Question 1

According to John Maynard Keynes,

Accepted Answer

A) a free market economy automatically finds equilibrium at full employment. 
B) Say's Law is always correct. 
C) effective demand determines real GDP. 
D) prices and wages move up and down freely. 
E) supply creates its own demand. 
A) a free market economy automatically finds equilibrium at full employment. 
B) Say's Law is always correct. 
C) effective demand determines real GDP. 
D) prices and wages move up and down freely. 
E) supply creates its own demand.

Question 2

The figure above shows two aggregate expenditure lines.
-In the figure above,if the MPC increased,the aggregate expenditure lines would ________ and the multiplier would ________ in value.

Accepted Answer

A) become less steep;rise 
B) become steeper;rise 
C) not change;rise 
D) not change;fall 
E) become steeper;fall 
A) become less steep;rise 
B) become steeper;rise 
C) not change;rise 
D) not change;fall 
E) become steeper;fall

Question 3

If the marginal propensity to consume is ________,then a $2 trillion increase in disposable income increases consumption expenditure by $1.2 trillion.If the marginal propensity to consume is ________,then a $2 trillion increase in disposable income increases consumption expenditures by $1.6 trillion.

Accepted Answer

A) 1.67;2.25 
B) 1.2;1.6 
C) 0.6;0.8 
D) 6.0;8.0 
E) None of the above because a $2 trillion increase in disposable income always leads to a $2 trillion increase in consumption expenditure. 
A) 1.67;2.25 
B) 1.2;1.6 
C) 0.6;0.8 
D) 6.0;8.0 
E) None of the above because a $2 trillion increase in disposable income always leads to a $2 trillion increase in consumption expenditure.

Question 4

Induced expenditure includes

Accepted Answer

A) consumption expenditure and exports. 
B) consumption expenditure and imports. 
C) consumption expenditure and government expenditure on goods and services. 
D) consumption expenditure,government expenditure on goods and services,and imports. 
E) investment,consumption expenditures and exports. 
A) consumption expenditure and exports. 
B) consumption expenditure and imports. 
C) consumption expenditure and government expenditure on goods and services. 
D) consumption expenditure,government expenditure on goods and services,and imports. 
E) investment,consumption expenditures and exports.

Question 5

When the real interest rate rises,there is

Accepted Answer

A) an upward movement along the consumption function. 
B) a downward movement along the consumption function. 
C) neither a shift of the consumption function nor a movement along the consumption function. 
D) an upward shift of the consumption function. 
E) a downward shift of the consumption function. 
A) an upward movement along the consumption function. 
B) a downward movement along the consumption function. 
C) neither a shift of the consumption function nor a movement along the consumption function. 
D) an upward shift of the consumption function. 
E) a downward shift of the consumption function.

Question 6

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.When real GDP is $15 billion,firms' inventories experience an unplanned

Accepted Answer

A) increase of $10 billion. 
B) decrease of $10 billion. 
C) decrease of $1 billion. 
D) increase of $4 billion. 
E) increase of $5 billion. 
A) increase of $10 billion. 
B) decrease of $10 billion. 
C) decrease of $1 billion. 
D) increase of $4 billion. 
E) increase of $5 billion.

Question 7

If aggregate planned expenditures are less than real GDP,then

Accepted Answer

A) unplanned inventory changes equal zero. 
B) there is no equilibrium level of real GDP. 
C) inventories increase above their planned levels and businesses increase their production. 
D) inventories increase above their planned levels and businesses decrease their production. 
E) inventories decrease below their planned levels and businesses increase their production. 
A) unplanned inventory changes equal zero. 
B) there is no equilibrium level of real GDP. 
C) inventories increase above their planned levels and businesses increase their production. 
D) inventories increase above their planned levels and businesses decrease their production. 
E) inventories decrease below their planned levels and businesses increase their production.

Question 8

The figure above shows two aggregate expenditure lines.
-In the figure above,what would happen to the size of the multiplier if marginal income tax rates were increased?

Accepted Answer

A) The multiplier would fall in value and might become negative. 
B) The multiplier would fall in value but would not become negative. 
C) The multiplier would rise in value. 
D) The multiplier would not change in value. 
E) More information is needed to determine the effect on the size of the multiplier. 
A) The multiplier would fall in value and might become negative. 
B) The multiplier would fall in value but would not become negative. 
C) The multiplier would rise in value. 
D) The multiplier would not change in value. 
E) More information is needed to determine the effect on the size of the multiplier.

Question 9

When the economy enters an expansion of a business cycle,households become more optimistic about expected future disposable income.The increase in optimism leads to

Accepted Answer

A) a shift upward of the consumption function. 
B) a movement downward along the consumption function. 
C) a movement upward along the consumption function. 
D) an increase in consumption expenditures. 
E) no change in the level of consumption expenditures. 
A) a shift upward of the consumption function. 
B) a movement downward along the consumption function. 
C) a movement upward along the consumption function. 
D) an increase in consumption expenditures. 
E) no change in the level of consumption expenditures.

Question 10

If the marginal propensity to consume is 0.85 and there are no imports or income taxes,the expenditure multiplier is equal to

Accepted Answer

A) 1 - 0.85 = 0.15. 
B) 0.85 × the change in autonomous expenditure. 
C) 1 ÷ (1 - 0.85)= 1 ÷ 0.15 = 1.45. 
D) 1 ÷ 0.85 = 1.176. 
E) 0.85 ÷ 1 = 0.85. 
A) 1 - 0.85 = 0.15. 
B) 0.85 × the change in autonomous expenditure. 
C) 1 ÷ (1 - 0.85)= 1 ÷ 0.15 = 1.45. 
D) 1 ÷ 0.85 = 1.176. 
E) 0.85 ÷ 1 = 0.85.

Question 11

If your MPC is 0.5 then,when your disposable income increases by $100,your consumption expenditure increases by

Accepted Answer

A) $100. 
B) $200. 
C) $5. 
D) $50. 
E) $95. 
A) $100. 
B) $200. 
C) $5. 
D) $50. 
E) $95.

Question 12

-The above table has data from the nation of Atlantica.Based on these data,when disposable income equals $2.0 trillion there is

Accepted Answer

A) savings of $1.0 trillion. 
B) dissavings of $1.0 trillion. 
C) savings of $3.0 trillion. 
D) dissavings of $3.0 trillion. 
E) dissavings of $5.0 trillion. 
A) savings of $1.0 trillion. 
B) dissavings of $1.0 trillion. 
C) savings of $3.0 trillion. 
D) dissavings of $3.0 trillion. 
E) dissavings of $5.0 trillion.

Question 13

Increases in autonomous expenditure induce ________ in aggregate expenditure thereby making the multiplier ________.

Accepted Answer

A) a decrease;less than one 
B) further increases;less than one 
C) further increases;greater than one 
D) further increases;unnecessary 
E) a decrease;greater than one 
A) a decrease;less than one 
B) further increases;less than one 
C) further increases;greater than one 
D) further increases;unnecessary 
E) a decrease;greater than one

Question 14

The fraction of a change in disposable income that is spent on consumption is the

Accepted Answer

A) marginal propensity to dissave. 
B) expected future disposable income. 
C) marginal buying power of money. 
D) marginal dissaving ratio. 
E) marginal propensity to consume. 
A) marginal propensity to dissave. 
B) expected future disposable income. 
C) marginal buying power of money. 
D) marginal dissaving ratio. 
E) marginal propensity to consume.

Question 15

-The figure above shows a nation's consumption function.The amount of autonomous consumption expenditure is

Accepted Answer

A) $0. 
B) $2 trillion. 
C) $1 trillion. 
D) $3 trillion. 
E) more than $3 trillion. 
A) $0. 
B) $2 trillion. 
C) $1 trillion. 
D) $3 trillion. 
E) more than $3 trillion.

Question 16

Which of the following situations leads to an unplanned increase in inventories of $2.0 trillion?

Accepted Answer

A) Real GDP = $5.0 trillion and aggregate planned expenditures = $5.0 trillion 
B) Real GDP = $6.0 trillion and aggregate planned expenditures = $4.0 trillion 
C) Real GDP = $8.0 trillion and aggregate planned expenditures = $5.0 trillion 
D) Real GDP = $5.0 trillion and aggregate planned expenditures = $7.0 trillion 
E) More information is needed about planned investment and actual investment. 
A) Real GDP = $5.0 trillion and aggregate planned expenditures = $5.0 trillion 
B) Real GDP = $6.0 trillion and aggregate planned expenditures = $4.0 trillion 
C) Real GDP = $8.0 trillion and aggregate planned expenditures = $5.0 trillion 
D) Real GDP = $5.0 trillion and aggregate planned expenditures = $7.0 trillion 
E) More information is needed about planned investment and actual investment.

Question 17

When consumption expenditure is ________ disposable income,saving is ________.

Accepted Answer

A) greater than;positive 
B) less than;negative 
C) equal to;negative 
D) equal to;positive 
E) less than;positive 
A) greater than;positive 
B) less than;negative 
C) equal to;negative 
D) equal to;positive 
E) less than;positive

Question 18

Autonomous expenditure includes

Accepted Answer

A) investment,government expenditure on goods and services,and exports. 
B) consumption expenditure,investment and net taxes. 
C) consumption expenditures,investment and exports. 
D) investment,government expenditure for goods and services,and imports. 
E) consumption expenditure,investment and imports. 
A) investment,government expenditure on goods and services,and exports. 
B) consumption expenditure,investment and net taxes. 
C) consumption expenditures,investment and exports. 
D) investment,government expenditure for goods and services,and imports. 
E) consumption expenditure,investment and imports.

Question 19

As disposable income ________ planned consumption expenditure ________.

Accepted Answer

A) increases;increases 
B) increases;changes only if net taxes also change 
C) increases;decreases 
D) decreases;increases 
E) decreases;remains the same,since it is autonomous expenditure 
A) increases;increases 
B) increases;changes only if net taxes also change 
C) increases;decreases 
D) decreases;increases 
E) decreases;remains the same,since it is autonomous expenditure

Question 20

-The above table has data from the nation of Media.Based on these data,when disposable income is $8.0 trillion,saving is

Accepted Answer

A) $1.5 trillion. 
B) $0.5 trillion. 
C) -$0.5 trillion. 
D) $7.5 trillion. 
E) -$1.5 trillion. 
A) $1.5 trillion. 
B) $0.5 trillion. 
C) -$0.5 trillion. 
D) $7.5 trillion. 
E) -$1.5 trillion.

According to John Maynard Keynes,

The figure above shows two aggregate expenditure lines. -In the figure above,if the MPC increased,the aggregate expenditure lines would and the multiplier would in value.

If the marginal propensity to consume is ,then a $2 trillion increase in disposable income increases consumption expenditure by $1.2 trillion.If the marginal propensity to consume is ,then a $2 trillion increase in disposable income increases consumption expenditures by $1.6 trillion.

Induced expenditure includes

When the real interest rate rises,there is

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.When real GDP is $15 billion,firms' inventories experience an unplanned

If aggregate planned expenditures are less than real GDP,then

The figure above shows two aggregate expenditure lines. -In the figure above,what would happen to the size of the multiplier if marginal income tax rates were increased?

When the economy enters an expansion of a business cycle,households become more optimistic about expected future disposable income.The increase in optimism leads to

If the marginal propensity to consume is 0.85 and there are no imports or income taxes,the expenditure multiplier is equal to

If your MPC is 0.5 then,when your disposable income increases by $100,your consumption expenditure increases by

-The above table has data from the nation of Atlantica.Based on these data,when disposable income equals $2.0 trillion there is

Increases in autonomous expenditure induce in aggregate expenditure thereby making the multiplier .

The fraction of a change in disposable income that is spent on consumption is the

-The figure above shows a nation's consumption function.The amount of autonomous consumption expenditure is

Which of the following situations leads to an unplanned increase in inventories of $2.0 trillion?

When consumption expenditure is disposable income,saving is .

Autonomous expenditure includes

As disposable income planned consumption expenditure .

-The above table has data from the nation of Media.Based on these data,when disposable income is $8.0 trillion,saving is

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance,saving and Investment

Money,the Price Level and Inflation

Aggregate Supply and Aggregate Demand

The Short-Run Policy Trade Off

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 12: Aggregate Expenditure Multiplier

According to John Maynard Keynes,

The figure above shows two aggregate expenditure lines. -In the figure above,if the MPC increased,the aggregate expenditure lines would ________ and the multiplier would ________ in value.

Induced expenditure includes

When the real interest rate rises,there is

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.When real GDP is $15 billion,firms' inventories experience an unplanned

If aggregate planned expenditures are less than real GDP,then

The figure above shows two aggregate expenditure lines. -In the figure above,what would happen to the size of the multiplier if marginal income tax rates were increased?

When the economy enters an expansion of a business cycle,households become more optimistic about expected future disposable income.The increase in optimism leads to

If the marginal propensity to consume is 0.85 and there are no imports or income taxes,the expenditure multiplier is equal to

If your MPC is 0.5 then,when your disposable income increases by $100,your consumption expenditure increases by

-The above table has data from the nation of Atlantica.Based on these data,when disposable income equals $2.0 trillion there is

Increases in autonomous expenditure induce ________ in aggregate expenditure thereby making the multiplier ________.

The fraction of a change in disposable income that is spent on consumption is the

-The figure above shows a nation's consumption function.The amount of autonomous consumption expenditure is

Which of the following situations leads to an unplanned increase in inventories of $2.0 trillion?

When consumption expenditure is ________ disposable income,saving is ________.

Autonomous expenditure includes

As disposable income ________ planned consumption expenditure ________.

-The above table has data from the nation of Media.Based on these data,when disposable income is $8.0 trillion,saving is

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance,saving and Investment

Money,the Price Level and Inflation

Aggregate Supply and Aggregate Demand

The Short-Run Policy Trade Off

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

The figure above shows two aggregate expenditure lines. -In the figure above,if the MPC increased,the aggregate expenditure lines would and the multiplier would in value.

Increases in autonomous expenditure induce in aggregate expenditure thereby making the multiplier .

When consumption expenditure is disposable income,saving is .

As disposable income planned consumption expenditure .