Exam 7: Short-Run Fluctuations

If the marginal propensity to consume were to increase with no change in the tax rate, then the consumption function drawn on a graph with disposable income on the horizontal axis would

Which of the following statements is true?

Dollar for dollar, the government spending multiplier

In the short-run aggregate demand model, firms are generally assumed to

An important distinction between the long-run and complete models is that

An assumption central to the short run analysis of the goods and services produced by an economy is that

The assumption to ignore inventory adjustment in the analysis of the economy in the short run is justified because

Short-term departures from equilibrium may be caused by

The income identity Y = C + I + G + X implicitly assumes that the left-hand variable Y is simultaneously real GDP, real output, and real income. It is an exact interpretation when

Let taxes be fixed and equal to T, consumption given by C = a + bY - T), investment and government spending exogenous, and net exports described by X = g - mY. The multiplier for T would then be

Short-run adjustments to changes in the economic conditions affecting the U.S. economy are

Macroeconomic equilibrium is stable in the simple model because

The theories and models of macroeconomics are used to

The distinction between spending balance and equilibrium is important because

^{Let taxes be set equal to T = T}0 ^{+ tY, consumption given by}