Exam 6: Aggregate Expenditure Aggregate Demand

Consider a no government open economy with multiplier as 2.5 and marginal propensity to import as 0.2. Therefore, MPC is:

When the price level is constant:

In an open macro model with no government, we will see all of the following equilibrium conditions except one, which is:

The marginal propensity to save (MPS) is equal to (1 - MPC). Higher the MPS, higher is the multiplier.

_____ export expenditure decreases equilibrium output and a ______ MPZ increases equilibrium output.

Table 6.3 -Refer to Table 6.3. The equilibrium level of real GDP in the above economy is:

If the marginal propensity to save increases, then the multiplier also increases.

The multiplier effect suggests that:

In the short run model, equilibrium real GDP occurs when:

Suppose that all firms in the economy experience a sudden and unexpected increase of $125 billion in their inventories. We can say that:

For each of the following, state the level of autonomous expenditures and induced expenditures. (a) Given the following table and income equal to $200. (b) Given the following expenditures function AE = $4000 + 0.6Y and income equals $1000.

In a 45-degree line diagram a fall in investment demand causes:

Other things equal, an increase in an economy's exports will:

-When the closed economy's GDP is $400:

The paradox of thrift states that a downward shift in the saving function will lower the equilibrium level of national income.

-At the $300 level of GDP:

-At every level of GDP the MPC and MPS:

Which of the following statements is true?

If the autonomous consumption is 250 and if Y= C = 1000, then the marginal propensity to save is:

Other things constant, the slope of the savings function shows us that: