Question 1

A general formula for the multiplier is

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
A)    . 
B)    . 
C)    . 
D)    .

Question 2

________ consumption is consumption that depends upon the level of GDP and ________ consumption is consumption that does not depend upon the level of GDP.

Accepted Answer

A)  Autonomous; induced 
B)  Induced; autonomous 
C)  Voluntary; autonomous 
D)  Autonomous; voluntary 
A)  Autonomous; induced 
B)  Induced; autonomous 
C)  Voluntary; autonomous 
D)  Autonomous; voluntary

Question 3

An increase in the price level in the United States will reduce U.S. imports and increase U.S. exports.

Accepted Answer

A) True 
 B)False

Question 4

Firms in a small economy anticipated that inventories would grow over the past year by $750,000, and over that year, inventories grew by exactly $750,000. This implies that

Accepted Answer

A)  aggregate expenditure and GDP were equal that year. 
B)  there was an unplanned increase in inventories that year. 
C)  there was an unplanned decrease in inventories that year. 
D)  aggregate expenditure was greater than GDP that year. 
A)  aggregate expenditure and GDP were equal that year. 
B)  there was an unplanned increase in inventories that year. 
C)  there was an unplanned decrease in inventories that year. 
D)  aggregate expenditure was greater than GDP that year.

Question 5

Table 23-15
  
-Refer to Table 23-15. 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 investment spending declines by $10 billion, what will happen to equilibrium GDP?

Accepted Answer

a. Equilibrium real GDP is determined wh

Question 6

If aggregate expenditure is less than GDP, then inventories rise and GDP falls.

Accepted Answer

A) True 
 B)False

Question 7

Actual investment spending includes spending by consumers on

Accepted Answer

A)  durable goods. 
B)  nondurable goods. 
C)  new houses. 
D)  services. 
A)  durable goods. 
B)  nondurable goods. 
C)  new houses. 
D)  services.

Question 8

On the 45 degree-line diagram, the 45 degree line shows points where real aggregate expenditure equals

Accepted Answer

A)  unplanned investment. 
B)  planned investment. 
C)  real GDP. 
D)  nominal GDP. 
A)  unplanned investment. 
B)  planned investment. 
C)  real GDP. 
D)  nominal GDP.

Question 9

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

Accepted Answer

A)  GDP will rise. 
B)  GDP will fall. 
C)  Wages will rise. 
D)  Inventories will fall. 
A)  GDP will rise. 
B)  GDP will fall. 
C)  Wages will rise. 
D)  Inventories will fall.

Question 10

What is the difference between aggregate expenditure and aggregate demand?

Accepted Answer

Aggregate expenditure is the t

Question 11

Table 23-13
  
-Refer to Table 23-13. 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 investment spending declines by $50 billion, what will happen to equilibrium GDP?

Accepted Answer

a. Equilibrium real GDP is determined wh

Question 12

What are the five main determinants of consumption spending? Which of these is the most important?

Accepted Answer

The five main determinants of consumptio

Question 13

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

Accepted Answer

A)  0.2 
B)  0.8 
C)  1.25 
D)  5 
A)  0.2 
B)  0.8 
C)  1.25 
D)  5

Question 14

If planned aggregate expenditure equals GDP, the economy is in macroeconomic equilibrium.

Accepted Answer

A) True 
 B)False

Question 15

Table 23-5
   Answer: When taxes are zero, saving is the difference between national income and consumption:
Saving = national income - consumption.
S = Y - C
Using the table:
   Diff: 1 Page Ref: 784-786/400-402
Topic: Income, Consumption, and Saving
*: Recurring
Learning Outcome: Macro-2: Explain the relationship between expenditure and income
AACSB: Analytical thinking
-Given Table 23-6 below, fill in the values for saving. Assume taxes = $800.

Accepted Answer

Saving = national in

Question 16

An increase in the price level ________ real wealth, which causes consumption to ________.

Accepted Answer

A)  lowers; increase 
B)  lowers; decrease 
C)  raises; increase 
D)  raises; decrease 
A)  lowers; increase 
B)  lowers; decrease 
C)  raises; increase 
D)  raises; decrease

Question 17

The recession of 2007-2009 resulted in falling revenues and large layoffs for a vast number of companies. By 2017, unemployment ________ and spending ________ in the economy.

Accepted Answer

A)  fell; decreased 
B)  rose; increased 
C)  fell; increased 
D)  rose; decreased 
A)  fell; decreased 
B)  rose; increased 
C)  fell; increased 
D)  rose; decreased

Question 18

Discuss the leading causes of the Great Depression. Use the 45-degree line diagram to show how they caused a decline in GDP.

Accepted Answer

Several events lowered aggregate expendi

Question 19

If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years, then

Accepted Answer

A)  investment spending will fall. 
B)  investment spending will rise. 
C)  investment spending will remain unaffected. 
D)  investment spending will rise and then fall. 
A)  investment spending will fall. 
B)  investment spending will rise. 
C)  investment spending will remain unaffected. 
D)  investment spending will rise and then fall.

Question 20

Which of the following is not one of the four main categories of spending identified by John Maynard Keynes?

Accepted Answer

A)  consumption 
B)  planned investment 
C)  government purchases 
D)  transfer payments 
A)  consumption 
B)  planned investment 
C)  government purchases 
D)  transfer payments

Exam 23: Aggregate Expenditure and Output in the Short Run

A general formula for the multiplier is

________ consumption is consumption that depends upon the level of GDP and ________ consumption is consumption that does not depend upon the level of GDP.

An increase in the price level in the United States will reduce U.S. imports and increase U.S. exports.

Firms in a small economy anticipated that inventories would grow over the past year by $750,000, and over that year, inventories grew by exactly $750,000. This implies that

Table 23-15 -Refer to Table 23-15. 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 investment spending declines by $10 billion, what will happen to equilibrium GDP?

If aggregate expenditure is less than GDP, then inventories rise and GDP falls.

Actual investment spending includes spending by consumers on

On the 45 degree-line diagram, the 45 degree line shows points where real aggregate expenditure equals

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

What is the difference between aggregate expenditure and aggregate demand?

Table 23-13 -Refer to Table 23-13. 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 investment spending declines by $50 billion, what will happen to equilibrium GDP?

What are the five main determinants of consumption spending? Which of these is the most important?

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

If planned aggregate expenditure equals GDP, the economy is in macroeconomic equilibrium.

An increase in the price level ________ real wealth, which causes consumption to ________.

The recession of 2007-2009 resulted in falling revenues and large layoffs for a vast number of companies. By 2017, unemployment ________ and spending ________ in the economy.

Discuss the leading causes of the Great Depression. Use the 45-degree line diagram to show how they caused a decline in GDP.

If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years, then

Which of the following is not one of the four main categories of spending identified by John Maynard Keynes?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

consumption is consumption that depends upon the level of GDP and consumption is consumption that does not depend upon the level of GDP.

An increase in the price level real wealth, which causes consumption to .

The recession of 2007-2009 resulted in falling revenues and large layoffs for a vast number of companies. By 2017, unemployment and spending in the economy.