Question 1

In Figure 9.1,at an income level of $2,000 billion,

Accepted Answer

A) Consumption equals $1,500 billion. 
B) Saving equals $0. 
C) The MPC equals 0.80. 
D) There is dissaving. 
A) Consumption equals $1,500 billion. 
B) Saving equals $0. 
C) The MPC equals 0.80. 
D) There is dissaving.

Question 2

According to Figure 9.1,saving equals zero at an income level of

Accepted Answer

A) $0. 
B) $1,000 billion. 
C) $2,000 billion. 
D) $500 billion. 
A) $0. 
B) $1,000 billion. 
C) $2,000 billion. 
D) $500 billion.

Question 3

Most economists today recognize that a short-run macro failure is possible.

Accepted Answer

A) True 
 B)False

Question 4

Total consumption consists entirely of two components: autonomous consumption and income-dependent consumption.

Accepted Answer

A) True 
 B)False

Question 5

Using the output at which the aggregate expenditure curve intersects the 45-degree line,we can identify

Accepted Answer

A) Equilibrium (macro)at the intersection point. 
B) Dissaving to the right of the intersection point. 
C) Full employment to the left of the intersection point if there is a recessionary gap. 
D) A consumption shortfall at the intersection point. 
A) Equilibrium (macro)at the intersection point. 
B) Dissaving to the right of the intersection point. 
C) Full employment to the left of the intersection point if there is a recessionary gap. 
D) A consumption shortfall at the intersection point.

Question 6

One In the News article titled "News Release: Disposable Income and Outlays: February 2017" says,"Personal spending increased $44 billion." An increase in spending is likely the result of

Accepted Answer

A) An increase in saving. 
B) An increase in income. 
C) An increase in taxes. 
D) A decrease in economic growth. 
A) An increase in saving. 
B) An increase in income. 
C) An increase in taxes. 
D) A decrease in economic growth.

Question 7

A movement from Point A to Point B in Figure 9.5 would result in

Accepted Answer

A) A decrease in aggregate demand. 
B) A decrease in both aggregate demand and aggregate supply. 
C) An increase in aggregate demand. 
D) An increase in aggregate demand and a decrease in aggregate supply. 
A) A decrease in aggregate demand. 
B) A decrease in both aggregate demand and aggregate supply. 
C) An increase in aggregate demand. 
D) An increase in aggregate demand and a decrease in aggregate supply.

Question 8

In Figure 9.2,if the consumption function shifts from C2 to C1,autonomous consumption

Accepted Answer

A) Increases,and aggregate demand shifts to the right. 
B) Decreases,and aggregate demand shifts to the right. 
C) Increases,and aggregate demand shifts to the left. 
D) Decreases,and aggregate demand shifts to the left. 
A) Increases,and aggregate demand shifts to the right. 
B) Decreases,and aggregate demand shifts to the right. 
C) Increases,and aggregate demand shifts to the left. 
D) Decreases,and aggregate demand shifts to the left.

Question 9

Which of the following will cause a decrease in U.S.gross exports?

Accepted Answer

A) An increase in foreign consumer income. 
B) A decrease in foreign business purchases of U.S.output. 
C) An increase in foreign wealth. 
D) None of the choices are correct. 
A) An increase in foreign consumer income. 
B) A decrease in foreign business purchases of U.S.output. 
C) An increase in foreign wealth. 
D) None of the choices are correct.

Question 10

Suppose a consumption function is given as C = $175 + 0.85YD.The marginal propensity to save is

Accepted Answer

A) 200. 
B) 0.15. 
C) -0.15. 
D) 0.85. 
A) 200. 
B) 0.15. 
C) -0.15. 
D) 0.85.

Question 11

When consumer spending exceeds disposable income,all of the following are true except

Accepted Answer

A) The APS is negative. 
B) The APC is greater than 1. 
C) Households are dissaving. 
D) The MPS is negative. 
A) The APS is negative. 
B) The APC is greater than 1. 
C) Households are dissaving. 
D) The MPS is negative.

Question 12

Refer to Table 9.2.(Data are expressed in billions of dollars. ) Table 9.2
$\begin{array}{|r|r|r|c|c|}
\hline \begin{array}{r}
\text { Full Employment } \
\text { Income (Output) }
\end{array} & \begin{array}{c}
\text { Consumers } \
\text { Desire to Spend }
\end{array} & \begin{array}{c}
\text { Investors Desire } \
\text { to Spend }
\end{array} & \begin{array}{c}
\text { Total Private } \
\text { Spending }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Saving }
\end{array} \
\hline \$ 500 & \$ 300 & \$ 250 & \$ & \$ \
\hline 600 & 375 & 250 & \$ & \$ \
\hline 700 & 450 & 250 & \$ & \$ \
\hline 800 & 525 & 250 & \$ & \$ \
\hline
\end{array}$
 Given the information in Table 9.2,saving equals investment at an income of

Accepted Answer

A) $500 billion. 
B) $600 billion. 
C) $700 billion. 
D) $800 billion. 
A) $500 billion. 
B) $600 billion. 
C) $700 billion. 
D) $800 billion.

Question 13

In Figure 9.8,if full-employment income is produced at $400 billion,the government can reduce a recessionary gap by

Accepted Answer

A) Decreasing government spending. 
B) Decreasing investment spending. 
C) Decreasing income taxes on consumers. 
D) Increasing taxes. 
A) Decreasing government spending. 
B) Decreasing investment spending. 
C) Decreasing income taxes on consumers. 
D) Increasing taxes.

Question 14

A decrease in U.S.exports to Japan can be represented by

Accepted Answer

A) The aggregate expenditure curve shifting upward. 
B) The aggregate expenditure curve shifting downward. 
C) A rightward movement along the aggregate expenditure curve. 
D) A leftward movement along the aggregate expenditure curve. 
A) The aggregate expenditure curve shifting upward. 
B) The aggregate expenditure curve shifting downward. 
C) A rightward movement along the aggregate expenditure curve. 
D) A leftward movement along the aggregate expenditure curve.

Question 15

Assume there is a decrease in government purchases and exports.Currently there is a recessionary gap,which implies that

Accepted Answer

A) Inventories are accumulating. 
B) Inventories are being depleted. 
C) Desired spending is greater than output. 
D) Investment is greater than saving. 
A) Inventories are accumulating. 
B) Inventories are being depleted. 
C) Desired spending is greater than output. 
D) Investment is greater than saving.

Question 16

Gross exports depend on the behavior of foreign businesses and consumers.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following occurs when the spending on final goods and services exceeds full-employment GDP?

Accepted Answer

A) Inventory accumulation. 
B) Unemployment. 
C) Inflationary gap. 
D) Recessionary gap. 
A) Inventory accumulation. 
B) Unemployment. 
C) Inflationary gap. 
D) Recessionary gap.

Question 18

Which of the following lists all the components that are included in aggregate demand?

Accepted Answer

A) Consumption,government spending,net exports,and investment. 
B) Government spending,saving,consumption,and investment. 
C) Investment,imports,exports,and consumption. 
D) Net exports,government spending,consumption,and transfer payments. 
A) Consumption,government spending,net exports,and investment. 
B) Government spending,saving,consumption,and investment. 
C) Investment,imports,exports,and consumption. 
D) Net exports,government spending,consumption,and transfer payments.

Question 19

Which of the following is true when an economy produces at full employment,but consumers,government,businesses,and the foreign sector do not buy all the output?

Accepted Answer

A) Inventories are depleted. 
B) There is a recessionary gap. 
C) Unemployment falls. 
D) The price level rises. 
A) Inventories are depleted. 
B) There is a recessionary gap. 
C) Unemployment falls. 
D) The price level rises.

Question 20

If firms become more pessimistic about future sales,then

Accepted Answer

A) The AD curve will shift to the right. 
B) The AD curve will shift to the left. 
C) There will be a rightward movement along the AD curve. 
D) There will be a leftward movement along the AD curve. 
A) The AD curve will shift to the right. 
B) The AD curve will shift to the left. 
C) There will be a rightward movement along the AD curve. 
D) There will be a leftward movement along the AD curve.

Exam 9: Aggregate Demand

In Figure 9.1,at an income level of $2,000 billion,

According to Figure 9.1,saving equals zero at an income level of

Most economists today recognize that a short-run macro failure is possible.

Total consumption consists entirely of two components: autonomous consumption and income-dependent consumption.

Using the output at which the aggregate expenditure curve intersects the 45-degree line,we can identify

One In the News article titled "News Release: Disposable Income and Outlays: February 2017" says,"Personal spending increased $44 billion." An increase in spending is likely the result of

A movement from Point A to Point B in Figure 9.5 would result in

In Figure 9.2,if the consumption function shifts from C2 to C1,autonomous consumption

Which of the following will cause a decrease in U.S.gross exports?

Suppose a consumption function is given as C = $175 + 0.85YD.The marginal propensity to save is

When consumer spending exceeds disposable income,all of the following are true except

In Figure 9.8,if full-employment income is produced at $400 billion,the government can reduce a recessionary gap by

A decrease in U.S.exports to Japan can be represented by

Assume there is a decrease in government purchases and exports.Currently there is a recessionary gap,which implies that

Gross exports depend on the behavior of foreign businesses and consumers.

Which of the following occurs when the spending on final goods and services exceeds full-employment GDP?

Which of the following lists all the components that are included in aggregate demand?

Which of the following is true when an economy produces at full employment,but consumers,government,businesses,and the foreign sector do not buy all the output?

If firms become more pessimistic about future sales,then

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters

In Figure 9.2,if the consumption function shifts from C₂ to C₁,autonomous consumption

Suppose a consumption function is given as C = $175 + 0.85Y_D.The marginal propensity to save is