. 
B)  income in the economy decreases because interest rates will rise and the economy will contract. 
C)  income in the economy will remain constant because the change in consumption equals the change in saving. 
D)  income in the economy will rise because the increased consumption that results from decreased saving causes the economy to expand. 
A)  income in the economy decreases because there is less money available for firms to invest. 
B)  income in the economy decreases because interest rates will rise and the economy will contract. 
C)  income in the economy will remain constant because the change in consumption equals the change in saving. 
D)  income in the economy will rise because the increased consumption that results from decreased saving causes the economy to expand.

Question 4

If the MPS is 0.22, the MPC is

Accepted Answer

A)  -0.22. 
B)  0.66. 
C)  0.78. 
D)  1.22. 
A)  -0.22. 
B)  0.66. 
C)  0.78. 
D)  1.22.

Question 5

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 ________ if aggregate income is above $200.

Accepted Answer

A)  negative 
B)  positive 
C)  zero 
D)  equal to aggregate consumption 
A)  negative 
B)  positive 
C)  zero 
D)  equal to aggregate consumption

Question 6

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 = 20 + 0.75Y]. The consumption function that best fits C2 is

Accepted Answer

A)  C2 = 10 + 0.5Y. 
B)  C2 = 20 + 0.25Y. 
C)  C2 = 10 + 0.4Y. 
D)  C2 = 40 + 0.75Y. 
A)  C2 = 10 + 0.5Y. 
B)  C2 = 20 + 0.25Y. 
C)  C2 = 10 + 0.4Y. 
D)  C2 = 40 + 0.75Y.

Question 7

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 level of $900, aggregate consumption would be

Accepted Answer

A)  $665. 
B)  $910. 
C)  $1,200. 
D)  $1,750. 
A)  $665. 
B)  $910. 
C)  $1,200. 
D)  $1,750.

Question 8

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. Society's MPC is

Accepted Answer

A)  0.1. 
B)  0.2. 
C)  0.8. 
D)  0.9. 
A)  0.1. 
B)  0.2. 
C)  0.8. 
D)  0.9.

Question 9

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. There is a $100 million unplanned decrease in inventories at an aggregate output level of

Accepted Answer

A)  $500 million. 
B)  $1,000 million. 
C)  $1,200 million. 
D)  > $1,200 million. 
A)  $500 million. 
B)  $1,000 million. 
C)  $1,200 million. 
D)  > $1,200 million.

Question 10

The fraction of a change in income that is consumed or spent is called

Accepted Answer

A)  the marginal propensity of income. 
B)  the marginal propensity to save. 
C)  the marginal propensity to consume. 
D)  average consumption. 
A)  the marginal propensity of income. 
B)  the marginal propensity to save. 
C)  the marginal propensity to consume. 
D)  average consumption.

Question 11

If C = 500 + 0.9Y and I = 400, then the equilibrium level of income is

Accepted Answer

A)  900. 
B)  1,000. 
C)  1,800. 
D)  9,000. 
A)  900. 
B)  1,000. 
C)  1,800. 
D)  9,000.

Question 12

If you earn additional $500 in disposable income one week for painting your neighbor's house

Accepted Answer

A)  the total of your consumption and saving will increase by more than $500. 
B)  the total of your consumption and saving will increase by $500. 
C)  the total of your consumption and saving will increase by less than $500. 
D)  your consumption will increase by more than $500, even if your MPS is 0.1. 
A)  the total of your consumption and saving will increase by more than $500. 
B)  the total of your consumption and saving will increase by $500. 
C)  the total of your consumption and saving will increase by less than $500. 
D)  your consumption will increase by more than $500, even if your MPS is 0.1.

Question 13

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. A decrease in the MPS

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 14

If the MPS is 0.05, the MPC is

Accepted Answer

A)  -0.05. 
B)  0.95. 
C)  1.05. 
D)  2.25. 
A)  -0.05. 
B)  0.95. 
C)  1.05. 
D)  2.25.

Question 15

Related to the Economics in Practice on p. 473: During normal economic conditions, a software company like Oracle is likely to have an inventory turnover ratio that is ________ an appliance manufacturer like Whirlpool.

Accepted Answer

A)  smaller than 
B)  equal to 
C)  larger than 
D)  close to zero compared to 
A)  smaller than 
B)  equal to 
C)  larger than 
D)  close to zero compared to

Question 16

In practice, the actual size of the multiplier is about

Accepted Answer

A)  1. 
B)  1.4. 
C)  2. 
D)  4. 
A)  1. 
B)  1.4. 
C)  2. 
D)  4.

Question 17

The multiplier is equal to 1 / (1 - MPC).

Accepted Answer

A) True 
 B)False

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 consumption equals his income at Point

Accepted Answer

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

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 increases 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 20

If Zander's saving function is of the form [S = -150 + 0.5Y], his consumption equals his income at an income level of

Accepted Answer

A)  150. 
B)  225. 
C)  300. 
D)  1,500. 
A)  150. 
B)  225. 
C)  300. 
D)  1,500.

Exam 23: Aggregate Expenditure and Equilibrium Output

A change in inventory is equal to

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. Planned saving equals planned investment at an aggregate output level of

Related to the Economics in Practice on p. 476: According to the "paradox of thrift," as individuals decrease their saving

If the MPS is 0.22, the MPC is

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 ________ if aggregate income is above $200.

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 = 20 + 0.75Y]. The consumption function that best fits C2 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 level of $900, aggregate consumption would be

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. Society's MPC is

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. There is a $100 million unplanned decrease in inventories at an aggregate output level of

The fraction of a change in income that is consumed or spent is called

If C = 500 + 0.9Y and I = 400, then the equilibrium level of income is

If you earn additional $500 in disposable income one week for painting your neighbor's house

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. A decrease in the MPS

If the MPS is 0.05, the MPC is

Related to the Economics in Practice on p. 473: During normal economic conditions, a software company like Oracle is likely to have an inventory turnover ratio that is ________ an appliance manufacturer like Whirlpool.

In practice, the actual size of the multiplier is about

The multiplier is equal to 1 / (1 - MPC).

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 consumption equals his income at Point

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 increases if the interest rate

If Zander's saving function is of the form [S = -150 + 0.5Y], his consumption equals his income at an income level of

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 is [C₁ = 20 + 0.75Y]. The consumption function that best fits C₂ is