Question 1

If the investment demand curve shifts to the left,then

Accepted Answer

A) The AD curve will shift to the left. 
B) The AD curve will shift to the right. 
C) The AD curve will not be affected. 
D) There will be upward movement along the AD curve. 
A) The AD curve will shift to the left. 
B) The AD curve will shift to the right. 
C) The AD curve will not be affected. 
D) There will be upward movement along the AD curve.

Question 2

The line described by the consumption function C = a + bYD will change its slope when

Accepted Answer

A) The MPC changes. 
B) Consumer confidence changes. 
C) Disposable income changes. 
D) The APS changes. 
A) The MPC changes. 
B) Consumer confidence changes. 
C) Disposable income changes. 
D) The APS changes.

Question 3

Use the following figure to answer the questions : Figure9.3:
  
-According to Figure 9.3,which of the following is true?

Accepted Answer

A) Dissaving occurs at disposable income levels above $20 billion. 
B) Consumption is $10 billion when disposable income is zero. 
C) The APC is greater than 1 at disposable income levels above $20 billion. 
D) At a disposable income level of $20 billion, consumption is zero. 
A) Dissaving occurs at disposable income levels above $20 billion. 
B) Consumption is $10 billion when disposable income is zero. 
C) The APC is greater than 1 at disposable income levels above $20 billion. 
D) At a disposable income level of $20 billion, consumption is zero.

Question 4

Use the following table to answer the questions : Table9.2:
  
-Complete Table 9.2.(Data are expressed in billions of dollars. )  Given the information in Table 9.2,saving is equal to $200 billion at an output level 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 5

If consumption is $340 and saving is $20,then disposable income

Accepted Answer

A) Is $340. 
B) Is $360. 
C) Is $320. 
D) Cannot be determined from the information given. 
A) Is $340. 
B) Is $360. 
C) Is $320. 
D) Cannot be determined from the information given.

Question 6

The consumption function will shift because of a change in current disposable income.

Accepted Answer

A) True 
 B)False

Question 7

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 8

The four components of aggregate spending are consumption,saving,imports,and taxes.

Accepted Answer

A) True 
 B)False

Question 9

Use the following figure to answer the questions : Figure9.6:
 
-In Figure 9.6,if full employment occurs at QA, then aggregate demand is

Accepted Answer

A) Just right,causing no cyclical unemployment. 
B) Too great,causing an inflationary gap. 
C) Too small,causing an inflationary gap. 
D) Too great, causing a recessionary gap. 
A) Just right,causing no cyclical unemployment. 
B) Too great,causing an inflationary gap. 
C) Too small,causing an inflationary gap. 
D) Too great, causing a recessionary gap.

Question 10

Which of the following will cause the aggregate demand curve to shift to the left?

Accepted Answer

A) A decrease in consumer and business confidence because of a terrorist attack. 
B) A decrease in the interest rate. 
C) A decrease in business taxes. 
D) An improvement in technology. 
A) A decrease in consumer and business confidence because of a terrorist attack. 
B) A decrease in the interest rate. 
C) A decrease in business taxes. 
D) An improvement in technology.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Use the following figure to  answer the questions : Figure9.9
  
-If the economy depicted in Figure 9.9 produced at a full-employment output level of $50 billion instead of the equilibrium output level,inventory levels would

Accepted Answer

A) Increase by $50 billion. 
B) Increase by $25 billion. 
C) Decrease by $25 billion. 
D) Decrease by $50 billion. 
A) Increase by $50 billion. 
B) Increase by $25 billion. 
C) Decrease by $25 billion. 
D) Decrease by $50 billion.

Question 13

Which of the following is not a component of aggregate demand?

Accepted Answer

A) Consumption. 
B) Investment. 
C) Productivity. 
D) Net exports. 
A) Consumption. 
B) Investment. 
C) Productivity. 
D) Net exports.

Question 14

Given that C = $500 + 0.8YD,if the level of disposable income is $1,000,the level of saving is

Accepted Answer

A) $300. 
B) -$300. 
C) $500. 
D) -$1,300. 
A) $300. 
B) -$300. 
C) $500. 
D) -$1,300.

Question 15

State and local purchases of goods and services account for approximately _______ percent of total government purchases.

Accepted Answer

A) 25 
B) 50 
C) 67 
D) 75. 
A) 25 
B) 50 
C) 67 
D) 75.

Question 16

Use the following figure to  answer the questions : Figure9.9
  
- If the economy depicted in Figure 9.9 produced at the full-employment output level of $150 billion instead of the equilibrium output level,inventory levels would

Accepted Answer

A) Remain constant. 
B) Increase by $50 billion. 
C) Increase by $25 billion. 
D) Decrease by $100 billion. 
A) Remain constant. 
B) Increase by $50 billion. 
C) Increase by $25 billion. 
D) Decrease by $100 billion.

Question 17

Use the following figure to  answer the questions : Figure9.8
 
- In response to changing inventories in Figure 9.8,if the economy produces at full employment of $400 billion,firms will attempt to

Accepted Answer

A) Reduce employment and buy more machinery. 
B) Reduce employment and buy less machinery. 
C) Increase employment and buy more machinery. 
D) Increase employment and buy less machinery. 
A) Reduce employment and buy more machinery. 
B) Reduce employment and buy less machinery. 
C) Increase employment and buy more machinery. 
D) Increase employment and buy less machinery.

Question 18

The combination of price level and real output that is compatible with both aggregate demand and aggregate supply is the definition of

Accepted Answer

A) Full-employment GDP. 
B) Disposable income. 
C) Macro equilibrium. 
D) Real expenditures. 
A) Full-employment GDP. 
B) Disposable income. 
C) Macro equilibrium. 
D) Real expenditures.

Question 19

Use the following figure to answer the questions : Figure9.1:
 
-Using Figure 9.1,the amount of autonomous consumption is

Accepted Answer

A) $500 billion. 
B) $750 billion. 
C) Different at every income level. 
D) Equal to disposable income when the consumption line crosses the 45-degree line. 
A) $500 billion. 
B) $750 billion. 
C) Different at every income level. 
D) Equal to disposable income when the consumption line crosses the 45-degree line.

Question 20

Which of the following causes a movement along the investment demand curve?

Accepted Answer

A) A change in expenditures. 
B) A change in technology. 
C) A change in the rate of interest. 
D) The current level of income. 
A) A change in expenditures. 
B) A change in technology. 
C) A change in the rate of interest. 
D) The current level of income.

Exam 9: Aggregate Demand Appendix: the Keynesian Cross

If the investment demand curve shifts to the left,then

The line described by the consumption function C = a + bYD will change its slope when

Use the following figure to answer the questions : Figure9.3: -According to Figure 9.3,which of the following is true?

Use the following table to answer the questions : Table9.2: -Complete Table 9.2.(Data are expressed in billions of dollars. ) Given the information in Table 9.2,saving is equal to $200 billion at an output level of

If consumption is $340 and saving is $20,then disposable income

The consumption function will shift because of a change in current disposable income.

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

The four components of aggregate spending are consumption,saving,imports,and taxes.

Use the following figure to answer the questions : Figure9.6: -In Figure 9.6,if full employment occurs at QA, then aggregate demand is

Which of the following will cause the aggregate demand curve to shift to the left?

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

Use the following figure to answer the questions : Figure9.9 -If the economy depicted in Figure 9.9 produced at a full-employment output level of $50 billion instead of the equilibrium output level,inventory levels would

Which of the following is not a component of aggregate demand?

Given that C = $500 + 0.8YD,if the level of disposable income is $1,000,the level of saving is

State and local purchases of goods and services account for approximately _______ percent of total government purchases.

Use the following figure to answer the questions : Figure9.9 - If the economy depicted in Figure 9.9 produced at the full-employment output level of $150 billion instead of the equilibrium output level,inventory levels would

Use the following figure to answer the questions : Figure9.8 - In response to changing inventories in Figure 9.8,if the economy produces at full employment of $400 billion,firms will attempt to

The combination of price level and real output that is compatible with both aggregate demand and aggregate supply is the definition of

Use the following figure to answer the questions : Figure9.1: -Using Figure 9.1,the amount of autonomous consumption is

Which of the following causes a movement along the investment demand curve?

Economics: the Core Issues Appendix: Using Graphs

The Us Economy: 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 Appendix: Indifference Curves

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 Glossary Index Reference Tables

Filters

The line described by the consumption function C = a + bY_D will change its slope when

Use the following figure to answer the questions : Figure9.6: -In Figure 9.6,if full employment occurs at Q_A, then aggregate demand is

Given that C = $500 + 0.8Y_D,if the level of disposable income is $1,000,the level of saving is