Exam 11: Spending, Output, and Fiscal Policy

Planned investment may differ from actual investment because of:

In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20.The vertical intercept of the expenditure line is:

Changes in government purchases affect planned spending:

C + I^p + G + NX equals:

The tendency of changes in asset prices to affect spending on consumption goods is called the ______ effect.

If firms sell more output than expected, planned investment:

The basic Keynesian model is built on the key assumption that:

In the short run, with predetermined prices, when output is less than planned aggregate expenditure:

In the short-run Keynesian model, if the mpc equals 0.8, then to decrease planned aggregate spending by $30 billion at any output level, government spending must be decreased by ______ or net taxes must be increased by _____.

Data on after-tax income and consumption spending for the Adam Smith family are given below: Based on these data, the Adam Smith family has a marginal propensity to consume equal to:

In the short-run Keynesian model, to close a recessionary gap of $1 billion dollars government purchases must be:

Provisions in the law that automatically increase government spending or decrease taxes when real output declines are called:

Refer to the figure below. Based on the Keynesian cross diagram, if output equals 5,000, planned aggregate expenditure is ______ output, and firms will ______ production in response.

If consumption increases by $9 when disposable income increases by $10, the marginal propensity to consume (mpc) equals:

In Econland autonomous consumption equals 700, the marginal propensity to consume equals 0.80, net taxes are fixed at 50, planned investment is fixed at 100, government purchases are fixed at 100, and net exports are fixed at 40.The vertical intercept of the expenditure line is:

In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20.Short-run equilibrium output in this economy equals:

In the Keynesian cross diagram, the vertical intercept of the expenditure line equals ______ and the slope of the expenditure line equals _____.

For an economy starting at potential output, a decrease in autonomous expenditure in the short run results in a(n):

In a short-run Keynesian model where the marginal propensity to consume is 0.5, to offset a recessionary gap resulting from a $1 billion decrease in autonomous consumption, government purchases must be:

If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, the mpc equals 0.9, and potential output (Y*) equals 9,000, then transfers must be decreased by approximately ______ to eliminate any output gap.