Question 1

The larger the MPC,the larger the value of the multiplier.

Accepted Answer

A) True 
 B)False

Question 2

What is the formula for the multiplier? Explain why this formula is considered to be too simple.

Accepted Answer

Multiplier = .
 @#IMG-DLM& The formula ignores the

Question 3

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

Accepted Answer

A) True 
 B)False

Question 4

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC). Show that MPC + MPS = 1.
Table 23-4

Accepted Answer

The MPC is defined as:
MPC = @#IMG-DLM& = @#IMG-DLM& = @#IMG-DLM& = 0.

Question 5

Autonomous expenditure times the multiplier equals

Accepted Answer

A)  autonomous saving. 
B)  autonomous consumption. 
C)  equilibrium GDP. 
D)  planned autonomous investment. 
A)  autonomous saving. 
B)  autonomous consumption. 
C)  equilibrium GDP. 
D)  planned autonomous investment.

Question 6

An decrease in the price level in the United States will shift the aggregate expenditure line downward.

Accepted Answer

A) True 
 B)False

Question 7

The five most important variables that determine the level of ________ are disposable income,wealth,expected future income,price level,and interest rate.

Accepted Answer

A)  consumption 
B)  government purchases 
C)  planned investment 
D)  net exports 
A)  consumption 
B)  government purchases 
C)  planned investment 
D)  net exports

Question 8

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume?
C = 1,000 + 0.8Y
I = 1,500
G=1,250
NX = 100

Accepted Answer

A)  0.2 
B)  0.8 
C)  1.8 
D)  10 
A)  0.2 
B)  0.8 
C)  1.8 
D)  10

Question 9

Lower interest rates increase both consumption and investment spending.

Accepted Answer

A) True 
 B)False

Question 10

Figure 23-3
  
-Refer to Figure 23-3. Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP₂ to GDP₁. If the MPC is 0.8,then what is the change in GDP?

Accepted Answer

A)  -$4 million 
B)  -$5 million 
C)  -$25 million 
D)  -$40 million 
A)  -$4 million 
B)  -$5 million 
C)  -$25 million 
D)  -$40 million

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

An increase in the price level in the United States will reduce imports and increase exports.

Accepted Answer

A) True 
 B)False

Question 13

Figure 23-1
  
-Refer to Figure 23-1.If the economy is at point J,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.

Question 14

If inflation in the United States is lower than inflation in other countries,what will be the effect on net exports for the United States?

Accepted Answer

A)  Net exports will rise as U.S. exports increase. 
B)  Net exports will rise as U.S. imports increase. 
C)  Net exports will decrease as U.S. exports decrease. 
D)  Net exports will decrease as U.S. imports decrease. 
A)  Net exports will rise as U.S. exports increase. 
B)  Net exports will rise as U.S. imports increase. 
C)  Net exports will decrease as U.S. exports decrease. 
D)  Net exports will decrease as U.S. imports decrease.

Question 15

If disposable income falls by $40 billion and consumption falls by $30 billion,then the slope of the consumption function is

Accepted Answer

A)  1.33. 
B)  0.75. 
C)  0.4. 
D)  0.3. 
A)  1.33. 
B)  0.75. 
C)  0.4. 
D)  0.3.

Question 16

If planned aggregate expenditure is greater than total production,

Accepted Answer

A)  actual inventories will equal planned inventories. 
B)  firms will experience an unplanned increase in inventories. 
C)  GDP will increase. 
D)  the economy is in equilibrium. 
A)  actual inventories will equal planned inventories. 
B)  firms will experience an unplanned increase in inventories. 
C)  GDP will increase. 
D)  the economy is in equilibrium.

Question 17

An unplanned decrease in inventories results in

Accepted Answer

A)  a decrease in planned investment. 
B)  an increase in planned investment. 
C)  actual investment that is greater than planned investment. 
D)  actual investment that is less than planned investment. 
A)  a decrease in planned investment. 
B)  an increase in planned investment. 
C)  actual investment that is greater than planned investment. 
D)  actual investment that is less than planned investment.

Question 18

Table 23-1
  
-Refer to Table 23-1. Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

Accepted Answer

The macroeconomic equilibrium is determi

Question 19

An example of assets that are included in ________ would be stocks,bonds,and savings accounts.

Accepted Answer

A)  household wealth 
B)  household income 
C)  planned investment 
D)  consumer purchases 
A)  household wealth 
B)  household income 
C)  planned investment 
D)  consumer purchases

Question 20

If firms sell what they expected to sell,which of the following will be true?

Accepted Answer

A)  Aggregate expenditure will be greater than GDP. 
B)  There is no unplanned change in inventories. 
C)  Inventories will rise, and GDP and employment will fall. 
D)  Aggregate expenditure will be less than GDP. 
A)  Aggregate expenditure will be greater than GDP. 
B)  There is no unplanned change in inventories. 
C)  Inventories will rise, and GDP and employment will fall. 
D)  Aggregate expenditure will be less than GDP.

The larger the MPC,the larger the value of the multiplier.

What is the formula for the multiplier? Explain why this formula is considered to be too simple.

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC). Show that MPC + MPS = 1. Table 23-4

Autonomous expenditure times the multiplier equals

An decrease in the price level in the United States will shift the aggregate expenditure line downward.

The five most important variables that determine the level of ________ are disposable income,wealth,expected future income,price level,and interest rate.

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 1,000 + 0.8Y I = 1,500 G=1,250 NX = 100

Lower interest rates increase both consumption and investment spending.

Figure 23-3 -Refer to Figure 23-3. Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP₂ to GDP₁. If the MPC is 0.8,then what is the change in GDP?

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

An increase in the price level in the United States will reduce imports and increase exports.

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

If inflation in the United States is lower than inflation in other countries,what will be the effect on net exports for the United States?

If disposable income falls by $40 billion and consumption falls by $30 billion,then the slope of the consumption function is

If planned aggregate expenditure is greater than total production,

An unplanned decrease in inventories results in

Table 23-1 -Refer to Table 23-1. Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

An example of assets that are included in ________ would be stocks,bonds,and savings accounts.

If firms sell what they expected to sell,which of the following will be true?

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

The larger the MPC,the larger the value of the multiplier.

What is the formula for the multiplier? Explain why this formula is considered to be too simple.

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC). Show that MPC + MPS = 1. Table 23-4

Autonomous expenditure times the multiplier equals

An decrease in the price level in the United States will shift the aggregate expenditure line downward.

The five most important variables that determine the level of ________ are disposable income,wealth,expected future income,price level,and interest rate.

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 1,000 + 0.8Y I = 1,500 G=1,250 NX = 100

Lower interest rates increase both consumption and investment spending.

Figure 23-3 -Refer to Figure 23-3. Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP₂ to GDP₁. If the MPC is 0.8,then what is the change in GDP?

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

An increase in the price level in the United States will reduce imports and increase exports.

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

If inflation in the United States is lower than inflation in other countries,what will be the effect on net exports for the United States?

If disposable income falls by $40 billion and consumption falls by $30 billion,then the slope of the consumption function is

If planned aggregate expenditure is greater than total production,

An unplanned decrease in inventories results in

Table 23-1 -Refer to Table 23-1. Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

An example of assets that are included in ________ would be stocks,bonds,and savings accounts.

If firms sell what they expected to sell,which of the following will be true?

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