Question 1

A country reports that unplanned inventories increased during 2014.The increase in unplanned inventories leads to

Accepted Answer

A) consumers increasing their consumption expenditure,which increases GDP. 
B) firms decreasing production,which decreases GDP. 
C) firms increasing production,which increases GDP. 
D) actual aggregate expenditure being different than real GDP. 
E) the government decreasing production,which decreases GDP. 
A) consumers increasing their consumption expenditure,which increases GDP. 
B) firms decreasing production,which decreases GDP. 
C) firms increasing production,which increases GDP. 
D) actual aggregate expenditure being different than real GDP. 
E) the government decreasing production,which decreases GDP.

Question 2

When the AE curve shifts upward because the price level falls,the corresponding effect on the aggregate demand curve is

Accepted Answer

A) a shift rightward of the aggregate demand curve. 
B) a shift leftward of the aggregate demand curve. 
C) nothing because aggregate demand does respond to changes in the price level. 
D) a movement downward along the aggregate demand curve. 
E) a movement upward along the aggregate demand curve. 
A) a shift rightward of the aggregate demand curve. 
B) a shift leftward of the aggregate demand curve. 
C) nothing because aggregate demand does respond to changes in the price level. 
D) a movement downward along the aggregate demand curve. 
E) a movement upward along the aggregate demand curve.

Question 3

Compared to the magnitude of the multiplier in an economy without imports,the multiplier in an identical economy with imports is

Accepted Answer

A) exactly the same. 
B) smaller only if imports exceed exports. 
C) always smaller. 
D) larger only if exports exceed imports. 
E) always larger. 
A) exactly the same. 
B) smaller only if imports exceed exports. 
C) always smaller. 
D) larger only if exports exceed imports. 
E) always larger.

Question 4

A $1.5 trillion increase in investment leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion.In this case,the expenditure multiplier is

Accepted Answer

A) 7.00. 
B) 10.5. 
C) 2.33. 
D) 4.67. 
E) 1.50. 
A) 7.00. 
B) 10.5. 
C) 2.33. 
D) 4.67. 
E) 1.50.

Question 5

As disposable income ________,planned consumption expenditure ________ by a ________ amount.

Accepted Answer

A) decreases;increases;smaller 
B) increases;increases;smaller 
C) increases;decreases;smaller 
D) decreases;increases;larger 
E) increases;increases;larger 
A) decreases;increases;smaller 
B) increases;increases;smaller 
C) increases;decreases;smaller 
D) decreases;increases;larger 
E) increases;increases;larger

Question 6

Other things remaining the same,________ in Australian real GDP results in ________ in Australian imports.

Accepted Answer

A) an increase;a decrease 
B) a decrease;an increase 
C) an increase;an increase 
D) an increase;a decrease followed by no change 
E) a decrease;no change 
A) an increase;a decrease 
B) a decrease;an increase 
C) an increase;an increase 
D) an increase;a decrease followed by no change 
E) a decrease;no change

Question 7

-The table above gives data for the nation of Mosh.If real GDP is $10 trillion,then

Accepted Answer

A) firms decrease production because inventories exceed their target levels. 
B) firms increase production because inventories are less than their target levels. 
C) firms decrease production because inventories are less than their target levels. 
D) the economy has reached equilibrium and no change in production will occur. 
E) We need more information to determine whether firms increase,decrease or do not change their production. 
A) firms decrease production because inventories exceed their target levels. 
B) firms increase production because inventories are less than their target levels. 
C) firms decrease production because inventories are less than their target levels. 
D) the economy has reached equilibrium and no change in production will occur. 
E) We need more information to determine whether firms increase,decrease or do not change their production.

Question 8

If aggregate planned expenditure equals GDP,then

Accepted Answer

A) the change in firms' inventories must be negative. 
B) the change in firms' inventories must be positive. 
C) actual aggregate expenditure might be greater than,equal to or less than real GDP. 
D) there must be no change in firms' inventories. 
E) the change in firms' inventories must be equal to the planned change. 
A) the change in firms' inventories must be negative. 
B) the change in firms' inventories must be positive. 
C) actual aggregate expenditure might be greater than,equal to or less than real GDP. 
D) there must be no change in firms' inventories. 
E) the change in firms' inventories must be equal to the planned change.

Question 9

The expenditure multipliers occur because

Accepted Answer

A) a change in autonomous expenditure causes real GDP to change in the opposite direction. 
B) government expenditure on goods and services change by an amount proportional to government taxes. 
C) a change in households' incomes changes autonomous expenditure. 
D) any change in real GDP must also change the price level. 
E) a change in autonomous expenditures changes households' incomes. 
A) a change in autonomous expenditure causes real GDP to change in the opposite direction. 
B) government expenditure on goods and services change by an amount proportional to government taxes. 
C) a change in households' incomes changes autonomous expenditure. 
D) any change in real GDP must also change the price level. 
E) a change in autonomous expenditures changes households' incomes.

Question 10

When the price level increases,aggregate planned expenditure ________ and equilibrium real GDP ________.As a result,in the AS-AD model,the aggregate demand curve has a ________ slope.

Accepted Answer

A) decreases;increases;negative 
B) increases;increases;positive 
C) increases;decreases;negative 
D) decreases;decreases;positive 
E) decreases;decreases;negative 
A) decreases;increases;negative 
B) increases;increases;positive 
C) increases;decreases;negative 
D) decreases;decreases;positive 
E) decreases;decreases;negative

Question 11

In an economy with no income taxes or imports,if the multiplier is 5,what does the MPC equal?

Accepted Answer

A) 0.9 
B) 0.4 
C) 0.8 
D) 0.5 
E) 0.2 
A) 0.9 
B) 0.4 
C) 0.8 
D) 0.5 
E) 0.2

Question 12

The expenditure multiplier explains how a change in

Accepted Answer

A) real GDP leads to a change in induced expenditure. 
B) induced expenditure leads to a change in real GDP. 
C) induced expenditure leads to a change in autonomous expenditure. 
D) autonomous expenditure leads to a change in real GDP. 
E) real GDP leads to a change in autonomous expenditure. 
A) real GDP leads to a change in induced expenditure. 
B) induced expenditure leads to a change in real GDP. 
C) induced expenditure leads to a change in autonomous expenditure. 
D) autonomous expenditure leads to a change in real GDP. 
E) real GDP leads to a change in autonomous expenditure.

Question 13

-In the figure above,when disposable income equals $20 trillion,

Accepted Answer

A) consumption expenditure is less than disposable income,so consumers are dissaving. 
B) consumption expenditure is greater than disposable income,so consumers are dissaving. 
C) consumption expenditure is greater than disposable income,so consumers are saving. 
D) consumption expenditure is less than disposable income,so consumers are saving. 
E) consumption expenditure is less than disposable income but it is not possible to determine whether consumers are saving or dissaving. 
A) consumption expenditure is less than disposable income,so consumers are dissaving. 
B) consumption expenditure is greater than disposable income,so consumers are dissaving. 
C) consumption expenditure is greater than disposable income,so consumers are saving. 
D) consumption expenditure is less than disposable income,so consumers are saving. 
E) consumption expenditure is less than disposable income but it is not possible to determine whether consumers are saving or dissaving.

Question 14

Which components of aggregate expenditure change as a result of real GDP changing?

Accepted Answer

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

Question 15

As the economy turns the corner into a recession,the level of unplanned inventories ________ and firms ________ production.

Accepted Answer

A) increases;begin to increase 
B) decreases;begin to decrease 
C) increases;begin to decrease 
D) increases;do not change 
E) decreases;begin to increase 
A) increases;begin to increase 
B) decreases;begin to decrease 
C) increases;begin to decrease 
D) increases;do not change 
E) decreases;begin to increase

Question 16

The MPC is 0.90 and there are no income taxes or imports.If government expenditures on goods and services increase by $2.0 billion,after the multiplier effect works out,aggregate expenditure increases by

Accepted Answer

A) $1.8 billion. 
B) $2.0 billion. 
C) $2.22 billion. 
D) $20 billion. 
E) $10 billion. 
A) $1.8 billion. 
B) $2.0 billion. 
C) $2.22 billion. 
D) $20 billion. 
E) $10 billion.

Question 17

An economy has no imports or income taxes.An increase in autonomous expenditure of $40 billion increases equilibrium expenditure by $160 billion.The expenditure multiplier equals

Accepted Answer

A) 6. 
B) 8. 
C) 2. 
D) 4. 
E) 16. 
A) 6. 
B) 8. 
C) 2. 
D) 4. 
E) 16.

Question 18

-The above table has data from the nation of Atlantica.Based on these data,the amount of autonomous consumption is

Accepted Answer

A) $7.5 trillion. 
B) $1.0 trillion. 
C) $0.5 trillion. 
D) $6.0 trillion. 
E) $1.5 trillion. 
A) $7.5 trillion. 
B) $1.0 trillion. 
C) $0.5 trillion. 
D) $6.0 trillion. 
E) $1.5 trillion.

Question 19

If the level of real GDP is $14 trillion while aggregate planned expenditure is $15 trillion,then

Accepted Answer

A) real GDP increases and planned expenditure decreases reaching equilibrium in the middle. 
B) inventories fall more than planned,leading firms to increase production. 
C) inventories rise more than planned,leading firms to increase production. 
D) inventories rise more than planned,leading firms to cut production. 
E) aggregate planned expenditure decreases to reach the equilibrium of $14 trillion. 
A) real GDP increases and planned expenditure decreases reaching equilibrium in the middle. 
B) inventories fall more than planned,leading firms to increase production. 
C) inventories rise more than planned,leading firms to increase production. 
D) inventories rise more than planned,leading firms to cut production. 
E) aggregate planned expenditure decreases to reach the equilibrium of $14 trillion.

Question 20

The slope of the consumption function is

Accepted Answer

A) equal to the MPC and is equal to 1. 
B) equal to the MPC and is greater than 1. 
C) equal to the MPC and is less than 1. 
D) not equal to the MPC and is less than 1. 
E) not equal to the MPC and is equal to 1. 
A) equal to the MPC and is equal to 1. 
B) equal to the MPC and is greater than 1. 
C) equal to the MPC and is less than 1. 
D) not equal to the MPC and is less than 1. 
E) not equal to the MPC and is equal to 1.

A country reports that unplanned inventories increased during 2014.The increase in unplanned inventories leads to

When the AE curve shifts upward because the price level falls,the corresponding effect on the aggregate demand curve is

Compared to the magnitude of the multiplier in an economy without imports,the multiplier in an identical economy with imports is

A $1.5 trillion increase in investment leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion.In this case,the expenditure multiplier is

As disposable income ,planned consumption expenditure by a amount.

Other things remaining the same, in Australian real GDP results in in Australian imports.

-The table above gives data for the nation of Mosh.If real GDP is $10 trillion,then

If aggregate planned expenditure equals GDP,then

The expenditure multipliers occur because

When the price level increases,aggregate planned expenditure and equilibrium real GDP .As a result,in the AS-AD model,the aggregate demand curve has a slope.

In an economy with no income taxes or imports,if the multiplier is 5,what does the MPC equal?

The expenditure multiplier explains how a change in

-In the figure above,when disposable income equals $20 trillion,

Which components of aggregate expenditure change as a result of real GDP changing?

As the economy turns the corner into a recession,the level of unplanned inventories and firms production.

The MPC is 0.90 and there are no income taxes or imports.If government expenditures on goods and services increase by $2.0 billion,after the multiplier effect works out,aggregate expenditure increases by

An economy has no imports or income taxes.An increase in autonomous expenditure of $40 billion increases equilibrium expenditure by $160 billion.The expenditure multiplier equals

-The above table has data from the nation of Atlantica.Based on these data,the amount of autonomous consumption is

If the level of real GDP is $14 trillion while aggregate planned expenditure is $15 trillion,then

The slope of the consumption function 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

A country reports that unplanned inventories increased during 2014.The increase in unplanned inventories leads to

When the AE curve shifts upward because the price level falls,the corresponding effect on the aggregate demand curve is

Compared to the magnitude of the multiplier in an economy without imports,the multiplier in an identical economy with imports is

A $1.5 trillion increase in investment leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion.In this case,the expenditure multiplier is

As disposable income ________,planned consumption expenditure ________ by a ________ amount.

Other things remaining the same,________ in Australian real GDP results in ________ in Australian imports.

-The table above gives data for the nation of Mosh.If real GDP is $10 trillion,then

If aggregate planned expenditure equals GDP,then

The expenditure multipliers occur because

When the price level increases,aggregate planned expenditure ________ and equilibrium real GDP ________.As a result,in the AS-AD model,the aggregate demand curve has a ________ slope.

In an economy with no income taxes or imports,if the multiplier is 5,what does the MPC equal?

The expenditure multiplier explains how a change in

-In the figure above,when disposable income equals $20 trillion,

Which components of aggregate expenditure change as a result of real GDP changing?

As the economy turns the corner into a recession,the level of unplanned inventories ________ and firms ________ production.

The MPC is 0.90 and there are no income taxes or imports.If government expenditures on goods and services increase by $2.0 billion,after the multiplier effect works out,aggregate expenditure increases by

An economy has no imports or income taxes.An increase in autonomous expenditure of $40 billion increases equilibrium expenditure by $160 billion.The expenditure multiplier equals

-The above table has data from the nation of Atlantica.Based on these data,the amount of autonomous consumption is

If the level of real GDP is $14 trillion while aggregate planned expenditure is $15 trillion,then

The slope of the consumption function 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

As disposable income ,planned consumption expenditure by a amount.

Other things remaining the same, in Australian real GDP results in in Australian imports.

When the price level increases,aggregate planned expenditure and equilibrium real GDP .As a result,in the AS-AD model,the aggregate demand curve has a slope.

As the economy turns the corner into a recession,the level of unplanned inventories and firms production.