Question 1

National income =

Accepted Answer

A)  Consumption + Saving - Taxes 
B)  Consumption - Saving - Taxes 
C)  Consumption - Saving +Taxes 
D)  Consumption + Saving + Taxes 
A)  Consumption + Saving - Taxes 
B)  Consumption - Saving - Taxes 
C)  Consumption - Saving +Taxes 
D)  Consumption + Saving + Taxes

Question 2

C = 2,550 + (MPC)Y
I = 800
G = 1,100
NX = 50
If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Accepted Answer

Y = C + I + G + NX.
11,250 = 2

Question 3

Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure?

Accepted Answer

A)  Price level decreases cause firms and consumers to hold less money, which lowers the interest rate. Lower interest rates raise consumption and planned investment expenditures, which raises aggregate expenditure. 
B)  Price level decreases reduce real wealth, which causes consumption spending and aggregate expenditure to rise. 
C)  As the price level falls, government spending rises, which raises aggregate expenditure. 
D)  Price level decreases in the United States relative to other countries lower net exports, which raises aggregate expenditure. 
A)  Price level decreases cause firms and consumers to hold less money, which lowers the interest rate. Lower interest rates raise consumption and planned investment expenditures, which raises aggregate expenditure. 
B)  Price level decreases reduce real wealth, which causes consumption spending and aggregate expenditure to rise. 
C)  As the price level falls, government spending rises, which raises aggregate expenditure. 
D)  Price level decreases in the United States relative to other countries lower net exports, which raises aggregate expenditure.

Question 4

Suppose the United States experiences a long period of inflation relative to other countries.How will this affect U.S.net exports?

Accepted Answer

If inflation in the United States is hig

Question 5

Examples of assets that are included in household wealth would be

Accepted Answer

A)  stocks, bonds, and savings accounts. 
B)  stocks, loans owed, and savings accounts. 
C)  stocks, bonds, and mortgages. 
D)  stocks, credit cards, and savings accounts. 
A)  stocks, bonds, and savings accounts. 
B)  stocks, loans owed, and savings accounts. 
C)  stocks, bonds, and mortgages. 
D)  stocks, credit cards, and savings accounts.

Question 6

If the consumption function is defined as C = 5,500 + 0.9Y,what is the autonomous level of consumption expenditure?

Accepted Answer

A)  $4,950 
B)  $5,500 
C)  $6,050 
D)  $6,111 
A)  $4,950 
B)  $5,500 
C)  $6,050 
D)  $6,111

Question 7

Which is the largest component of aggregate expenditure?

Accepted Answer

A)  planned investment expenditures 
B)  consumption expenditures 
C)  government expenditures 
D)  net export expenditures 
A)  planned investment expenditures 
B)  consumption expenditures 
C)  government expenditures 
D)  net export expenditures

Question 8

If firms are more optimistic that future profits will rise and remain strong for the next few years,then

Accepted Answer

A)  investment spending will fall. 
B)  investment spending will rise. 
C)  investment spending will remain unaffected. 
D)  investment spending will rise and then fall. 
A)  investment spending will fall. 
B)  investment spending will rise. 
C)  investment spending will remain unaffected. 
D)  investment spending will rise and then fall.

Question 9

From 1983-2011,net exports for the United States

Accepted Answer

A)  grew and then declined. 
B)  were negative. 
C)  were positive. 
D)  increased as exports rose above imports. 
A)  grew and then declined. 
B)  were negative. 
C)  were positive. 
D)  increased as exports rose above imports.

Question 10

Which of the following will cause a direct increase in consumption spending?

Accepted Answer

A)  an increase in planned investment 
B)  an increase in government spending 
C)  an increase in disposable income 
D)  a decrease in net export spending 
A)  an increase in planned investment 
B)  an increase in government spending 
C)  an increase in disposable income 
D)  a decrease in net export spending

Question 11

If the marginal propensity to consume is 0.75,the marginal propensity to save is

Accepted Answer

A)  0.25. 
B)  0.5. 
C)  1. 
D)  3. 
A)  0.25. 
B)  0.5. 
C)  1. 
D)  3.

Question 12

On the 45-degree line diagram,the 45-degree line shows points where

Accepted Answer

A)  real income equals real GDP. 
B)  real aggregate expenditure equals C + I. 
C)  real aggregate expenditure equals real GDP. 
D)  real aggregate output equals the quantity produced. 
A)  real income equals real GDP. 
B)  real aggregate expenditure equals C + I. 
C)  real aggregate expenditure equals real GDP. 
D)  real aggregate output equals the quantity produced.

Question 13

Equilibrium GDP is equal to

Accepted Answer

A)  autonomous expenditure times the marginal propensity to consume. 
B)  autonomous expenditure times the marginal propensity to save. 
C)  autonomous expenditure times the multiplier. 
D)  autonomous expenditure. 
A)  autonomous expenditure times the marginal propensity to consume. 
B)  autonomous expenditure times the marginal propensity to save. 
C)  autonomous expenditure times the multiplier. 
D)  autonomous expenditure.

Question 14

C = 4,000 + 0.5Y
I = 1,500
G=2,250
NX = -150
Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

Accepted Answer

Y = C + I + G + NX.
Y = 4,000

Question 15

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a true statement about the multiplier?

Accepted Answer

A)  The multiplier rises as the MPC rises. 
B)  The smaller the MPC, the larger the multiplier. 
C)  The multiplier is a value between zero and one. 
D)  The multiplier effect does not occur when autonomous expenditure decreases. 
A)  The multiplier rises as the MPC rises. 
B)  The smaller the MPC, the larger the multiplier. 
C)  The multiplier is a value between zero and one. 
D)  The multiplier effect does not occur when autonomous expenditure decreases.

Question 17

Explain how a stock market crash has the potential to lead to a recession in an economy.

Accepted Answer

A stock market crash is essentially a su

Question 18

Table 23-7
  
-Refer to Table 23-7.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 investment spending declines by $50 billion,what will happen to equilibrium GDP?

Accepted Answer

a.Equilibrium real GDP is determined whe

Question 19

Figure 23-1
  
-Refer to Figure 23-1.If the economy is at a level of aggregate expenditure given by point K,

Accepted Answer

A)  the economy is in equilibrium. 
B)  production is greater than spending. 
C)  production is less than spending. 
D)  inventories will increase above their desired level. 
A)  the economy is in equilibrium. 
B)  production is greater than spending. 
C)  production is less than spending. 
D)  inventories will increase above their desired level.

Question 20

Figure 23-1
  
-Refer to Figure 23-1.If the economy is at point L,what will happen?

Accepted Answer

A)  Inventories have fallen below their desired level, and firms decrease production. 
B)  Inventories have fallen below their desired level, and firms increase production. 
C)  Inventories have risen above their desired level, and firms decrease production. 
D)  Inventories have risen above their desired level, and firms increase production. 
A)  Inventories have fallen below their desired level, and firms decrease production. 
B)  Inventories have fallen below their desired level, and firms increase production. 
C)  Inventories have risen above their desired level, and firms decrease production. 
D)  Inventories have risen above their desired level, and firms increase production.

National income =

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure?

Suppose the United States experiences a long period of inflation relative to other countries.How will this affect U.S.net exports?

Examples of assets that are included in household wealth would be

If the consumption function is defined as C = 5,500 + 0.9Y,what is the autonomous level of consumption expenditure?

Which is the largest component of aggregate expenditure?

If firms are more optimistic that future profits will rise and remain strong for the next few years,then

From 1983-2011,net exports for the United States

Which of the following will cause a direct increase in consumption spending?

If the marginal propensity to consume is 0.75,the marginal propensity to save is

On the 45-degree line diagram,the 45-degree line shows points where

Equilibrium GDP is equal to

C = 4,000 + 0.5Y I = 1,500 G=2,250 NX = -150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

Which of the following is a true statement about the multiplier?

Explain how a stock market crash has the potential to lead to a recession in an economy.

Table 23-7 -Refer to Table 23-7.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 investment spending declines by $50 billion,what will happen to equilibrium GDP?

Figure 23-1 -Refer to Figure 23-1.If the economy is at a level of aggregate expenditure given by point K,

Figure 23-1 -Refer to Figure 23-1.If the economy is at point L,what will happen?

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

National income =

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure?

Suppose the United States experiences a long period of inflation relative to other countries.How will this affect U.S.net exports?

Examples of assets that are included in household wealth would be

If the consumption function is defined as C = 5,500 + 0.9Y,what is the autonomous level of consumption expenditure?

Which is the largest component of aggregate expenditure?

If firms are more optimistic that future profits will rise and remain strong for the next few years,then

From 1983-2011,net exports for the United States

Which of the following will cause a direct increase in consumption spending?

If the marginal propensity to consume is 0.75,the marginal propensity to save is

On the 45-degree line diagram,the 45-degree line shows points where

Equilibrium GDP is equal to

C = 4,000 + 0.5Y I = 1,500 G=2,250 NX = -150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

Which of the following is a true statement about the multiplier?

Explain how a stock market crash has the potential to lead to a recession in an economy.

Table 23-7 -Refer to Table 23-7.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 investment spending declines by $50 billion,what will happen to equilibrium GDP?

Figure 23-1 -Refer to Figure 23-1.If the economy is at a level of aggregate expenditure given by point K,

Figure 23-1 -Refer to Figure 23-1.If the economy is at point L,what will happen?

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