Question 1

If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:

Accepted Answer

A)  increase from 4 to 5. 
B)  decrease from 5 to 4. 
C)  increase from 0.20 to 0.25. 
D)  decrease from 1.25 to 1.20. 
A)  increase from 4 to 5. 
B)  decrease from 5 to 4. 
C)  increase from 0.20 to 0.25. 
D)  decrease from 1.25 to 1.20.

Question 2

If trade policies change, aggregate expenditure will likely:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  The effect on aggregate expenditure depends on the policy. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  The effect on aggregate expenditure depends on the policy.

Question 3

The figure shows planned aggregate expenditure and output for an economy.   If output in this economy is Y3, we would expect there to be:

Accepted Answer

A)  a decrease in inventories. 
B)  an increase in inventories. 
C)  no change in inventories. 
D)  an increase in consumption spending. 
A)  a decrease in inventories. 
B)  an increase in inventories. 
C)  no change in inventories. 
D)  an increase in consumption spending.

Question 4

An increase in interest rates would:

Accepted Answer

A)  decrease autonomous spending. 
B)  increase spending dependent on income. 
C)  increase autonomous spending. 
D)  decrease spending dependent on income. 
A)  decrease autonomous spending. 
B)  increase spending dependent on income. 
C)  increase autonomous spending. 
D)  decrease spending dependent on income.

Question 5

When PAE is less than Y, firms will:

Accepted Answer

A)  decrease production. 
B)  increase production. 
C)  make no change in production. 
D)  increase labor. 
A)  decrease production. 
B)  increase production. 
C)  make no change in production. 
D)  increase labor.

Question 6

If the MPC is 0.8, what must the spending multiplier be?

Accepted Answer

A)  5 
B)  2 
C)  1.2 
D)  1.8 
A)  5 
B)  2 
C)  1.2 
D)  1.8

Question 7

If consumers increase their preference for foreign goods and services, aggregate expenditure will likely:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  increase at first and then decrease. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  increase at first and then decrease.

Question 8

If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _______ its spending by _______ billion.

Accepted Answer

A)  increase; $240 
B)  decrease; $240 
C)  increase; $960 
D)  decrease; $960 
A)  increase; $240 
B)  decrease; $240 
C)  increase; $960 
D)  decrease; $960

Question 9

Wealth can be held as:

Accepted Answer

A)  checking accounts. 
B)  credit card accounts. 
C)  private jets. 
D)  student loans. 
A)  checking accounts. 
B)  credit card accounts. 
C)  private jets. 
D)  student loans.

Question 10

If spending increases by $100, and GDP increases by $400 as a result, what must the MPC be?

Accepted Answer

A)  0.70 
B)  0.75 
C)  4 
D)  2 
A)  0.70 
B)  0.75 
C)  4 
D)  2

Question 11

The real exchange rate is the:

Accepted Answer

A)  value of goods in one nation relative to the value of a similar set of goods in another country. 
B)  rate at which people exchange goods and services in a domestic market. 
C)  rate at which firms in different nations would be willing to exchange goods. 
D)  value of goods in one nation relative to the value of the same set of goods in another country. 
A)  value of goods in one nation relative to the value of a similar set of goods in another country. 
B)  rate at which people exchange goods and services in a domestic market. 
C)  rate at which firms in different nations would be willing to exchange goods. 
D)  value of goods in one nation relative to the value of the same set of goods in another country.

Question 12

The figure shows planned aggregate expenditure and output for an economy.   The Keynesian equilibrium occurs at what output level?

Accepted Answer

A)  Y 1 
B)  Y 2 
C)  Y 3 
D)  It does not occur at any output level in this graph. 
A)  Y 1 
B)  Y 2 
C)  Y 3 
D)  It does not occur at any output level in this graph.

Question 13

Edgar, Angela, and Juan are coworkers who receive the same amount of money as a holiday bonus. Angela places most of her money in her 401k account and spends a small amount on stocking stuffers for her family. Edgar spends most of his money on a new smartwatch. Juan takes his wife out for a nice dinner and saves the remaining money. Who has the lowest marginal propensity to consume?

Accepted Answer

A)  Angela 
B)  Juan 
C)  Edgar 
D)  There is not enough information to answer this question. 
A)  Angela 
B)  Juan 
C)  Edgar 
D)  There is not enough information to answer this question.

Question 14

A government would choose to increase spending:

Accepted Answer

A)  if households are growing wealthier 
B)  when interest rates increase. 
C)  to stimulate the economy. 
D)  when it expects tax revenues to increase. 
A)  if households are growing wealthier 
B)  when interest rates increase. 
C)  to stimulate the economy. 
D)  when it expects tax revenues to increase.

Question 15

The multiplier effect suggests that:

Accepted Answer

A)  spending $1 increases GDP by more than $1. 
B)  spending $1 increases GDP by less than $1. 
C)  saving $1 increases GDP by more than $1. 
D)  spending $1 decreases GDP by more than $1. 
A)  spending $1 increases GDP by more than $1. 
B)  spending $1 increases GDP by less than $1. 
C)  saving $1 increases GDP by more than $1. 
D)  spending $1 decreases GDP by more than $1.

Question 16

During the Great Depression, the banking industry was crippled so badly that _______ of the banks failed.

Accepted Answer

A)  nearly half 
B)  a quarter 
C)  almost all 
D)  a majority 
A)  nearly half 
B)  a quarter 
C)  almost all 
D)  a majority

Question 17

If a person's MPC is 0.75 it means they will:

Accepted Answer

A)  spend 75 cents of each new dollar they receive. 
B)  invest 75 cents of every new dollar they receive. 
C)  spend 25 cents and save 75 cents of each additional dollar they earn. 
D)  spend 25 percent of any additional money earned. 
A)  spend 75 cents of each new dollar they receive. 
B)  invest 75 cents of every new dollar they receive. 
C)  spend 25 cents and save 75 cents of each additional dollar they earn. 
D)  spend 25 percent of any additional money earned.

Question 18

In the long run, unplanned inventory expenditure will:

Accepted Answer

A)  equal zero, as planned inventories should equal actual inventories. 
B)  increase, as firms struggle to figure out what consumers want. 
C)  decrease, as firms are able to better match production with consumer preferences. 
D)  become positive, as firms tend to be optimistic about sales. 
A)  equal zero, as planned inventories should equal actual inventories. 
B)  increase, as firms struggle to figure out what consumers want. 
C)  decrease, as firms are able to better match production with consumer preferences. 
D)  become positive, as firms tend to be optimistic about sales.

Question 19

Suppose that Christina has a disposable annual income of $50,000 and an MPC of 0.8. She allocates $10,000 of her income for necessities, and the remaining money is both spent and saved. Based on this information, what is Christina's autonomous consumption?

Accepted Answer

A)  $10,000 
B)  $40,000 
C)  $32,000 
D)  $50,000 
A)  $10,000 
B)  $40,000 
C)  $32,000 
D)  $50,000

Question 20

If PAE is greater than Y:

Accepted Answer

A)  production will eventually decrease. 
B)  production will eventually increase. 
C)  there will be no change in aggregate production. 
D)  the government will intervene by decreasing taxes. 
A)  production will eventually decrease. 
B)  production will eventually increase. 
C)  there will be no change in aggregate production. 
D)  the government will intervene by decreasing taxes.

If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:

If trade policies change, aggregate expenditure will likely:

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y₃, we would expect there to be:

An increase in interest rates would:

When PAE is less than Y, firms will:

If the MPC is 0.8, what must the spending multiplier be?

If consumers increase their preference for foreign goods and services, aggregate expenditure will likely:

If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _ its spending by _ billion.

Wealth can be held as:

If spending increases by $100, and GDP increases by $400 as a result, what must the MPC be?

The real exchange rate is the:

The figure shows planned aggregate expenditure and output for an economy. The Keynesian equilibrium occurs at what output level?

A government would choose to increase spending:

The multiplier effect suggests that:

During the Great Depression, the banking industry was crippled so badly that _______ of the banks failed.

If a person's MPC is 0.75 it means they will:

In the long run, unplanned inventory expenditure will:

Suppose that Christina has a disposable annual income of $50,000 and an MPC of 0.8. She allocates $10,000 of her income for necessities, and the remaining money is both spent and saved. Based on this information, what is Christina's autonomous consumption?

If PAE is greater than Y:

Economicsand Life

Specializationand Exchange

Markets

Elasticity

Efficiency

Governmentintervention

Measuringgdp

Thecost of Living

Unemploymentand the Labor Market

Economicgrowth

Aggregatedemand and Aggregate Supply

Fiscalpolicy

Thebasics of Finance

Moneyand the Monetary System

Inflation

Financialcrisis

Open-Marketmacroeconomics

Developmenteconomics

Filters

Exam 11: Aggregateexpenditures

If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:

If trade policies change, aggregate expenditure will likely:

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y3, we would expect there to be:

An increase in interest rates would:

When PAE is less than Y, firms will:

If the MPC is 0.8, what must the spending multiplier be?

If consumers increase their preference for foreign goods and services, aggregate expenditure will likely:

If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _______ its spending by _______ billion.

Wealth can be held as:

If spending increases by $100, and GDP increases by $400 as a result, what must the MPC be?

The real exchange rate is the:

The figure shows planned aggregate expenditure and output for an economy. The Keynesian equilibrium occurs at what output level?

A government would choose to increase spending:

The multiplier effect suggests that:

During the Great Depression, the banking industry was crippled so badly that _______ of the banks failed.

If a person's MPC is 0.75 it means they will:

In the long run, unplanned inventory expenditure will:

Suppose that Christina has a disposable annual income of $50,000 and an MPC of 0.8. She allocates $10,000 of her income for necessities, and the remaining money is both spent and saved. Based on this information, what is Christina's autonomous consumption?

If PAE is greater than Y:

Economicsand Life

Specializationand Exchange

Markets

Elasticity

Efficiency

Governmentintervention

Measuringgdp

Thecost of Living

Unemploymentand the Labor Market

Economicgrowth

Aggregatedemand and Aggregate Supply

Fiscalpolicy

Thebasics of Finance

Moneyand the Monetary System

Inflation

Financialcrisis

Open-Marketmacroeconomics

Developmenteconomics

Filters

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y₃, we would expect there to be:

If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _ its spending by _ billion.