Exam 23: Aggregate Expenditure and Output in the Short Run

Consumption is $5 million, planned investment spending is $8 million, government purchases are $10 million, and net exports are equal to $2 million. If GDP during that same time period is equal to $23 million, what unplanned changes in inventories occurred?

A decrease in the price level results in a(n) ________ in household consumption spending and a(n) ________ in investment spending.

When we graph consumption as a function of ________ rather than as a function of disposable income, the slope of this consumption function is ________.

If aggregate expenditure is less than GDP, how will the economy reach macroeconomic equilibrium?

Goods that have been produced but not yet sold are referred to as

Aggregate expenditure includes consumption spending, planned investment spending, government purchases, and net exports.

Table 23-14 -Refer to Table 23-14. Using the table above, answer the following questions. The numbers in the table are in billions of dollars. a. What is the equilibrium level of real GDP? b. What is the MPC? c. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? d. Refer to part c. If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?

Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP? C = 1,000 + 0.8Y I = 1,500 G =1,250 NX = 100

Autonomous expenditure is a type of expenditure that does not depend on

If the consumption function is defined as C = 5,500 + 0.9Y, what is the value of the multiplier?

Which of the following correctly describes how an increase in the price level affects consumption spending?

Into which category of aggregate expenditure would each of the following transactions fall? a. Sandra MacMillian purchases a new Ford Focus. b. The city of Richardson buys 5 new garbage trucks. c. Adrian Garcia buys a newly constructed townhome. d. A consumer in Latvia orders an iPhone from Apple. e. Ford Motor Company buys 300 new iPhones from Apple.

Table 23-4 -Refer to Table 23-4. Given the data in the table above, the marginal propensity to save is

What is the main reason for changes in GDP in the short run?

If consumption is defined as C = 4,500 + 0.75Y, then the value of the marginal propensity to save is 0.25.

During the Great Depression, economists first began studying the relationship between

If the consumption function is defined as C = 7,250 + 0.8Y, what is the value of the multiplier?

The components of aggregate expenditure are

If firms are more optimistic that future profits will rise and remain strong for the next few years, then

Firms in a small economy planned that inventories would grow over the past year by $500,000. Over that year, inventories did grow by exactly $500,000. This implies that