Exam 12: Aggregate Expenditure and Output in the Short Run

Figure 23-2 -Refer to Figure 23-2.If the U.S.economy is currently at point N,which of the following could cause it to move to point K?

A stock market boom which causes stock prices to rise should cause

The formula for aggregate expenditure is

When Jack's income increases by $5,000,he spends an additional $4,000 dollars.This implies that his marginal propensity to consume is 1.25.

Use a 45-degree diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

________ consumption is consumption that does not depend upon the level of GDP.

If planned aggregate expenditure is less than total production,

If firms find that consumers are purchasing more than expected,which of the following would you expect?

Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

All of the following are true statements about the multiplier except

You review a salesman's income over a 5-year period.You note it fluctuates tremendously from year to year,yet his consumption of goods and services remains consistently at the same level,year after year.Does this mean that income is not a determinant of consumption,or could something else explain his behavior?

If disposable income falls by $50 billion and consumption falls by $40 billion,then the slope of the consumption function is

________ in taxes will decrease consumption spending,and ________ in transfer payments will increase consumption spending.

Table 23-6 -Refer to Table 23-6.Using the table above,answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If potential GDP is $7,000 billion,is the economy at full employment? If not,what is the condition of the economy? d.If the economy is not at full employment,by how much should government spending increase so that the economy can move to the full employment level of GDP?

Why is the aggregate demand curve downward sloping while the aggregate expenditure line is upward sloping?

Figure 23-4 -Refer to Figure 23-4.Potential GDP equals $100 billion.The economy is currently producing GDP₁ which is equal to $90 billion.If the MPC is 0.8,then how much must autonomous spending change for the economy to move to potential GDP?

If planned aggregate expenditure is less than total production,

A decrease in Social Security payments will

Table 23-5 -Refer to Table 23-5.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP?