Question 1

When aggregate planned expenditure exceeds real GDP,

Accepted Answer

A) real GDP decreases. 
B) an unplanned increase in inventories occurs. 
C) firms decrease production. 
D) an unplanned decrease in inventories occurs. 
E) real GDP remains at its equilibrium level. 
A) real GDP decreases. 
B) an unplanned increase in inventories occurs. 
C) firms decrease production. 
D) an unplanned decrease in inventories occurs. 
E) real GDP remains at its equilibrium level.

Question 2

-The above table gives data for the nation of Mouseville.There are no imports into or exports from Mouseville.The equilibrium level of real GDP is

Accepted Answer

A) $700 billion. 
B) $900 billion. 
C) $800 billion. 
D) $500 billion. 
E) $100 billion. 
A) $700 billion. 
B) $900 billion. 
C) $800 billion. 
D) $500 billion. 
E) $100 billion.

Question 3

Jane supports herself at university by working in a bookstore earning $300 a month,which she spends entirely every month.If she gets a salary increase of $100 a month,she spends $90 more dollars on consumption expenditure.Jane's MPC is equal to

Accepted Answer

A) 0.10. 
B) $90. 
C) 1.00. 
D) 0.50. 
E) 0.90. 
A) 0.10. 
B) $90. 
C) 1.00. 
D) 0.50. 
E) 0.90.

Question 4

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The expenditure multiplier is equal to

Accepted Answer

A) 10. 
B) 2. 
C) 1.25. 
D) 5. 
E) 0.8. 
A) 10. 
B) 2. 
C) 1.25. 
D) 5. 
E) 0.8.

Question 5

In the range of disposable income where the consumption function lies above the 45° line,

Accepted Answer

A) saving is positive. 
B) disposable income equals planned expenditures. 
C) disposable income is negative. 
D) saving is negative. 
E) induced consumption is zero. 
A) saving is positive. 
B) disposable income equals planned expenditures. 
C) disposable income is negative. 
D) saving is negative. 
E) induced consumption is zero.

Question 6

-In the figure above,if real GDP is $10 trillion,aggregate planned expenditure is

Accepted Answer

A) equal to $10 trillion and there are no unplanned inventory changes. 
B) less than $10 trillion and unplanned inventory changes are positive. 
C) more than $10 trillion and unplanned inventory changes are negative. 
D) equal to $10 trillion and unplanned inventory changes are negative. 
E) equal to $10 trillion and unplanned inventory changes are positive. 
A) equal to $10 trillion and there are no unplanned inventory changes. 
B) less than $10 trillion and unplanned inventory changes are positive. 
C) more than $10 trillion and unplanned inventory changes are negative. 
D) equal to $10 trillion and unplanned inventory changes are negative. 
E) equal to $10 trillion and unplanned inventory changes are positive.

Question 7

If firms' inventories exceed their planned inventories,firms

Accepted Answer

A) increase production. 
B) increase income. 
C) increase employment. 
D) decrease production. 
E) increase GDP. 
A) increase production. 
B) increase income. 
C) increase employment. 
D) decrease production. 
E) increase GDP.

Question 8

When the real interest rate falls,the consumption function

Accepted Answer

A) shifts upward. 
B) shifts downward. 
C) does not shift and there is no movement along the consumption function. 
D) does not shift and there is a movement downward along the consumption function. 
E) does not shift and there is a movement upward along the consumption function. 
A) shifts upward. 
B) shifts downward. 
C) does not shift and there is no movement along the consumption function. 
D) does not shift and there is a movement downward along the consumption function. 
E) does not shift and there is a movement upward along the consumption function.

Question 9

If the economy is in the expansion phase of a business cycle and investment increases,when the multiplier effect kicks in,the expansion

Accepted Answer

A) reverses. 
B) is not affected. 
C) picks up speed. 
D) slows down. 
E) peaks. 
A) reverses. 
B) is not affected. 
C) picks up speed. 
D) slows down. 
E) peaks.

Question 10

A change in the price level

Accepted Answer

A) shifts the AE curve and the AD curve in the same direction. 
B) shifts the AE curve and the AD curve in opposite directions. 
C) shifts the AE curve and creates a movement along the AD curve. 
D) creates a movement along the AE curve and shifts the AD curve. 
E) creates a movement along both the AE curve and the AD curve. 
A) shifts the AE curve and the AD curve in the same direction. 
B) shifts the AE curve and the AD curve in opposite directions. 
C) shifts the AE curve and creates a movement along the AD curve. 
D) creates a movement along the AE curve and shifts the AD curve. 
E) creates a movement along both the AE curve and the AD curve.

Question 11

Induced expenditures are defined as that part of

Accepted Answer

A) autonomous expenditure that responds to changes in real GDP. 
B) aggregate expenditure that responds to changes in real GDP. 
C) autonomous expenditure that does not respond to changes in real GDP. 
D) real GDP that does not respond to changes in aggregate expenditure. 
E) aggregate expenditure that does not respond to changes in real GDP. 
A) autonomous expenditure that responds to changes in real GDP. 
B) aggregate expenditure that responds to changes in real GDP. 
C) autonomous expenditure that does not respond to changes in real GDP. 
D) real GDP that does not respond to changes in aggregate expenditure. 
E) aggregate expenditure that does not respond to changes in real GDP.

Question 12

Autonomous expenditure is expenditure that is

Accepted Answer

A) not influenced by the interest rate. 
B) not influenced by the price level. 
C) influenced by real GDP. 
D) not influenced by real GDP. 
E) influenced by the interest rate. 
A) not influenced by the interest rate. 
B) not influenced by the price level. 
C) influenced by real GDP. 
D) not influenced by real GDP. 
E) influenced by the interest rate.

Question 13

The multiplier effect

Accepted Answer

A) reinforces the negative effects of any reduction in spending. 
B) explains what causes a recession. 
C) explains how the economy recovers from a recession. 
D) has no impact on equilibrium expenditure. 
E) explains what causes an expansion. 
A) reinforces the negative effects of any reduction in spending. 
B) explains what causes a recession. 
C) explains how the economy recovers from a recession. 
D) has no impact on equilibrium expenditure. 
E) explains what causes an expansion.

Question 14

-The above table gives real GDP and the aggregate expenditure schedule.When real GDP is $15 billion,the amount of unplanned investment is

Accepted Answer

A) $14.25 billion. 
B) $29.25 billion. 
C) $0.75 billion. 
D) $15 billion. 
E) unknown. 
A) $14.25 billion. 
B) $29.25 billion. 
C) $0.75 billion. 
D) $15 billion. 
E) unknown.

Question 15

If the real interest rate increases,there is

Accepted Answer

A) a downward shift of the consumption function. 
B) a movement upward along the consumption function. 
C) a movement downward along consumption function. 
D) an upward shift of the consumption function. 
E) a change in the slope of the consumption function. 
A) a downward shift of the consumption function. 
B) a movement upward along the consumption function. 
C) a movement downward along consumption function. 
D) an upward shift of the consumption function. 
E) a change in the slope of the consumption function.

Question 16

In an economy with no income taxes or imports,the expenditure multiplier is

Accepted Answer

A) greater than 1 if the MPC is less than 1. 
B) equal to 1 if the MPC is greater than 1. 
C) greater than 1 only if the MPC is greater than 1. 
D) always less than 1 no matter what the size of the MPC. 
E) less than 1 only if the MPC is less than 1. 
A) greater than 1 if the MPC is less than 1. 
B) equal to 1 if the MPC is greater than 1. 
C) greater than 1 only if the MPC is greater than 1. 
D) always less than 1 no matter what the size of the MPC. 
E) less than 1 only if the MPC is less than 1.

Question 17

A decrease in wealth ________ consumption expenditure and ________.

Accepted Answer

A) decreases;results in a movement downward along the consumption function 
B) increases;shifts the consumption function downward 
C) decreases;shifts the consumption function upward 
D) decreases;shifts the consumption function downward 
E) increases;shifts the consumption function upward 
A) decreases;results in a movement downward along the consumption function 
B) increases;shifts the consumption function downward 
C) decreases;shifts the consumption function upward 
D) decreases;shifts the consumption function downward 
E) increases;shifts the consumption function upward

Question 18

Consumption expenditure exceeds disposable income

Accepted Answer

A) only when the economy is in equilibrium. 
B) when there is dissaving. 
C) never. 
D) when there is positive saving. 
E) always. 
A) only when the economy is in equilibrium. 
B) when there is dissaving. 
C) never. 
D) when there is positive saving. 
E) always.

Question 19

When real GDP exceeds aggregate planned expenditure,

Accepted Answer

A) real GDP increases. 
B) an unplanned increase in inventories occurs. 
C) an unplanned decrease in inventories occurs. 
D) firms increase production. 
E) real GDP remains at its equilibrium. 
A) real GDP increases. 
B) an unplanned increase in inventories occurs. 
C) an unplanned decrease in inventories occurs. 
D) firms increase production. 
E) real GDP remains at its equilibrium.

Question 20

During the start of an expansion,aggregate planned expenditure

Accepted Answer

A) is slowly decreasing. 
B) increases the magnitude of the expenditure multiplier. 
C) decreases the magnitude of the expenditure multiplier. 
D) exceeds real GDP. 
E) is less than real GDP. 
A) is slowly decreasing. 
B) increases the magnitude of the expenditure multiplier. 
C) decreases the magnitude of the expenditure multiplier. 
D) exceeds real GDP. 
E) is less than real GDP.

When aggregate planned expenditure exceeds real GDP,

-The above table gives data for the nation of Mouseville.There are no imports into or exports from Mouseville.The equilibrium level of real GDP is

Jane supports herself at university by working in a bookstore earning $300 a month,which she spends entirely every month.If she gets a salary increase of $100 a month,she spends $90 more dollars on consumption expenditure.Jane's MPC is equal to

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The expenditure multiplier is equal to

In the range of disposable income where the consumption function lies above the 45° line,

-In the figure above,if real GDP is $10 trillion,aggregate planned expenditure is

If firms' inventories exceed their planned inventories,firms

When the real interest rate falls,the consumption function

If the economy is in the expansion phase of a business cycle and investment increases,when the multiplier effect kicks in,the expansion

A change in the price level

Induced expenditures are defined as that part of

Autonomous expenditure is expenditure that is

The multiplier effect

-The above table gives real GDP and the aggregate expenditure schedule.When real GDP is $15 billion,the amount of unplanned investment is

If the real interest rate increases,there is

In an economy with no income taxes or imports,the expenditure multiplier is

A decrease in wealth consumption expenditure and .

Consumption expenditure exceeds disposable income

When real GDP exceeds aggregate planned expenditure,

During the start of an expansion,aggregate planned expenditure

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

When aggregate planned expenditure exceeds real GDP,

-The above table gives data for the nation of Mouseville.There are no imports into or exports from Mouseville.The equilibrium level of real GDP is

Jane supports herself at university by working in a bookstore earning $300 a month,which she spends entirely every month.If she gets a salary increase of $100 a month,she spends $90 more dollars on consumption expenditure.Jane's MPC is equal to

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The expenditure multiplier is equal to

In the range of disposable income where the consumption function lies above the 45° line,

-In the figure above,if real GDP is $10 trillion,aggregate planned expenditure is

If firms' inventories exceed their planned inventories,firms

When the real interest rate falls,the consumption function

If the economy is in the expansion phase of a business cycle and investment increases,when the multiplier effect kicks in,the expansion

A change in the price level

Induced expenditures are defined as that part of

Autonomous expenditure is expenditure that is

The multiplier effect

-The above table gives real GDP and the aggregate expenditure schedule.When real GDP is $15 billion,the amount of unplanned investment is

If the real interest rate increases,there is

In an economy with no income taxes or imports,the expenditure multiplier is

A decrease in wealth ________ consumption expenditure and ________.

Consumption expenditure exceeds disposable income

When real GDP exceeds aggregate planned expenditure,

During the start of an expansion,aggregate planned expenditure

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

A decrease in wealth consumption expenditure and .