Exam 9: Aggregate Demand

Which of the following is least likely to cause a shift of the consumption function?

As disposable income decreases, saving decreases.

Identify the correct statement.

The table given below shows the real gross domestic product (GDP), consumption, and planned investment in an economy. The marginal propensity to consume (MPC) in the economy is: 

Historically, consumption spending in the United States has _____.

An increase in autonomous investment in an economy will _____.

An increase in the U.S. price level, other things constant, will _____.

The aggregate expenditure line is drawn on a graph that measures:

A decrease in the price level will _____.

If the marginal propensity to save (MPS) is 1/8, the value of the simple spending multiplier is:

If the marginal propensity to save (MPS) is 0.25, the simple multiplier is _____.

Exports minus imports equal net exports.

Suppose an increase in disposable income from $3 trillion to $3.2 trillion increases consumption from $2.5 trillion to $2.6 trillion. The marginal propensity to consume is _____.

The consumption function assumes that:

Net taxes are:

An upward shift of the consumption function might be caused by:

An increase in the marginal propensity to consume (MPC) will cause the consumption function to become steeper. 

Only a change in the price level can cause shifts in both the aggregate expenditure line and the aggregate demand curve.

The market interest rate is important to the investment decision of firms:

Assume an economy is in equilibrium at a real GDP of $5 trillion. If aggregate expenditure (AE) increases by $1 trillion, the economy's equilibrium real GDP is likely to _____.