Exam 21: The Simplest Short-Run Macro Model

Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend in such a model is 0.6,the simple multiplier is

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Question 21

The aggregate expenditure (AE)function is an upward-sloping curve that describes

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Question 22

Consider the simplest macro model with demand-determined output.Suppose an increase in business confidence leads firms to increase investment in new equipment by $30 million.The marginal propensity to spend in this economy is 0.9.What is the eventual total new expenditure in this economy due to the increase in investment?

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Question 23

In the simple macro model,desired investment expenditure will generally fall as a result of which of the following changes?

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Question 24

FIGURE 21-2 Refer to Figure 21-2.Which of the following is the correct equation for the consumption function depicted in the figure?

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Question 25

Consider the following aggregate expenditure function: AE = $300 billion + (0.87)Y.Assuming that we have no government,no international trade and desired investment is autonomous and is equal to $56 billion,then which of the following is the correct statement of the consumption function?

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Question 26

Suppose aggregate output is demand-determined.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $20 billion,the marginal propensity to spend must be

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Question 27

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 Refer to Table 21-1.The marginal propensity to consume is equal to

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Question 28

When desired consumption exceeds disposable income,desired saving is ; when desired consumption is less than the disposable income,desired saving is .

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Question 29

Consider the following information concerning an economy with demand-determined output.There is no government or foreign trade. TABLE 21-7 Refer to Table 21-7.The simple multiplier in this economy is

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Question 30

Consider a simple macro model with a constant price level.If the AE function is horizontal,then we know the simple multiplier is

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Question 31

Consider a simple macro model with demand-determined output.At the equilibrium level of national income,

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Question 32

FIGURE 21-1 Refer to Figure 21-1.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is equal to

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Question 33

Suppose there is an increase in the marginal propensity to spend out of national income.The result will be

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Question 34

Consider an exogenous increase in the real interest rate in the simple macro model.This will tend to cause in desired consumption and in desired investment.

(Multiple Choice)

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Question 35

Consider a simple macro model with a constant price level and demand-determined output.If national income is above its equilibrium level,it is likely that inventories are ,and so national income tends to .

(Multiple Choice)

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Question 36

Suppose aggregate output is demand-determined.Suppose a decrease in autonomous investment expenditure of $20 million reduces equilibrium national income by $50 million.The marginal propensity to spend is equal to

(Multiple Choice)

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Question 37

FIGURE 21-2 Refer to Figure 21-2.If disposable income is $3000,desired consumption expenditure is equal to

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Question 38

Consider the following news headline: "Canadian business leaders fear reduced world demand for commodities".Which of the following correctly describes the likely effect in our simple macro model?

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Question 39

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 21-4 Refer to Table 21-4.At the equilibrium level of national income,desired saving ($billions)will be

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Question 40

Showing 21 - 40 of 155

Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend in such a model is 0.6,the simple multiplier is

The aggregate expenditure (AE)function is an upward-sloping curve that describes

In the simple macro model,desired investment expenditure will generally fall as a result of which of the following changes?

FIGURE 21-2 Refer to Figure 21-2.Which of the following is the correct equation for the consumption function depicted in the figure?

Consider the following aggregate expenditure function: AE = $300 billion + (0.87)Y.Assuming that we have no government,no international trade and desired investment is autonomous and is equal to $56 billion,then which of the following is the correct statement of the consumption function?

Suppose aggregate output is demand-determined.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $20 billion,the marginal propensity to spend must be

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 Refer to Table 21-1.The marginal propensity to consume is equal to

When desired consumption exceeds disposable income,desired saving is ; when desired consumption is less than the disposable income,desired saving is .

Consider the following information concerning an economy with demand-determined output.There is no government or foreign trade. TABLE 21-7 Refer to Table 21-7.The simple multiplier in this economy is

Consider a simple macro model with a constant price level.If the AE function is horizontal,then we know the simple multiplier is

Consider a simple macro model with demand-determined output.At the equilibrium level of national income,

FIGURE 21-1 Refer to Figure 21-1.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is equal to

Suppose there is an increase in the marginal propensity to spend out of national income.The result will be

Consider an exogenous increase in the real interest rate in the simple macro model.This will tend to cause in desired consumption and in desired investment.

Consider a simple macro model with a constant price level and demand-determined output.If national income is above its equilibrium level,it is likely that inventories are ,and so national income tends to .

Suppose aggregate output is demand-determined.Suppose a decrease in autonomous investment expenditure of $20 million reduces equilibrium national income by $50 million.The marginal propensity to spend is equal to

FIGURE 21-2 Refer to Figure 21-2.If disposable income is $3000,desired consumption expenditure is equal to

Consider the following news headline: "Canadian business leaders fear reduced world demand for commodities".Which of the following correctly describes the likely effect in our simple macro model?

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 21-4 Refer to Table 21-4.At the equilibrium level of national income,desired saving ($billions)will be

Economic Issues and Concepts

Economic Theories, data, and Graphs

Demand, supply, and Price

What Macroeconomics Is All About

The Measurement of National Income

Adding Government and Trade to the Simple Macro Model

Real Gdp and the Price Level in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

Exam 21: The Simplest Short-Run Macro Model

Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend in such a model is 0.6,the simple multiplier is

The aggregate expenditure (AE)function is an upward-sloping curve that describes

In the simple macro model,desired investment expenditure will generally fall as a result of which of the following changes?

FIGURE 21-2 Refer to Figure 21-2.Which of the following is the correct equation for the consumption function depicted in the figure?

Consider the following aggregate expenditure function: AE = $300 billion + (0.87)Y.Assuming that we have no government,no international trade and desired investment is autonomous and is equal to $56 billion,then which of the following is the correct statement of the consumption function?

Suppose aggregate output is demand-determined.If the business community decreases its planned investment expenditures by $4 billion,causing equilibrium national income to fall by $20 billion,the marginal propensity to spend must be

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 Refer to Table 21-1.The marginal propensity to consume is equal to

When desired consumption exceeds disposable income,desired saving is ________; when desired consumption is less than the disposable income,desired saving is ________.

Consider the following information concerning an economy with demand-determined output.There is no government or foreign trade. TABLE 21-7 Refer to Table 21-7.The simple multiplier in this economy is

Consider a simple macro model with a constant price level.If the AE function is horizontal,then we know the simple multiplier is

Consider a simple macro model with demand-determined output.At the equilibrium level of national income,

FIGURE 21-1 Refer to Figure 21-1.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is equal to

Suppose there is an increase in the marginal propensity to spend out of national income.The result will be

Consider an exogenous increase in the real interest rate in the simple macro model.This will tend to cause ________ in desired consumption and ________ in desired investment.

Consider a simple macro model with a constant price level and demand-determined output.If national income is above its equilibrium level,it is likely that inventories are ________,and so national income tends to ________.

Suppose aggregate output is demand-determined.Suppose a decrease in autonomous investment expenditure of $20 million reduces equilibrium national income by $50 million.The marginal propensity to spend is equal to

FIGURE 21-2 Refer to Figure 21-2.If disposable income is $3000,desired consumption expenditure is equal to

Consider the following news headline: "Canadian business leaders fear reduced world demand for commodities".Which of the following correctly describes the likely effect in our simple macro model?

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 21-4 Refer to Table 21-4.At the equilibrium level of national income,desired saving ($billions)will be

Economic Issues and Concepts

Economic Theories, data, and Graphs

Demand, supply, and Price

What Macroeconomics Is All About

The Measurement of National Income

Adding Government and Trade to the Simple Macro Model

Real Gdp and the Price Level in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

When desired consumption exceeds disposable income,desired saving is ; when desired consumption is less than the disposable income,desired saving is .

Consider an exogenous increase in the real interest rate in the simple macro model.This will tend to cause in desired consumption and in desired investment.

Consider a simple macro model with a constant price level and demand-determined output.If national income is above its equilibrium level,it is likely that inventories are ,and so national income tends to .