Question 1

For all points below the 45-degree line,planned aggregate expenditure will be less than GDP.

Accepted Answer

A) True 
 B)False

Question 2

What is the difference between aggregate expenditure and consumption spending?

Accepted Answer

Aggregate expenditure represents the tot

Question 3

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Accepted Answer

A)  0.2 
B)  0.8 
C)  1.25 
D)  5 
A)  0.2 
B)  0.8 
C)  1.25 
D)  5

Question 4

Consumer spending ________ and investment spending ________.

Accepted Answer

A)  is very volatile and subject to fluctuations; follows a smooth trend 
B)  follows a smooth trend; is more volatile and subject to fluctuations 
C)  follows a smooth trend; is the most stable component of aggregate expenditure 
D)  is very erratic; is also erratic, but less erratic than consumer spending 
A)  is very volatile and subject to fluctuations; follows a smooth trend 
B)  follows a smooth trend; is more volatile and subject to fluctuations 
C)  follows a smooth trend; is the most stable component of aggregate expenditure 
D)  is very erratic; is also erratic, but less erratic than consumer spending

Question 5

Economists think that the marginal propensity to consume for the U.S.economy is somewhere around 0.9.Based on our simple multiplier formula,this would imply that the multiplier for the United States should be around 10.However,economists agree that the spending multiplier is closer to 2.What might explain this supposed anomaly?

Accepted Answer

The formula for the multiplier,M = @#IMG-DLM& ,is

Question 6

All of the following are components of aggregate expenditure except

Accepted Answer

A)  consumption spending. 
B)  net export spending. 
C)  actual investment spending. 
D)  government spending. 
A)  consumption spending. 
B)  net export spending. 
C)  actual investment spending. 
D)  government spending.

Question 7

If disposable income increases by $100 million,and consumption increases by $90 million,then the marginal propensity to consume is

Accepted Answer

A)  0.9. 
B)  0.8. 
C)  0.75. 
D)  0.6. 
A)  0.9. 
B)  0.8. 
C)  0.75. 
D)  0.6.

Question 8

What impact does a decrease in the price level in the United States have on net exports and why?

Accepted Answer

A)  A decrease in the price level increases net exports because lower prices increase the value of the dollar. 
B)  A decrease in the price level increases net exports by reducing the relative cost of American goods. 
C)  A decrease in the price level reduces net exports because lower prices raise the value of the dollar. 
D)  A decrease in the price level reduces net exports because lower prices increase American spending on imports. 
A)  A decrease in the price level increases net exports because lower prices increase the value of the dollar. 
B)  A decrease in the price level increases net exports by reducing the relative cost of American goods. 
C)  A decrease in the price level reduces net exports because lower prices raise the value of the dollar. 
D)  A decrease in the price level reduces net exports because lower prices increase American spending on imports.

Question 9

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

Accepted Answer

A) True 
 B)False

Question 10

The marginal propensity to consume is the slope of the consumption function.

Accepted Answer

A) True 
 B)False

Question 11

Investment spending ________ during a recession,and ________ during an expansion.

Accepted Answer

A)  declines; increases 
B)  increases; declines 
C)  increases; increases 
D)  declines; declines 
A)  declines; increases 
B)  increases; declines 
C)  increases; increases 
D)  declines; declines

Question 12

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

Accepted Answer

A)  the MPC is 0.5. 
B)  the MPC is 0.75. 
C)  the MPC is 0.8. 
D)  the MPC is 0.9. 
A)  the MPC is 0.5. 
B)  the MPC is 0.75. 
C)  the MPC is 0.8. 
D)  the MPC is 0.9.

Question 13

How does a decrease in government spending affect the aggregate expenditure line?

Accepted Answer

A)  It shifts the aggregate expenditure line upward. 
B)  It shifts the aggregate expenditure line downward. 
C)  It increases the slope of the aggregate expenditure line. 
D)  It decreases the slope of the aggregate expenditure line. 
A)  It shifts the aggregate expenditure line upward. 
B)  It shifts the aggregate expenditure line downward. 
C)  It increases the slope of the aggregate expenditure line. 
D)  It decreases the slope of the aggregate expenditure line.

Question 14

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what will the new equilibrium level of GDP be if government spending increases to 2,500?
C = 5,000 + (MPC)Y
I = 1,500
G = 2,000
NX = -500

Accepted Answer

A)  $32,500 
B)  $34,000 
C)  $38,000 
D)  $42,000 
A)  $32,500 
B)  $34,000 
C)  $38,000 
D)  $42,000

Question 15

A decrease in the price level in the United States will have what effect on the aggregate expenditure line?

Accepted Answer

A)  Aggregate expenditure will shift downward. 
B)  Aggregate expenditure will become steeper. 
C)  Aggregate expenditure will shift upward. 
D)  Aggregate expenditure will not be affected by an increase in the price level in the United States. 
A)  Aggregate expenditure will shift downward. 
B)  Aggregate expenditure will become steeper. 
C)  Aggregate expenditure will shift upward. 
D)  Aggregate expenditure will not be affected by an increase in the price level in the United States.

Question 16

MPC + MPS =

Accepted Answer

A)  0. 
B)  0.5. 
C)  1. 
D)  100. 
A)  0. 
B)  0.5. 
C)  1. 
D)  100.

Question 17

Concerned that its dependence on sales of microprocessors to computer firms would make it vulnerable to sharp sales declines during the recession of 2007-2009,Intel began to develop memory chips that could be used in portable consumer electronic devices such as cell phones.One reason that Intel chose to branch out from producing microprocessors for computers is that

Accepted Answer

A)  sales of computers have been declining over the past decade. 
B)  technology with respect to microprocessor production was no longer advancing at a rate where Intel's new products were still wanted by computer manufacturers. 
C)  Intel had lost a majority of its market share in microprocessor production to foreign competition. 
D)  computers are durable goods and spending on computers follows the business cycle. 
A)  sales of computers have been declining over the past decade. 
B)  technology with respect to microprocessor production was no longer advancing at a rate where Intel's new products were still wanted by computer manufacturers. 
C)  Intel had lost a majority of its market share in microprocessor production to foreign competition. 
D)  computers are durable goods and spending on computers follows the business cycle.

Question 18

Decreases in the price level will

Accepted Answer

A)  lower consumption because goods and services are less affordable. 
B)  raise consumption because goods and services are more affordable. 
C)  raise consumption because real wealth increases. 
D)  lower consumption because real wealth decreases. 
A)  lower consumption because goods and services are less affordable. 
B)  raise consumption because goods and services are more affordable. 
C)  raise consumption because real wealth increases. 
D)  lower consumption because real wealth decreases.

Question 19

Which of the following leads to an increase real GDP?

Accepted Answer

A)  a decrease in government spending 
B)  a decrease in the inflation rate in other countries, relative to the inflation in the United States 
C)  a decrease in interest rates 
D)  households have increasingly pessimistic expectations about future income 
A)  a decrease in government spending 
B)  a decrease in the inflation rate in other countries, relative to the inflation in the United States 
C)  a decrease in interest rates 
D)  households have increasingly pessimistic expectations about future income

Question 20

If firms sell exactly what they expected to sell,all of the following will be true except

Accepted Answer

A)  aggregate expenditure will be greater than GDP. 
B)  there is no unplanned change in inventories. 
C)  inventories will not change, and GDP and employment will remain stable. 
D)  aggregate expenditure will be equal to GDP. 
A)  aggregate expenditure will be greater than GDP. 
B)  there is no unplanned change in inventories. 
C)  inventories will not change, and GDP and employment will remain stable. 
D)  aggregate expenditure will be equal to GDP.

For all points below the 45-degree line,planned aggregate expenditure will be less than GDP.

What is the difference between aggregate expenditure and consumption spending?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Consumer spending and investment spending .

All of the following are components of aggregate expenditure except

If disposable income increases by $100 million,and consumption increases by $90 million,then the marginal propensity to consume is

What impact does a decrease in the price level in the United States have on net exports and why?

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

The marginal propensity to consume is the slope of the consumption function.

Investment spending during a recession,and during an expansion.

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

How does a decrease in government spending affect the aggregate expenditure line?

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what will the new equilibrium level of GDP be if government spending increases to 2,500? C = 5,000 + (MPC)Y I = 1,500 G = 2,000 NX = -500

A decrease in the price level in the United States will have what effect on the aggregate expenditure line?

MPC + MPS =

Decreases in the price level will

Which of the following leads to an increase real GDP?

If firms sell exactly what they expected to sell,all of the following will be true except

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 12: Aggregate Expenditure and Output in the Short Run

For all points below the 45-degree line,planned aggregate expenditure will be less than GDP.

What is the difference between aggregate expenditure and consumption spending?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Consumer spending ________ and investment spending ________.

All of the following are components of aggregate expenditure except

If disposable income increases by $100 million,and consumption increases by $90 million,then the marginal propensity to consume is

What impact does a decrease in the price level in the United States have on net exports and why?

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

The marginal propensity to consume is the slope of the consumption function.

Investment spending ________ during a recession,and ________ during an expansion.

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

How does a decrease in government spending affect the aggregate expenditure line?

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what will the new equilibrium level of GDP be if government spending increases to 2,500? C = 5,000 + (MPC)Y I = 1,500 G = 2,000 NX = -500

A decrease in the price level in the United States will have what effect on the aggregate expenditure line?

MPC + MPS =

Decreases in the price level will

Which of the following leads to an increase real GDP?

If firms sell exactly what they expected to sell,all of the following will be true except

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Consumer spending and investment spending .

Investment spending during a recession,and during an expansion.