Question 1

When the price level increases,aggregate planned expenditure decreases,which leads to

Accepted Answer

A) a rightward shift of the aggregate demand curve. 
B) a leftward shift of the aggregate demand curve. 
C) neither a movement along nor a shift of the aggregate demand curve. 
D) an upward movement along the aggregate demand curve. 
E) a downward movement along the aggregate demand curve. 
A) a rightward shift of the aggregate demand curve. 
B) a leftward shift of the aggregate demand curve. 
C) neither a movement along nor a shift of the aggregate demand curve. 
D) an upward movement along the aggregate demand curve. 
E) a downward movement along the aggregate demand curve.

Question 2

Which of the following is NOT included in aggregate expenditure?

Accepted Answer

A) Government expenditure 
B) Net exports 
C) Consumption expenditure 
D) Taxes 
E) Investment 
A) Government expenditure 
B) Net exports 
C) Consumption expenditure 
D) Taxes 
E) Investment

Question 3

The expenditure multiplier is typically

Accepted Answer

A) negative. 
B) greater than 1. 
C) equal to 1. 
D) less than 1 but greater than 0. 
E) greater than 10. 
A) negative. 
B) greater than 1. 
C) equal to 1. 
D) less than 1 but greater than 0. 
E) greater than 10.

Question 4

If a $2 billion increase in investment brings about a $5 billion increase in equilibrium expenditure,we know that the multiplier equals

Accepted Answer

A) 10. 
B) 2.5. 
C) 4. 
D) 5. 
E) 3. 
A) 10. 
B) 2.5. 
C) 4. 
D) 5. 
E) 3.

Question 5

-In the above figure,equilibrium expenditure is equal to

Accepted Answer

A) $5 trillion. 
B) $15 trillion. 
C) $20 trillion. 
D) $10 trillion. 
E) None of the above answers is correct 
A) $5 trillion. 
B) $15 trillion. 
C) $20 trillion. 
D) $10 trillion. 
E) None of the above answers is correct

Question 6

Based on data from the Australian economy,the marginal propensity to consume is about

Accepted Answer

A) 0.75. 
B) 1.10. 
C) 0.60. 
D) 0.95. 
E) 0.87. 
A) 0.75. 
B) 1.10. 
C) 0.60. 
D) 0.95. 
E) 0.87.

Question 7

If aggregate planned expenditures equal real GDP,then

Accepted Answer

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

Question 8

If autonomous spending decreases,then

Accepted Answer

A) the expenditure multiplier means that equilibrium expenditure decreases by a larger amount. 
B) equilibrium expenditure does not change. 
C) equilibrium expenditure decreases by the same amount. 
D) the expenditure multiplier means that equilibrium expenditure increases by a larger amount. 
E) the expenditure multiplier means that equilibrium expenditure increases by a smaller amount. 
A) the expenditure multiplier means that equilibrium expenditure decreases by a larger amount. 
B) equilibrium expenditure does not change. 
C) equilibrium expenditure decreases by the same amount. 
D) the expenditure multiplier means that equilibrium expenditure increases by a larger amount. 
E) the expenditure multiplier means that equilibrium expenditure increases by a smaller amount.

Question 9

When disposable income increases,consumption expenditure

Accepted Answer

A) does not change. 
B) also increases,and by an equal amount. 
C) also increases,and by more. 
D) decreases by the same amount. 
E) also increases,but by less. 
A) does not change. 
B) also increases,and by an equal amount. 
C) also increases,and by more. 
D) decreases by the same amount. 
E) also increases,but by less.

Question 10

When GDP = $2.5 trillion,C = $1.0 trillion,I = $0.6 trillion,G = $0.4 trillion,and NX = $0,then

Accepted Answer

A) equilibrium expenditure = $2.0 trillion. 
B) aggregate planned expenditure = $1.6 trillion. 
C) aggregate planned expenditure = $2.5 trillion. 
D) unplanned inventory change = -$0.5 trillion. 
E) unplanned inventory change = $0.5 trillion. 
A) equilibrium expenditure = $2.0 trillion. 
B) aggregate planned expenditure = $1.6 trillion. 
C) aggregate planned expenditure = $2.5 trillion. 
D) unplanned inventory change = -$0.5 trillion. 
E) unplanned inventory change = $0.5 trillion.

Question 11

An increase in the price level leads to

Accepted Answer

A) a leftward movement along both the AE and AD curves. 
B) a downward shift in the AE curve and a movement upward along the AD curve. 
C) an upward shift in the AE curve and a movement upward along the AD curve. 
D) a downward shift in both the AE and AD curves. 
E) a downward shift in the AD curve and a movement downward along the AE curve. 
A) a leftward movement along both the AE and AD curves. 
B) a downward shift in the AE curve and a movement upward along the AD curve. 
C) an upward shift in the AE curve and a movement upward along the AD curve. 
D) a downward shift in both the AE and AD curves. 
E) a downward shift in the AD curve and a movement downward along the AE curve.

Question 12

The consumption function shows the relationship between

Accepted Answer

A) consumption expenditure and the price level. 
B) consumption expenditure and planned income. 
C) consumption expenditure and disposable income. 
D) inventory levels and real GDP. 
E) consumption expenditure and planned inventory investment. 
A) consumption expenditure and the price level. 
B) consumption expenditure and planned income. 
C) consumption expenditure and disposable income. 
D) inventory levels and real GDP. 
E) consumption expenditure and planned inventory investment.

Question 13

If the expenditure multiplier is 5,the slope of the aggregate expenditure (AE)curve is

Accepted Answer

A) 0.8. 
B) 0.7. 
C) 0.5. 
D) 0.6. 
E) 0.2. 
A) 0.8. 
B) 0.7. 
C) 0.5. 
D) 0.6. 
E) 0.2.

Question 14

If an increase of $10 billion in investment results in an increase in equilibrium expenditure of $40 billion,the multiplier equals

Accepted Answer

A) $10 billion × $40 billion = $400 billion. 
B) $10 billion - $40 billion = -$30 billion. 
C) $10 billion ÷ $40 billion = 0.25. 
D) $40 billion ÷ $10 billion = 4. 
E) $40 billion - $10 billion = $30 billion. 
A) $10 billion × $40 billion = $400 billion. 
B) $10 billion - $40 billion = -$30 billion. 
C) $10 billion ÷ $40 billion = 0.25. 
D) $40 billion ÷ $10 billion = 4. 
E) $40 billion - $10 billion = $30 billion.

Question 15

The size of the expenditure multiplier is influenced by i.the marginal propensity to consume.
Ii)autonomous spending.
Iii)the marginal tax rate.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) ii and iii 
E) i and iii 
A) i only 
B) ii only 
C) iii only 
D) ii and iii 
E) i and iii

Question 16

The quantity of real GDP demanded on the AD curve is the equilibrium real GDP when

Accepted Answer

A) aggregate planned expenditure is greater than real GDP. 
B) equilibrium expenditure is greater than real GDP. 
C) aggregate planned expenditure equals real GDP. 
D) aggregate planned expenditure is less than real GDP. 
E) the price level equals the equilibrium price level. 
A) aggregate planned expenditure is greater than real GDP. 
B) equilibrium expenditure is greater than real GDP. 
C) aggregate planned expenditure equals real GDP. 
D) aggregate planned expenditure is less than real GDP. 
E) the price level equals the equilibrium price level.

Question 17

In an economy in with no income taxes or imports, the multiplier equals

Accepted Answer

A)   
B)   
C)   
D)   
E)   
A)   
B)   
C)   
D)   
E)

Question 18

The ________ the marginal propensity to import,the ________ the multiplier.

Accepted Answer

A) larger;larger 
B) larger;smaller 
C) larger;more negative 
D) smaller;smaller 
E) None of the above is correct,because the expenditure multiplier is not related to the marginal propensity to import. 
A) larger;larger 
B) larger;smaller 
C) larger;more negative 
D) smaller;smaller 
E) None of the above is correct,because the expenditure multiplier is not related to the marginal propensity to import.

Question 19

Which of the following reduces the magnitude of the expenditure multiplier?

Accepted Answer

A) A decrease in imports 
B) A decrease in saving 
C) Higher marginal tax rates 
D) A decrease in the marginal propensity to consume 
E) A decrease in government purchases of goods and services 
A) A decrease in imports 
B) A decrease in saving 
C) Higher marginal tax rates 
D) A decrease in the marginal propensity to consume 
E) A decrease in government purchases of goods and services

Question 20

The ________ the marginal tax rate,the ________ the expenditure multiplier.

Accepted Answer

A) larger;larger 
B) smaller;smaller 
C) larger;more negative 
D) smaller;larger 
E) None of the above is correct,because the expenditure multiplier is not related to the marginal tax rate. 
A) larger;larger 
B) smaller;smaller 
C) larger;more negative 
D) smaller;larger 
E) None of the above is correct,because the expenditure multiplier is not related to the marginal tax rate.

When the price level increases,aggregate planned expenditure decreases,which leads to

Which of the following is NOT included in aggregate expenditure?

The expenditure multiplier is typically

If a $2 billion increase in investment brings about a $5 billion increase in equilibrium expenditure,we know that the multiplier equals

-In the above figure,equilibrium expenditure is equal to

Based on data from the Australian economy,the marginal propensity to consume is about

If aggregate planned expenditures equal real GDP,then

If autonomous spending decreases,then

When disposable income increases,consumption expenditure

When GDP = $2.5 trillion,C = $1.0 trillion,I = $0.6 trillion,G = $0.4 trillion,and NX = $0,then

An increase in the price level leads to

The consumption function shows the relationship between

If the expenditure multiplier is 5,the slope of the aggregate expenditure (AE)curve is

If an increase of $10 billion in investment results in an increase in equilibrium expenditure of $40 billion,the multiplier equals

The size of the expenditure multiplier is influenced by i.the marginal propensity to consume. Ii)autonomous spending. Iii)the marginal tax rate.

The quantity of real GDP demanded on the AD curve is the equilibrium real GDP when

In an economy in with no income taxes or imports, the multiplier equals

The the marginal propensity to import,the the multiplier.

Which of the following reduces the magnitude of the expenditure multiplier?

The the marginal tax rate,the the expenditure multiplier.

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 the price level increases,aggregate planned expenditure decreases,which leads to

Which of the following is NOT included in aggregate expenditure?

The expenditure multiplier is typically

If a $2 billion increase in investment brings about a $5 billion increase in equilibrium expenditure,we know that the multiplier equals

-In the above figure,equilibrium expenditure is equal to

Based on data from the Australian economy,the marginal propensity to consume is about

If aggregate planned expenditures equal real GDP,then

If autonomous spending decreases,then

When disposable income increases,consumption expenditure

When GDP = $2.5 trillion,C = $1.0 trillion,I = $0.6 trillion,G = $0.4 trillion,and NX = $0,then

An increase in the price level leads to

The consumption function shows the relationship between

If the expenditure multiplier is 5,the slope of the aggregate expenditure (AE)curve is

If an increase of $10 billion in investment results in an increase in equilibrium expenditure of $40 billion,the multiplier equals

The size of the expenditure multiplier is influenced by i.the marginal propensity to consume. Ii)autonomous spending. Iii)the marginal tax rate.

The quantity of real GDP demanded on the AD curve is the equilibrium real GDP when

In an economy in with no income taxes or imports, the multiplier equals

The ________ the marginal propensity to import,the ________ the multiplier.

Which of the following reduces the magnitude of the expenditure multiplier?

The ________ the marginal tax rate,the ________ the expenditure multiplier.

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 the marginal propensity to import,the the multiplier.

The the marginal tax rate,the the expenditure multiplier.