Exam 21: The Simplest Short-Run Macro Model

Consider a simple macro model with a constant price level and demand-determined output.If the simple multiplier is 3 and there is a $2 billion increase in autonomous investment spending,then the equilibrium level of income will increase by

The percentage of disposable income that is saved by Canadian households has been changing over time.In 2017,it was estimated to be about ________ percent.

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

Consider the following information for an economy with demand-determined output and a constant price level.There is no government or foreign trade. TABLE 21-8 Refer to Table 21-8.This economy's equilibrium level of national income is

Consider a simple macro model with demand-determined output.In such a model,the smaller the marginal propensity to spend,the

In the simplest macroeconomic model,with a closed economy and no government,the aggregate expenditure (AE)function is the sum of

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

Suppose aggregate output is demand-determined.If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending,then equilibrium income will ________ and the marginal propensity to spend must equal ________.

Suppose the price level is constant,output is demand-determined,and the economy is closed with no government.If the marginal propensity to spend is 0.7,the simple multiplier is

FIGURE 21-2 Refer to Figure 21-2.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is

FIGURE 21-2 Refer to Figure 21-2.The amount of desired consumption expenditure that is unrelated to the level of disposable income is

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 $920 billion.We can expect that

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired consumption rises from $350 billion to $380 billion.We can conclude that the marginal propensity to consume for this economy is

The simple multiplier applies to short-run situations in which the price level is constant.The simple multiplier can be defined as

The consumption function used in the textbook is based on a number of assumptions.Given these assumptions,which of the following statements is true?

FIGURE 21-2 Refer to Figure 21-2.The slope of the consumption function in the figure is equal to

In a simple macro model with the price level assumed to be constant,a change in firms' level of desired investment is predicted to influence equilibrium national income by

Which of the following statements must be true in the simple macro model (with a closed economy and no government)?

Consider the following aggregate expenditure function: AE = $500 billion + (0.75)Y.Assuming no government,no international trade,and desired investment is autonomous and equal to $120 billion,then which of the following is the correct statement of the consumption function?

The Smith family's disposable income rose from $40 000 per year to $42 000 and their desired consumption expenditure rose from $38 000 to $39 600.It can be concluded that their