Exam 12: Aggregate Expenditure and Output in the Short Run

Firms in a small economy anticipated that inventories would grow over the past year by $500,000. Over that year,inventories actually grew by only $400,000. This implies that

Aggregate expenditure includes spending on

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 $10 billion,what will happen to equilibrium GDP?

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

On the 45-degree line diagram,the 45-degree line shows points where real aggregate expenditure equals

What are the five main determinants of consumption spending? Which of these is the most important?

Increases in the price level will

If the consumption function is defined as C = 7,250 + 0.8Y,what is the marginal propensity to save?

If the consumption function is defined as C = 5,500 + 0.9Y,what is the marginal propensity to consume?

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?

A decrease in the real interest rate will

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

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

If disposable income increases by $500 million,and consumption increases by $400 million,then the marginal propensity to consume is

Net exports usually ________ when the U.S.economy is in a recession and ________ when the U.S.economy is expanding.

________ is defined as national income + transfers - taxes.

Which of the following will reduce consumer expenditures?

From 1983-2011,________ for the United States were negative.

If an increase in investment spending of $20 million results in a $200 million increase in equilibrium real GDP,then

Figure 23-1 -Refer to Figure 23-1. According to the figure above,at what point is aggregate expenditure less than GDP?