A) is of little consequence in a capitalist economy. B) represents actual physical output lost. C) implies an equilibrium level of output less than the full-employment level. D) will automatically close, according to the Keynesian model. A) is of little consequence in a capitalist economy. B) represents actual physical output lost. C) implies an equilibrium level of output less than the full-employment level. D) will automatically close, according to the Keynesian model.

Exam 19: The Keynesian Model in Action

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Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:

(Multiple Choice)

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Question 21

Exhibit 9-1 GDP and consumption data As shown in Exhibit 9-1, if equilibrium GDP is $5 trillion, then the total of investment, government spending, and net exports is:

(Multiple Choice)

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Question 22

According to the Keynesian model, an economy will have persistent, high unemployment if:

(Multiple Choice)

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Question 23

A recessionary gap is the amount by which aggregate expenditures ____ the amount required to achieve full-employment equilibrium GDP.

(Multiple Choice)

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Question 24

Exhibit 9-1 GDP and consumption data As shown in Exhibit 9-1, if investment is $0.5 trillion, government spending is $1 trillion, net exports are − $0.5 trillion, and GDP is $2 trillion, then:

(Multiple Choice)

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Question 25

Within the framework of the aggregate expenditures model, what will happen if an economy is operating at a real GDP greater than full-employment real GDP?

(Multiple Choice)

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Question 26

The equilibrium level of real GDP is $1,000, the target full-employment level of real GDP is $1,500, and the marginal propensity to consume is 0.75. The target can be reached if government spending is:

(Multiple Choice)

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Question 27

Exhibit 9-8 Keynesian aggregate expenditures model In Exhibit 9-8, the value of the spending multiplier is:

(Multiple Choice)

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Question 28

Within the Keynesian aggregate expenditures model, if the economy is below equilibrium, then there will be:

(Multiple Choice)

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Question 29

If exports are $10 trillion and imports are $10.5 trillion, adding net exports to the aggregate expenditures (AE) line that includes consumption, investment, and government spending will cause the AE line to:

(Multiple Choice)

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Question 30

In the aggregate expenditures model, if aggregate expenditures (AE) are greater than GDP, then:

(Multiple Choice)

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Question 31

Within the Keynesian aggregate expenditures model, which of the following autonomous changes would decrease the equilibrium output?

(Multiple Choice)

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Question 32

Within the framework of the Keynesian model, if aggregate expenditures exceed aggregate output, then:

(Multiple Choice)

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Question 33

In the aggregate expenditures model, a tax cut causes a(n):

(Multiple Choice)

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Question 34

Which of the following policy options would not be used to eliminate an inflationary gap?

(Multiple Choice)

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Question 35

Exhibit 9-8 Keynesian aggregate expenditures model In Exhibit 9-8, an increase in aggregate expenditures of 100 causes real GDP to rise by:

(Multiple Choice)

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Question 36

A recessionary gap:

(Multiple Choice)

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Question 37

Assume the marginal propensity to save is 0.10. Firms become optimistic and increase investment spending by $10 billion. Other things being equal, real GDP will:

(Multiple Choice)

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Question 38

A new major league baseball expansion team is moving to your town. It will inject consumer spending worth $40 million into your local economy initially. The Chamber of Commerce predicts that this will generate a total of $500 million in additional spending for your town. The team owners think that this is an underestimate. What do you need to know to figure out who is right? Explain.

(Essay)

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Question 39

The ratio of the change in GDP to an initial change in aggregate expenditures (AE) is the:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 105

Exam 19: The Keynesian Model in Action

Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:

Exhibit 9-1 GDP and consumption data As shown in Exhibit 9-1, if equilibrium GDP is $5 trillion, then the total of investment, government spending, and net exports is:

According to the Keynesian model, an economy will have persistent, high unemployment if:

A recessionary gap is the amount by which aggregate expenditures ____ the amount required to achieve full-employment equilibrium GDP.

Exhibit 9-1 GDP and consumption data As shown in Exhibit 9-1, if investment is $0.5 trillion, government spending is $1 trillion, net exports are − $0.5 trillion, and GDP is $2 trillion, then:

Within the framework of the aggregate expenditures model, what will happen if an economy is operating at a real GDP greater than full-employment real GDP?

The equilibrium level of real GDP is $1,000, the target full-employment level of real GDP is $1,500, and the marginal propensity to consume is 0.75. The target can be reached if government spending is:

Exhibit 9-8 Keynesian aggregate expenditures model ​ In Exhibit 9-8, the value of the spending multiplier is:

Within the Keynesian aggregate expenditures model, if the economy is below equilibrium, then there will be:

If exports are $10 trillion and imports are $10.5 trillion, adding net exports to the aggregate expenditures (AE) line that includes consumption, investment, and government spending will cause the AE line to:

In the aggregate expenditures model, if aggregate expenditures (AE) are greater than GDP, then:

Within the Keynesian aggregate expenditures model, which of the following autonomous changes would decrease the equilibrium output?

Within the framework of the Keynesian model, if aggregate expenditures exceed aggregate output, then:

In the aggregate expenditures model, a tax cut causes a(n):

Which of the following policy options would not be used to eliminate an inflationary gap?

Exhibit 9-8 Keynesian aggregate expenditures model ​ In Exhibit 9-8, an increase in aggregate expenditures of 100 causes real GDP to rise by:

A recessionary gap:

Assume the marginal propensity to save is 0.10. Firms become optimistic and increase investment spending by $10 billion. Other things being equal, real GDP will:

The ratio of the change in GDP to an initial change in aggregate expenditures (AE) is the:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

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Exhibit 9-8 Keynesian aggregate expenditures model In Exhibit 9-8, the value of the spending multiplier is:

Exhibit 9-8 Keynesian aggregate expenditures model In Exhibit 9-8, an increase in aggregate expenditures of 100 causes real GDP to rise by: