Question 1

-The above table presents data from the nation of Pacifica. When real GDP equals $2.0 trillion, aggregate planned expenditure equals

Accepted Answer

A)  $5.00 trillion. 
B)  $3.75 trillion. 
C)  $4.00 trillion. 
D)  $5.50 trillion. 
E)  $6.00 trillion. 
A)  $5.00 trillion. 
B)  $3.75 trillion. 
C)  $4.00 trillion. 
D)  $5.50 trillion. 
E)  $6.00 trillion.

Question 2

Autonomous expenditure includes

Accepted Answer

A)  investment, government expenditure on goods and services, and exports. 
B)  consumption expenditure, investment and net taxes. 
C)  consumption expenditures, investment and exports. 
D)  investment, government expenditure for goods and services, and imports. 
E)  consumption expenditure, investment and imports. 
A)  investment, government expenditure on goods and services, and exports. 
B)  consumption expenditure, investment and net taxes. 
C)  consumption expenditures, investment and exports. 
D)  investment, government expenditure for goods and services, and imports. 
E)  consumption expenditure, investment and imports.

Question 3

-The above table has data from the nation of Atlantica. Based on these data, when disposable income equals 8.0 there is

Accepted Answer

A)  savings of $0.5 trillion. 
B)  dissavings of $15.5 trillion. 
C)  dissavings of $7.5 trillion. 
D)  dissavings of $0.5 trillion. 
E)  savings of $15.5 trillion. 
A)  savings of $0.5 trillion. 
B)  dissavings of $15.5 trillion. 
C)  dissavings of $7.5 trillion. 
D)  dissavings of $0.5 trillion. 
E)  savings of $15.5 trillion.

Question 4

A rise in the real interest rate ________ consumption expenditure and ________.

Accepted Answer

A)  decreases; shifts the consumption function upward 
B)  decreases; results in a movement downward along the consumption function 
C)  increases; shifts the consumption function upward 
D)  increases; shifts the consumption function downward 
E)  decreases; shifts the consumption function downward 
A)  decreases; shifts the consumption function upward 
B)  decreases; results in a movement downward along the consumption function 
C)  increases; shifts the consumption function upward 
D)  increases; shifts the consumption function downward 
E)  decreases; shifts the consumption function downward

Question 5

-In the figure above, what is the MPC?

Accepted Answer

A)  0.50 
B)  1.00 
C)  0.75 
D)  0.90 
E)  0.80 
A)  0.50 
B)  1.00 
C)  0.75 
D)  0.90 
E)  0.80

Question 6

When the change in unplanned inventories is positive, then

Accepted Answer

A)  real GDP is larger than aggregate planned expenditure. 
B)  real GDP equals aggregate planned expenditure. 
C)  planned inventories will increase in order to return to equilibrium. 
D)  real GDP is less than aggregate planned expenditure. 
E)  economic growth will occur as the economy returns to equilibrium. 
A)  real GDP is larger than aggregate planned expenditure. 
B)  real GDP equals aggregate planned expenditure. 
C)  planned inventories will increase in order to return to equilibrium. 
D)  real GDP is less than aggregate planned expenditure. 
E)  economic growth will occur as the economy returns to equilibrium.

Question 7

The figure above shows two aggregate expenditure lines.
-In the figure above, what would happen to the size of the multiplier if marginal income tax rates were increased?

Accepted Answer

A)  The multiplier would fall in value and might become negative. 
B)  The multiplier would fall in value but would not become negative. 
C)  The multiplier would rise in value. 
D)  The multiplier would not change in value. 
E)  More information is needed to determine the effect on the size of the multiplier. 
A)  The multiplier would fall in value and might become negative. 
B)  The multiplier would fall in value but would not become negative. 
C)  The multiplier would rise in value. 
D)  The multiplier would not change in value. 
E)  More information is needed to determine the effect on the size of the multiplier.

Question 8

If disposable income decreases during a recession, there is

Accepted Answer

A)  an upward shift in the consumption function. 
B)  a downward shift in the consumption function. 
C)  no change in consumption expenditures. 
D)  movement upward along the consumption function. 
E)  movement downward along the consumption function. 
A)  an upward shift in the consumption function. 
B)  a downward shift in the consumption function. 
C)  no change in consumption expenditures. 
D)  movement upward along the consumption function. 
E)  movement downward along the consumption function.

Question 9

-In the figure above, when disposable income equals $20 trillion,

Accepted Answer

A)  consumption expenditure is less than disposable income, so consumers are dissaving. 
B)  consumption expenditure is greater than disposable income, so consumers are dissaving. 
C)  consumption expenditure is greater than disposable income, so consumers are saving. 
D)  consumption expenditure is less than disposable income, so consumers are saving. 
E)  consumption expenditure is less than disposable income but it is not possible to determine whether consumers are saving or dissaving. 
A)  consumption expenditure is less than disposable income, so consumers are dissaving. 
B)  consumption expenditure is greater than disposable income, so consumers are dissaving. 
C)  consumption expenditure is greater than disposable income, so consumers are saving. 
D)  consumption expenditure is less than disposable income, so consumers are saving. 
E)  consumption expenditure is less than disposable income but it is not possible to determine whether consumers are saving or dissaving.

Question 10

When the real interest rate rises, there is

Accepted Answer

A)  an upward movement along the consumption function. 
B)  a downward movement along the consumption function. 
C)  neither a shift of the consumption function nor a movement along the consumption function. 
D)  an upward shift of the consumption function. 
E)  a downward shift of the consumption function. 
A)  an upward movement along the consumption function. 
B)  a downward movement along the consumption function. 
C)  neither a shift of the consumption function nor a movement along the consumption function. 
D)  an upward shift of the consumption function. 
E)  a downward shift of the consumption function.

Question 11

When the price level increases, aggregate planned expenditure decreases, which leads to

Accepted Answer

A)  a rightward shift of the aggregate demand curve. 
B)  a leftward shift of the aggregate demand curve. 
C)  neither a movement along nor a shift of the aggregate demand curve. 
D)  an upward movement along the aggregate demand curve. 
E)  a downward movement along the aggregate demand curve. 
A)  a rightward shift of the aggregate demand curve. 
B)  a leftward shift of the aggregate demand curve. 
C)  neither a movement along nor a shift of the aggregate demand curve. 
D)  an upward movement along the aggregate demand curve. 
E)  a downward movement along the aggregate demand curve.

Question 12

If your planned consumption expenditure is $600 per month and your disposable income is $500 per month, your

Accepted Answer

A)  dissaving is $100 per month. 
B)  saving is $100 per month. 
C)  autonomous consumption is -$100 per month. 
D)  autonomous consumption must be zero per month. 
E)  induced consumption is $600. 
A)  dissaving is $100 per month. 
B)  saving is $100 per month. 
C)  autonomous consumption is -$100 per month. 
D)  autonomous consumption must be zero per month. 
E)  induced consumption is $600.

Question 13

A change in the price level

Accepted Answer

A)  shifts the AE curve and the AD curve in the same direction. 
B)  shifts the AE curve and the AD curve in opposite directions. 
C)  shifts the AE curve and creates a movement along the AD curve. 
D)  creates a movement along the AE curve and shifts the AD curve. 
E)  creates a movement along both the AE curve and the AD curve. 
A)  shifts the AE curve and the AD curve in the same direction. 
B)  shifts the AE curve and the AD curve in opposite directions. 
C)  shifts the AE curve and creates a movement along the AD curve. 
D)  creates a movement along the AE curve and shifts the AD curve. 
E)  creates a movement along both the AE curve and the AD curve.

Question 14

-In the above figure, equilibrium expenditure is equal to

Accepted Answer

A)  $5 trillion. 
B)  $15 trillion. 
C)  $20 trillion. 
D)  $10 trillion. 
E)  None of the above answers is correct 
A)  $5 trillion. 
B)  $15 trillion. 
C)  $20 trillion. 
D)  $10 trillion. 
E)  None of the above answers is correct

Question 15

Compared to the magnitude of the multiplier in an economy without imports, the multiplier in an identical economy with imports is

Accepted Answer

A)  exactly the same. 
B)  smaller only if imports exceed exports. 
C)  always smaller. 
D)  larger only if exports exceed imports. 
E)  always larger. 
A)  exactly the same. 
B)  smaller only if imports exceed exports. 
C)  always smaller. 
D)  larger only if exports exceed imports. 
E)  always larger.

Question 16

Aggregate expenditure is equal to

Accepted Answer

A)  C + I + G - NX. 
B)  C - I - G - NX. 
C)  C + I + G. 
D)  Y + C + I + G + NX. 
E)  C + I + G + NX. 
A)  C + I + G - NX. 
B)  C - I - G - NX. 
C)  C + I + G. 
D)  Y + C + I + G + NX. 
E)  C + I + G + NX.

Question 17

When the price level increases, aggregate planned expenditure ________ and equilibrium real GDP ________. As a result, in the AS-AD model, the aggregate demand curve has a ________ slope.

Accepted Answer

A)  decreases; increases; negative 
B)  increases; increases; positive 
C)  increases; decreases; negative 
D)  decreases; decreases; positive 
E)  decreases; decreases; negative 
A)  decreases; increases; negative 
B)  increases; increases; positive 
C)  increases; decreases; negative 
D)  decreases; decreases; positive 
E)  decreases; decreases; negative

Question 18

Other things remaining the same, ________ in Australian real GDP results in ________ in Australian imports.

Accepted Answer

A)  an increase; a decrease 
B)  a decrease; an increase 
C)  an increase; an increase 
D)  an increase; a decrease followed by no change 
E)  a decrease; no change 
A)  an increase; a decrease 
B)  a decrease; an increase 
C)  an increase; an increase 
D)  an increase; a decrease followed by no change 
E)  a decrease; no change

Question 19

When aggregate planned expenditure is less than GDP,

Accepted Answer

A)  the economy definitely is at its equilibrium expenditure and firms do not change production. 
B)  the economy definitely is at its equilibrium expenditure but, even so, firms decrease production. 
C)  the economy might be at its equilibrium expenditure and, if it is, firms do not change their production. 
D)  firms increase production until the economy reaches equilibrium expenditure. 
E)  firms decrease production until the economy reaches equilibrium expenditure. 
A)  the economy definitely is at its equilibrium expenditure and firms do not change production. 
B)  the economy definitely is at its equilibrium expenditure but, even so, firms decrease production. 
C)  the economy might be at its equilibrium expenditure and, if it is, firms do not change their production. 
D)  firms increase production until the economy reaches equilibrium expenditure. 
E)  firms decrease production until the economy reaches equilibrium expenditure.

Question 20

Autonomous expenditure is expenditure that is

Accepted Answer

A)  not influenced by the interest rate. 
B)  not influenced by the price level. 
C)  influenced by real GDP. 
D)  not influenced by real GDP. 
E)  influenced by the interest rate. 
A)  not influenced by the interest rate. 
B)  not influenced by the price level. 
C)  influenced by real GDP. 
D)  not influenced by real GDP. 
E)  influenced by the interest rate.

-The above table presents data from the nation of Pacifica. When real GDP equals $2.0 trillion, aggregate planned expenditure equals

Autonomous expenditure includes

-The above table has data from the nation of Atlantica. Based on these data, when disposable income equals 8.0 there is

A rise in the real interest rate consumption expenditure and .

-In the figure above, what is the MPC?

When the change in unplanned inventories is positive, then

The figure above shows two aggregate expenditure lines. -In the figure above, what would happen to the size of the multiplier if marginal income tax rates were increased?

If disposable income decreases during a recession, there is

-In the figure above, when disposable income equals $20 trillion,

When the real interest rate rises, there is

When the price level increases, aggregate planned expenditure decreases, which leads to

If your planned consumption expenditure is $600 per month and your disposable income is $500 per month, your

A change in the price level

-In the above figure, equilibrium expenditure is equal to

Compared to the magnitude of the multiplier in an economy without imports, the multiplier in an identical economy with imports is

Aggregate expenditure is equal to

When the price level increases, aggregate planned expenditure and equilibrium real GDP . As a result, in the AS-AD model, the aggregate demand curve has a slope.

Other things remaining the same, in Australian real GDP results in in Australian imports.

When aggregate planned expenditure is less than GDP,

Autonomous expenditure is expenditure that is

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

GDP: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving and Investment

Money, the Price Level and Inflation

Aggregate Supply and Aggregate Demand

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 12: Aggregate Expenditure Multiplier

-The above table presents data from the nation of Pacifica. When real GDP equals $2.0 trillion, aggregate planned expenditure equals

Autonomous expenditure includes

-The above table has data from the nation of Atlantica. Based on these data, when disposable income equals 8.0 there is

A rise in the real interest rate ________ consumption expenditure and ________.

-In the figure above, what is the MPC?

When the change in unplanned inventories is positive, then

The figure above shows two aggregate expenditure lines. -In the figure above, what would happen to the size of the multiplier if marginal income tax rates were increased?

If disposable income decreases during a recession, there is

-In the figure above, when disposable income equals $20 trillion,

When the real interest rate rises, there is

When the price level increases, aggregate planned expenditure decreases, which leads to

If your planned consumption expenditure is $600 per month and your disposable income is $500 per month, your

A change in the price level

-In the above figure, equilibrium expenditure is equal to

Compared to the magnitude of the multiplier in an economy without imports, the multiplier in an identical economy with imports is

Aggregate expenditure is equal to

When the price level increases, aggregate planned expenditure ________ and equilibrium real GDP ________. As a result, in the AS-AD model, the aggregate demand curve has a ________ slope.

Other things remaining the same, ________ in Australian real GDP results in ________ in Australian imports.

When aggregate planned expenditure is less than GDP,

Autonomous expenditure is expenditure that is

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

GDP: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving and Investment

Money, the Price Level and Inflation

Aggregate Supply and Aggregate Demand

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

A rise in the real interest rate consumption expenditure and .

When the price level increases, aggregate planned expenditure and equilibrium real GDP . As a result, in the AS-AD model, the aggregate demand curve has a slope.

Other things remaining the same, in Australian real GDP results in in Australian imports.