Exam 21: The Simplest Short-Run Macro Model

Consider the following news headline: "Increase in consumer confidence leads to increase in spending".Which of the following correctly describes the likely effect in our simple macro model?

Consider a simple macro model with demand-determined output.In such a model,the multiplier is larger,the

Consider a simple macro model with a constant price level and demand-determined output.In the extreme situation where the marginal propensity to spend is one,the simple multiplier is

FIGURE 21-3 Refer to Figure 21-3.Consider the simplest macro model with no government and no foreign trade,and the aggregate expenditure function AE = C + I.If there was zero autonomous expenditure and the marginal propensity to consume was equal to one,then the AE function would be

Consider the equation: AE = C + I + G + (X - IM).Which of the following statements correctly describes this sum?

Consider the following information describing an economy with demand-determined output.There is no government or foreign trade.All dollar figures are in billions. 1.equilibrium condition is Y = C + I 2.marginal propensity to save = 0.20 3.the autonomous part of C is $50 4.investment is autonomous and equals $25 TABLE 21-5 Refer to Table 21-5.At the equilibrium level of national income,what is the level of desired consumption expenditures?

Total desired saving divided by total income is called the

Desired consumption divided by disposable income is called the

FIGURE 21-2 Refer to Figure 21-2.What is the marginal propensity to consume associated with this consumption function?

FIGURE 21-3 Refer to Figure 21-3.If national income is Y₁ and the aggregate expenditure function is AE₁,

The change in desired consumption divided by the change in disposable income that brought it about is called the

Consider the simplest macro model with a constant price level and demand-determined output.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $12 billion,the marginal propensity to spend must be

The slope of the aggregate expenditure (AE)function is always equal to the marginal propensity to

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory ________ will induce firms to ________ the rate of output production.

Suppose aggregate output is demand-determined.Which of the following will lead to an increase in the simple multiplier?

Consider the simplest macro model with demand-determined output,where AE = C + I.Suppose actual national income is $900 billion and desired consumption plus desired investment is $890 billion.We can expect that

In a simple macro model,a decrease in households' wealth is generally assumed to

Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions. TABLE 21-3 Refer to Table 21-3.At the equilibrium level of national income,desired consumption expenditure ($billions)will be

Consider the simplest macro model with demand-determined output.Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million.The marginal propensity to spend in this economy is 0.75.What is the increase in expenditure in this economy during the initial first round of spending?

Which of the following correctly describes the meaning of the aggregate expenditure (AE)function?