Exam 13: Consumption and the Aggregate Expenditures Model

Use the following to answer questions Exhibit: Consumption and Disposable Personal Income -(Exhibit: Consumption and Disposable Personal Income) When disposable personal income is $2,000 billion,

Disposable personal income is the total income households spend on consumption.

In the aggregate expenditures model, in equilibrium,

In general, an increase in the income tax rate will make the aggregate expenditures curve

An increase in aggregate demand causes an increase in

Let AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment, G = Government Purchases.Consider a simple aggregate expenditures model, where AE = C + I_P + G and all components of aggregate expenditures except consumption are autonomous.All other things unchanged, a decrease in the price level

In the aggregate expenditures model, if real GDP equals $700 billion and aggregate expenditures equal $400 billion,

According to the interest-rate effect, higher prices

Use the following to answer questions Exhibit: Consumption and Disposable Personal Income -(Exhibit: Consumption and Disposable Personal Income) When disposable personal income is $2,000 billion, consumption is

Use the following to answer questions Exhibit: Income and Consumption -Suppose the consumption function is C = $500 + 0.8Y.If Y = $1,000, what is the amount of consumption?

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, I_P = Planned Investment, G = Government Purchases.Further, I_P and G are autonomous.If real GDP produced is $4,000,

According to the real wealth effect, if you are living in a period of rising price levels, the cost of the goods and services you buy

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.Which of the following statements is true?

The marginal propensity to consume is the

Use the following to answer questions Exhibit: Income and Consumption -(Exhibit: Income and Consumption) Negative personal saving occurs when disposable personal income is

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.If the level of real GDP equals $7,000 billion, and if there are no changes in the consumption function or in planned investment, then we expect that, in the next period, real GDP will

Use the following to answer questions Exhibit: Aggregate Expenditures (AE) in a Simplified Economy -(Exhibit: Aggregate Expenditures (AE) In a Simplified Economy) Consider a simple economy that is made up of only two sectors, households and firms, and that investment is autonomous.Further, disposable personal income = real GDP.Suppose that actual real GDP in this economy is $500 billion in a particular period.We would expect to see

Use the following to answer questions Exhibit: Real GDP and the Multiplier -(Exhibit: Real GDP and the Multiplier) What is the value of the marginal propensity to consume?

Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption.Which of the following causes the aggregate expenditures curve to shift downwards?

Use the following to answer questions Exhibit: Consumption and Real GDP -Consumption spending in any one period that is determined by income in that period is explained by the