Question 1

The marginal propensity to consume is the

Accepted Answer

A) slope of the saving function. 
B) slope of the consumption function. 
C) proportion of disposable personal income used for consumption. 
D) change in consumption divided by the change in saving. 
A) slope of the saving function. 
B) slope of the consumption function. 
C) proportion of disposable personal income used for consumption. 
D) change in consumption divided by the change in saving.

Question 2

If consumption is $80 billion when income is $100, the most likely value for the marginal propensity to consume is 0.8.

Accepted Answer

A) True 
 B)False

Question 3

In a graph with real GDP on the horizontal axis and aggregate expenditures on the vertical axis, induced aggregate expenditures are represented by

Accepted Answer

A) a ray from the origin. 
B) an upward sloping line. 
C) a 45-degree line. 
D) a horizontal line. 
A) a ray from the origin. 
B) an upward sloping line. 
C) a 45-degree line. 
D) a horizontal line.

Question 4

Use the following to answer questions 
Exhibit: Aggregate Expenditures Curve
Figure 13-6  
-(Exhibit: Aggregate Expenditures Curve)
Suppose government purchases rise by $100.In the aggregate demand/aggregate supply model,

Accepted Answer

A) the aggregate demand curve shifts to the right by $100 at any given price level. 
B) the aggregate demand curve shifts to the right by ($100 * the multiplier)at any given price level. 
C) there is a downward movement along the aggregate demand curve such that real GDP demanded increases by $100. 
D) there is a downward movement along the aggregate demand curve such that real GDP demanded increases by ($100 * the multiplier). 
A) the aggregate demand curve shifts to the right by $100 at any given price level. 
B) the aggregate demand curve shifts to the right by ($100 * the multiplier)at any given price level. 
C) there is a downward movement along the aggregate demand curve such that real GDP demanded increases by $100. 
D) there is a downward movement along the aggregate demand curve such that real GDP demanded increases by ($100 * the multiplier).

Question 5

What is the international trade effect?

Accepted Answer

A) It is the tendency for exports to fall and imports to rise when the domestic price level falls relative to the foreign price level. 
B) It is the tendency for exports to rise and imports to fall when the domestic price level falls relative to the foreign price level. 
C) It is the tendency for domestic investments to fall when foreign interest rates rise relative to domestic interest rates. 
D) It is the tendency for exchange rates to fall when foreign interest rates rise relative to domestic interest rates. 
A) It is the tendency for exports to fall and imports to rise when the domestic price level falls relative to the foreign price level. 
B) It is the tendency for exports to rise and imports to fall when the domestic price level falls relative to the foreign price level. 
C) It is the tendency for domestic investments to fall when foreign interest rates rise relative to domestic interest rates. 
D) It is the tendency for exchange rates to fall when foreign interest rates rise relative to domestic interest rates.

Question 6

Use the following to answer questions 
Exhibit: Consumption and Real GDP  
-(Exhibit: Consumption and Real GDP)
An equation for the consumption function is

Accepted Answer

A) C = 1 + Y. 
B) C = Y. 
C) C = 1 + 2Y. 
D) C = 1 + 0.5Y. 
A) C = 1 + Y. 
B) C = Y. 
C) C = 1 + 2Y. 
D) C = 1 + 0.5Y.

Question 7

Use the following to answer questions 
Exhibit: Consumption and Disposable Personal Income  
-(Exhibit: Consumption and Disposable Personal Income)
If disposable personal income is $400 billion, what is the amount of personal saving?

Accepted Answer

A) −$200 billion 
B) $0 
C) $200 billion 
D) $400 billion 
A) −$200 billion 
B) $0 
C) $200 billion 
D) $400 billion

Question 8

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the marginal propensity to save is 0.1?

Accepted Answer

A) 1 
B) 4 
C) 5 
D) 10 
A) 1 
B) 4 
C) 5 
D) 10

Question 9

Use the following to answer questions 
Exhibit: Income and Consumption
  
-(Exhibit: Income and Consumption)
When disposable personal income is $100, what is the amount of personal saving?

Accepted Answer

A) −$40 
B) −$20 
C) $0 
D) $20 
A) −$40 
B) −$20 
C) $0 
D) $20

Question 10

The marginal propensity to consume is given by

Accepted Answer

A) the change in consumption divided by the change in saving. 
B) the change in consumption divided by the change in disposable personal income. 
C) consumption divided by the change in disposable personal income. 
D) consumption divided by disposable income. 
A) the change in consumption divided by the change in saving. 
B) the change in consumption divided by the change in disposable personal income. 
C) consumption divided by the change in disposable personal income. 
D) consumption divided by disposable income.

Question 11

Use the following to answer questions 
Exhibit: Aggregate Expenditures Curve
Figure 13-6  
-(Exhibit: Aggregate Expenditures Curve)
Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment, G = Government Purchases.Further, IP and G are autonomous.What is the level of autonomous aggregate expenditures at equilibrium real GDP?

Accepted Answer

A) $800 billion 
B) $1,000 billion 
C) $1,600 billion 
D) $3,200 billion 
A) $800 billion 
B) $1,000 billion 
C) $1,600 billion 
D) $3,200 billion

Question 12

Use the following to answer questions 
Exhibit: Aggregate Expenditures and Real GDP 1  
-(Exhibit: Aggregate Expenditures and Real GDP 1)
Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment.Suppose AE = C + IP, and IP is autonomous.What is the value of AE when Y = $12,000 billion?

Accepted Answer

A) $6,000 billion 
B) $9,000 billion 
C) $12,000 billion 
D) $15,000 billion 
A) $6,000 billion 
B) $9,000 billion 
C) $12,000 billion 
D) $15,000 billion

Question 13

Use the following to answer questions 
Exhibit: Aggregate Expenditures and Real GDP 1  
-(Exhibit: Aggregate Expenditures and Real GDP 1)
Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment.Suppose AE = C + IP, and IP is autonomous.At a real GDP of $7,000 billion

Accepted Answer

A) planned investment is greater than actual investment. 
B) planned investment equals actual investment. 
C) planned investment is less than actual investment. 
D) there will be no unplanned investment. 
A) planned investment is greater than actual investment. 
B) planned investment equals actual investment. 
C) planned investment is less than actual investment. 
D) there will be no unplanned investment.

Question 14

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, the size of the multiplier depends on the

Accepted Answer

A) 45-degree line. 
B) height of the consumption function. 
C) slope of the aggregate demand curve. 
D) slope of the aggregate expenditures curve. 
A) 45-degree line. 
B) height of the consumption function. 
C) slope of the aggregate demand curve. 
D) slope of the aggregate expenditures curve.

The marginal propensity to consume is the

If consumption is $80 billion when income is $100, the most likely value for the marginal propensity to consume is 0.8.

In a graph with real GDP on the horizontal axis and aggregate expenditures on the vertical axis, induced aggregate expenditures are represented by

Use the following to answer questions Exhibit: Aggregate Expenditures Curve Figure 13-6 -(Exhibit: Aggregate Expenditures Curve) Suppose government purchases rise by $100.In the aggregate demand/aggregate supply model,

What is the international trade effect?

Use the following to answer questions Exhibit: Consumption and Real GDP -(Exhibit: Consumption and Real GDP) An equation for the consumption function is

Use the following to answer questions Exhibit: Consumption and Disposable Personal Income -(Exhibit: Consumption and Disposable Personal Income) If disposable personal income is $400 billion, what is the amount of personal saving?

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the marginal propensity to save is 0.1?

Use the following to answer questions Exhibit: Income and Consumption -(Exhibit: Income and Consumption) When disposable personal income is $100, what is the amount of personal saving?

The marginal propensity to consume is given by

Use the following to answer questions Exhibit: Aggregate Expenditures and Real GDP 1 -(Exhibit: Aggregate Expenditures and Real GDP 1) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment.Suppose AE = C + I_P, and I_P is autonomous.At a real GDP of $7,000 billion

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, the size of the multiplier depends on the

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

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Exam 13: Consumption and the Aggregate Expenditures Model

The marginal propensity to consume is the

If consumption is $80 billion when income is $100, the most likely value for the marginal propensity to consume is 0.8.

In a graph with real GDP on the horizontal axis and aggregate expenditures on the vertical axis, induced aggregate expenditures are represented by

Use the following to answer questions Exhibit: Aggregate Expenditures Curve Figure 13-6 -(Exhibit: Aggregate Expenditures Curve) Suppose government purchases rise by $100.In the aggregate demand/aggregate supply model,

What is the international trade effect?

Use the following to answer questions Exhibit: Consumption and Real GDP -(Exhibit: Consumption and Real GDP) An equation for the consumption function is

Use the following to answer questions Exhibit: Consumption and Disposable Personal Income -(Exhibit: Consumption and Disposable Personal Income) If disposable personal income is $400 billion, what is the amount of personal saving?

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, what is the value of the multiplier if the marginal propensity to save is 0.1?

Use the following to answer questions Exhibit: Income and Consumption -(Exhibit: Income and Consumption) When disposable personal income is $100, what is the amount of personal saving?

The marginal propensity to consume is given by

Use the following to answer questions Exhibit: Aggregate Expenditures and Real GDP 1 -(Exhibit: Aggregate Expenditures and Real GDP 1) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment.Suppose AE = C + IP, and IP is autonomous.At a real GDP of $7,000 billion

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, the size of the multiplier depends on the

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Filters

Use the following to answer questions Exhibit: Aggregate Expenditures and Real GDP 1 -(Exhibit: Aggregate Expenditures and Real GDP 1) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment.Suppose AE = C + I_P, and I_P is autonomous.At a real GDP of $7,000 billion