Question 1

Which component of aggregate expenditure is neutral to macroeconomic changes?

Accepted Answer

A)  Consumption 
B)  Investment 
C)  Government 
D)  Net exports 
A)  Consumption 
B)  Investment 
C)  Government 
D)  Net exports

Question 2

Which of the following components has a negative or indirect relationship with consumption?

Accepted Answer

A)  Expected future income 
B)  Real income 
C)  Wealth 
D)  Interest rates 
A)  Expected future income 
B)  Real income 
C)  Wealth 
D)  Interest rates

Question 3

The table shown displays the spending habits of three coworkers.   Who has the highest MPC?

Accepted Answer

A)  Mary 
B)  Chris 
C)  Steve 
D)  There is not enough information to answer this question. 
A)  Mary 
B)  Chris 
C)  Steve 
D)  There is not enough information to answer this question.

Question 4

The multiplier measures the:

Accepted Answer

A)  effect of government spending or tax cuts on national income. 
B)  number of times each dollar is spent in the economy. 
C)  supply of money in the economy. 
D)  effect of household spending on national income. 
A)  effect of government spending or tax cuts on national income. 
B)  number of times each dollar is spent in the economy. 
C)  supply of money in the economy. 
D)  effect of household spending on national income.

Question 5

20. Suppose that John earns a disposable annual income of $50,000 and allocates $10,000 of this for necessities. Any additional income beyond that is both spent and saved. If John's MPC is 0.8, how much will he spend on non-necessities?

Accepted Answer

A)  $10,000 
B)  $40,000 
C)  $32,000 
D)  $35,000 
A)  $10,000 
B)  $40,000 
C)  $32,000 
D)  $35,000

Question 6

Which of the following terms is not a common alternative economists use to refer to GDP?

Accepted Answer

A)  Net national income 
B)  Total output 
C)  National income 
D)  Aggregate expenditure 
A)  Net national income 
B)  Total output 
C)  National income 
D)  Aggregate expenditure

Question 7

Suppose that John earns a disposable annual income of $50,000 and allocates $10,000 of this for necessities. Any additional income beyond that is both spent and saved. If John's MPC is 0.8, how much money will he save?

Accepted Answer

A)  $10,000 
B)  $40,000 
C)  $12,000 
D)  $8,000 
A)  $10,000 
B)  $40,000 
C)  $12,000 
D)  $8,000

Question 8

Economist John Maynard Keynes noted that:

Accepted Answer

A)  firms may not produce all they can at a given price, but rather what they can sell. 
B)  firms generally produce as much as they can at a given price. 
C)  government spending needs to be kept in check in order for the economy to operate efficiently. 
D)  household spending patterns don't really influence the health of the economy. 
A)  firms may not produce all they can at a given price, but rather what they can sell. 
B)  firms generally produce as much as they can at a given price. 
C)  government spending needs to be kept in check in order for the economy to operate efficiently. 
D)  household spending patterns don't really influence the health of the economy.

Question 9

When PAE increases, we expect that the economy will be at _______ levels of equilibrium GDP.

Accepted Answer

A)  lower 
B)  higher 
C)  constant 
D)  cycling 
A)  lower 
B)  higher 
C)  constant 
D)  cycling

Question 10

If the expected profitability of a business activity increases, we would expect investment spending to:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  There is not enough information to determine what would happen. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  There is not enough information to determine what would happen.

Question 11

Which of the following is not a direct determinant of net export spending?

Accepted Answer

A)  Domestic income 
B)  Foreign income 
C)  Interest rates 
D)  Exchange rates 
A)  Domestic income 
B)  Foreign income 
C)  Interest rates 
D)  Exchange rates

Question 12

The multiplier effect occurs when:

Accepted Answer

A)  spending by one person generates income for others and causes them to spend more too. 
B)  the level of consumer confidence increases more than predicted given a tax cut. 
C)  increased spending by one or more individuals causes others to increase their savings. 
D)  None of these are true. 
A)  spending by one person generates income for others and causes them to spend more too. 
B)  the level of consumer confidence increases more than predicted given a tax cut. 
C)  increased spending by one or more individuals causes others to increase their savings. 
D)  None of these are true.

Question 13

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

Accepted Answer

A)  an increase; less than 
B)  an increase; greater than 
C)  no change; equal to 
D)  a decrease; less than 
A)  an increase; less than 
B)  an increase; greater than 
C)  no change; equal to 
D)  a decrease; less than

Question 14

If foreign income decreases, net exports will likely:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  There is not enough information to determine what will happen. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  There is not enough information to determine what will happen.

Which component of aggregate expenditure is neutral to macroeconomic changes?

Which of the following components has a negative or indirect relationship with consumption?

The table shown displays the spending habits of three coworkers. Who has the highest MPC?

The multiplier measures the:

20_.Suppose that John earns a disposable annual income of $50,000 and allocates $10,000 of this for necessities. Any additional income beyond that is both spent and saved. If John's MPC is 0.8, how much will he spend on non-necessities?

Which of the following terms is not a common alternative economists use to refer to GDP?

Suppose that John earns a disposable annual income of $50,000 and allocates $10,000 of this for necessities. Any additional income beyond that is both spent and saved. If John's MPC is 0.8, how much money will he save?

Economist John Maynard Keynes noted that:

When PAE increases, we expect that the economy will be at _______ levels of equilibrium GDP.

If the expected profitability of a business activity increases, we would expect investment spending to:

Which of the following is not a direct determinant of net export spending?

The multiplier effect occurs when:

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

If foreign income decreases, net exports will likely:

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Efficiency

Governmentintervention

Measuringgdp

Thecost of Living

Unemploymentand the Labor Market

Economicgrowth

Aggregatedemand and Aggregate Supply

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Exam 11: Aggregateexpenditures

Which component of aggregate expenditure is neutral to macroeconomic changes?

Which of the following components has a negative or indirect relationship with consumption?

The table shown displays the spending habits of three coworkers. Who has the highest MPC?

The multiplier measures the:

20. Suppose that John earns a disposable annual income of $50,000 and allocates $10,000 of this for necessities. Any additional income beyond that is both spent and saved. If John's MPC is 0.8, how much will he spend on non-necessities?

Which of the following terms is not a common alternative economists use to refer to GDP?

Suppose that John earns a disposable annual income of $50,000 and allocates $10,000 of this for necessities. Any additional income beyond that is both spent and saved. If John's MPC is 0.8, how much money will he save?

Economist John Maynard Keynes noted that:

When PAE increases, we expect that the economy will be at _______ levels of equilibrium GDP.

If the expected profitability of a business activity increases, we would expect investment spending to:

Which of the following is not a direct determinant of net export spending?

The multiplier effect occurs when:

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

If foreign income decreases, net exports will likely:

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

20_.Suppose that John earns a disposable annual income of $50,000 and allocates $10,000 of this for necessities. Any additional income beyond that is both spent and saved. If John's MPC is 0.8, how much will he spend on non-necessities?

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