Question 1

Investment spending will decrease when

Accepted Answer

A)  the interest rate falls. 
B)  the corporate income tax decreases. 
C)  business cash flow decreases. 
D)  firms become more optimistic about earning future profits. 
A)  the interest rate falls. 
B)  the corporate income tax decreases. 
C)  business cash flow decreases. 
D)  firms become more optimistic about earning future profits.

Question 2

The decline in consumer spending during the 2007-2009 recession was due in part to a decrease in disposable income. The decline in consumption resulting from the decline in disposable income caused a ________ the aggregate expenditure curve.

Accepted Answer

A)  movement up along 
B)  movement down along 
C)  downward shift of 
D)  upward shift of 
A)  movement up along 
B)  movement down along 
C)  downward shift of 
D)  upward shift of

Question 3

What are the four categories of aggregate expenditure?

Accepted Answer

The four categories are consum

Question 4

The ________ model focuses on the relationship between total spending and real GDP in the short run,assuming the price level is constant.

Accepted Answer

A)  supply and demand 
B)  national income 
C)  aggregate expenditure 
D)  business cycle 
A)  supply and demand 
B)  national income 
C)  aggregate expenditure 
D)  business cycle

Question 5

Table 23-2
  
-Refer to Table 23-2. Given the consumption schedule in the table above,the marginal propensity to consume is

Accepted Answer

A)  0.5. 
B)  0.6. 
C)  0.75. 
D)  0.8. 
A)  0.5. 
B)  0.6. 
C)  0.75. 
D)  0.8.

Question 6

A decrease in the price level results in a(n)________ in household consumption spending and a(n)________ in investment spending.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  decrease; decrease 
D)  decrease; increase 
A)  increase; decrease 
B)  increase; increase 
C)  decrease; decrease 
D)  decrease; increase

Question 7

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP?
C = 1,000 + 0.8Y
I = 1,500
G=1,250
NX = 100

Accepted Answer

A)  $3,080 
B)  $3,850 
C)  $6,930 
D)  $19,250 
A)  $3,080 
B)  $3,850 
C)  $6,930 
D)  $19,250

Question 8

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

Accepted Answer

A)  The price level in the United States falls relative to the price level in other countries. 
B)  Congress abolishes investment tax incentives. 
C)  The interest rate rises. 
D)  Household wealth declines. 
A)  The price level in the United States falls relative to the price level in other countries. 
B)  Congress abolishes investment tax incentives. 
C)  The interest rate rises. 
D)  Household wealth declines.

Question 9

Equations for C,I,G,and NX are given below. If the equilibrium level of GDP is $21,500,what is the marginal propensity to consume?
C = 1,500 + (MPC)Y
I = 1,000
G = 2,000
NX = -200

Accepted Answer

A)  0.67 
B)  0.75 
C)  0.8 
D)  0.9 
A)  0.67 
B)  0.75 
C)  0.8 
D)  0.9

Question 10

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

Accepted Answer

A)  Cellar-Kefauver Act 
B)  Sherman Antitrust Act 
C)  Clayton Act 
D)  Smoot-Hawley Tariff 
A)  Cellar-Kefauver Act 
B)  Sherman Antitrust Act 
C)  Clayton Act 
D)  Smoot-Hawley Tariff

Question 11

Table 23-2
  
-Refer to Table 23-2.Given the consumption schedule in the table above,the marginal propensity to save is

Accepted Answer

A)  0.3. 
B)  0.4. 
C)  0.5. 
D)  0.6. 
A)  0.3. 
B)  0.4. 
C)  0.5. 
D)  0.6.

Question 12

A general formula for the multiplier is

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 13

If the economy is currently in equilibrium at a level of GDP that is above potential GDP,which of the following would move the economy back to potential GDP?

Accepted Answer

A)  a decrease in wealth 
B)  a decrease in interest rates 
C)  an increase in business confidence 
D)  a decrease in the value of the dollar relative to other currencies 
A)  a decrease in wealth 
B)  a decrease in interest rates 
C)  an increase in business confidence 
D)  a decrease in the value of the dollar relative to other currencies

Question 14

The multiplier is calculated as the change in ________ / change in ________.

Accepted Answer

A)  real GDP; autonomous expenditure 
B)  autonomous expenditure; real GDP. 
C)  nominal GDP; autonomous expenditure. 
D)  real GDP; induced spending. 
A)  real GDP; autonomous expenditure 
B)  autonomous expenditure; real GDP. 
C)  nominal GDP; autonomous expenditure. 
D)  real GDP; induced spending.

Question 15

The sum of the marginal propensity to consume and the marginal propensity to save is always equal to

Accepted Answer

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

Question 16

Ceteris paribus,how does an expansion in the United States affect U.S.net exports?

Accepted Answer

As GDP increases in the United States du

Question 17

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.

Accepted Answer

A) True 
 B)False

Question 18

When aggregate expenditure is less than GDP,which of the following is true?

Accepted Answer

A)  There was an unplanned increase in inventories. 
B)  Firms spent more on capital goods than they anticipated. 
C)  Households bought more new homes than they anticipated. 
D)  All of the above must be true when aggregate expenditure is less than GDP. 
A)  There was an unplanned increase in inventories. 
B)  Firms spent more on capital goods than they anticipated. 
C)  Households bought more new homes than they anticipated. 
D)  All of the above must be true when aggregate expenditure is less than GDP.

Question 19

Given the equations for C,I,G,and NX below,what is the marginal propensity to save?
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 20

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect U.S.net exports?

Accepted Answer

If inflation in the United States is low

Investment spending will decrease when

The decline in consumer spending during the 2007-2009 recession was due in part to a decrease in disposable income. The decline in consumption resulting from the decline in disposable income caused a ________ the aggregate expenditure curve.

What are the four categories of aggregate expenditure?

The ________ model focuses on the relationship between total spending and real GDP in the short run,assuming the price level is constant.

Table 23-2 -Refer to Table 23-2. Given the consumption schedule in the table above,the marginal propensity to consume is

A decrease in the price level results in a(n) in household consumption spending and a(n) in investment spending.

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 1,000 + 0.8Y I = 1,500 G=1,250 NX = 100

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

Equations for C,I,G,and NX are given below. If the equilibrium level of GDP is $21,500,what is the marginal propensity to consume? C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

Table 23-2 -Refer to Table 23-2.Given the consumption schedule in the table above,the marginal propensity to save is

A general formula for the multiplier is

If the economy is currently in equilibrium at a level of GDP that is above potential GDP,which of the following would move the economy back to potential GDP?

The multiplier is calculated as the change in / change in .

The sum of the marginal propensity to consume and the marginal propensity to save is always equal to

Ceteris paribus,how does an expansion in the United States affect U.S.net exports?

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.

When aggregate expenditure is less than GDP,which of the following is true?

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

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect U.S.net exports?

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

Investment spending will decrease when

The decline in consumer spending during the 2007-2009 recession was due in part to a decrease in disposable income. The decline in consumption resulting from the decline in disposable income caused a ________ the aggregate expenditure curve.

What are the four categories of aggregate expenditure?

The ________ model focuses on the relationship between total spending and real GDP in the short run,assuming the price level is constant.

Table 23-2 -Refer to Table 23-2. Given the consumption schedule in the table above,the marginal propensity to consume is

A decrease in the price level results in a(n)________ in household consumption spending and a(n)________ in investment spending.

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 1,000 + 0.8Y I = 1,500 G=1,250 NX = 100

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

Equations for C,I,G,and NX are given below. If the equilibrium level of GDP is $21,500,what is the marginal propensity to consume? C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

Table 23-2 -Refer to Table 23-2.Given the consumption schedule in the table above,the marginal propensity to save is

A general formula for the multiplier is

If the economy is currently in equilibrium at a level of GDP that is above potential GDP,which of the following would move the economy back to potential GDP?

The multiplier is calculated as the change in ________ / change in ________.

The sum of the marginal propensity to consume and the marginal propensity to save is always equal to

Ceteris paribus,how does an expansion in the United States affect U.S.net exports?

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.

When aggregate expenditure is less than GDP,which of the following is true?

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

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect U.S.net exports?

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

A decrease in the price level results in a(n) in household consumption spending and a(n) in investment spending.

The multiplier is calculated as the change in / change in .