Question 1

The components of aggregate expenditure are consumption expenditure,

Accepted Answer

A)  interest, gross spending, and net spending. 
B)  investment, government expenditure on goods and services, and net income. 
C)  interest, government expenditure on goods and services, and net exports. 
D)  investment, government expenditure on goods and services, and net exports. 
E)  investment, government expenditure on goods and services, and net taxes. 
A)  interest, gross spending, and net spending. 
B)  investment, government expenditure on goods and services, and net income. 
C)  interest, government expenditure on goods and services, and net exports. 
D)  investment, government expenditure on goods and services, and net exports. 
E)  investment, government expenditure on goods and services, and net taxes.

Question 2

When aggregate planned expenditure exceeds real GDP,

Accepted Answer

A)  firms increase production and real GDP increases. 
B)  firms decrease production and real GDP increases. 
C)  firms decrease production and real GDP decreases. 
D)  firms increase production and real GDP decreases. 
E)  firms do nothing because induced expenditure will increase so that the equilibrium is reached. 
A)  firms increase production and real GDP increases. 
B)  firms decrease production and real GDP increases. 
C)  firms decrease production and real GDP decreases. 
D)  firms increase production and real GDP decreases. 
E)  firms do nothing because induced expenditure will increase so that the equilibrium is reached.

Question 3

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Disposable income } \
\text { (trillions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption expenditure } \
\text { (trillions of 2005 dollars) }
\end{array} \
\hline 0.0 & 1.8 \
1.0 & 2.6 \
2.0 & 3.2 \
3.0 & 4.0 \
4.0 & 5.8 \
\hline
\end{array}$$
-The above table has data from the nation of Atlantica.Based on these data, autonomous consumption is

Accepted Answer

A)  $1.8 trillion. 
B)  $2.6 trillion. 
C)  $3.2 trillion. 
D)  $4.0 trillion. 
E)  $5.8 trillion. 
A)  $1.8 trillion. 
B)  $2.6 trillion. 
C)  $3.2 trillion. 
D)  $4.0 trillion. 
E)  $5.8 trillion.

Question 4

If real GDP equals aggregate planned expenditure, then inventories

Accepted Answer

A)  rise above their target levels. 
B)  fall below their target levels. 
C)  equal their target levels. 
D)  are either above or below their target levels depending on whether planned inventories are above or below their target levels. 
E)  None of the above answers is necessarily correct because there is no relationship between inventories and aggregate planned expenditure. 
A)  rise above their target levels. 
B)  fall below their target levels. 
C)  equal their target levels. 
D)  are either above or below their target levels depending on whether planned inventories are above or below their target levels. 
E)  None of the above answers is necessarily correct because there is no relationship between inventories and aggregate planned expenditure.

Question 5

When the change in unplanned inventories is positive, then

Accepted Answer

A)  real GDP is less than aggregate planned expenditure. 
B)  real GDP equals aggregate planned expenditure. 
C)  real GDP is larger than aggregate planned expenditure. 
D)  economic growth will occur as the economy returns to equilibrium. 
E)  planned inventories will increase in order to return to equilibrium. 
A)  real GDP is less than aggregate planned expenditure. 
B)  real GDP equals aggregate planned expenditure. 
C)  real GDP is larger than aggregate planned expenditure. 
D)  economic growth will occur as the economy returns to equilibrium. 
E)  planned inventories will increase in order to return to equilibrium.

Question 6

Equilibrium expenditure is the level of expenditure at which

Accepted Answer

A)  firms' inventories are zero. 
B)  firms' inventories are at the desired level. 
C)  firms' produce more output than they sell. 
D)  aggregate planned expenditure minus planned changes in inventories equals real GDP. 
E)  aggregate planned expenditure plus planned changes in inventories equals real GDP. 
A)  firms' inventories are zero. 
B)  firms' inventories are at the desired level. 
C)  firms' produce more output than they sell. 
D)  aggregate planned expenditure minus planned changes in inventories equals real GDP. 
E)  aggregate planned expenditure plus planned changes in inventories equals real GDP.

Question 7

A rise in the real interest rate ________ consumption expenditure and ________.

Accepted Answer

A)  increases; shifts the consumption function upward 
B)  decreases; shifts the consumption function downward 
C)  increases; shifts the consumption function downward 
D)  decreases; shifts the consumption function upward 
E)  decreases; results in a movement downward along the consumption function 
A)  increases; shifts the consumption function upward 
B)  decreases; shifts the consumption function downward 
C)  increases; shifts the consumption function downward 
D)  decreases; shifts the consumption function upward 
E)  decreases; results in a movement downward along the consumption function

Question 8

If aggregate planned expenditures are less than real GDP, then

Accepted Answer

A)  inventories increase above their planned levels and businesses decrease their production. 
B)  inventories decrease below their planned levels and businesses increase their production. 
C)  there is no equilibrium level of real GDP. 
D)  inventories increase above their planned levels and businesses increase their production. 
E)  unplanned inventory changes equal zero. 
A)  inventories increase above their planned levels and businesses decrease their production. 
B)  inventories decrease below their planned levels and businesses increase their production. 
C)  there is no equilibrium level of real GDP. 
D)  inventories increase above their planned levels and businesses increase their production. 
E)  unplanned inventory changes equal zero.

Question 9

When investment increases, the expenditure multiplier points out that

Accepted Answer

A)  consumption decreases by a greater amount. 
B)  real GDP increases by a greater amount. 
C)  consumption increases by the same amount. 
D)  real GDP decreases by a greater amount. 
E)  ultimately investment increases by more than the initial increase. 
A)  consumption decreases by a greater amount. 
B)  real GDP increases by a greater amount. 
C)  consumption increases by the same amount. 
D)  real GDP decreases by a greater amount. 
E)  ultimately investment increases by more than the initial increase.

Question 10

When the price level ________, equilibrium expenditure ________ and the quantity of real GDP demanded ________.

Accepted Answer

A)  falls; increases; increases 
B)  rises; increases; decreases 
C)  falls; increases; decreases 
D)  rises; decreases; increases 
E)  rises; increases; increases 
A)  falls; increases; increases 
B)  rises; increases; decreases 
C)  falls; increases; decreases 
D)  rises; decreases; increases 
E)  rises; increases; increases

Question 11

A shift in the aggregate planned expenditure curve as a result of an increase in the price level results in

Accepted Answer

A)  a leftward shift in the aggregate demand curve. 
B)  a downward movement along the aggregate demand curve. 
C)  a rightward shift in the aggregate demand curve. 
D)  an upward movement along the aggregate demand curve. 
E)  no movement along the aggregate demand curve and no shift in the aggregate demand curve. 
A)  a leftward shift in the aggregate demand curve. 
B)  a downward movement along the aggregate demand curve. 
C)  a rightward shift in the aggregate demand curve. 
D)  an upward movement along the aggregate demand curve. 
E)  no movement along the aggregate demand curve and no shift in the aggregate demand curve.

Question 12

The MPC is equal to the

Accepted Answer

A)  change in consumption expenditure divided by the change in disposable income that brought it about. 
B)  change in consumption expenditure divided by the total disposable income that brought it about. 
C)  level of consumption expenditure divided by the level of total disposable income that brought it about. 
D)  level of consumption divided by the change in disposable income that brought it about. 
E)  change in disposable income divided by the change in consumption expenditure. 
A)  change in consumption expenditure divided by the change in disposable income that brought it about. 
B)  change in consumption expenditure divided by the total disposable income that brought it about. 
C)  level of consumption expenditure divided by the level of total disposable income that brought it about. 
D)  level of consumption divided by the change in disposable income that brought it about. 
E)  change in disposable income divided by the change in consumption expenditure.

Question 13

The marginal propensity to import is larger in Mexico than in the United States.As a result,

Accepted Answer

A)  the expenditure multiplier is larger in the United States. 
B)  the expenditure multiplier is larger in Mexico. 
C)  there is less autonomous investment in Mexico. 
D)  there is more autonomous expenditure in Mexico. 
E)  induced expenditure is larger in Mexico. 
A)  the expenditure multiplier is larger in the United States. 
B)  the expenditure multiplier is larger in Mexico. 
C)  there is less autonomous investment in Mexico. 
D)  there is more autonomous expenditure in Mexico. 
E)  induced expenditure is larger in Mexico.

Question 14

-In the figure above, if real GDP is $6 trillion, aggregate planned expenditure is

Accepted Answer

A)  less than $6 trillion and unplanned inventory changes are positive. 
B)  equal to $6 trillion and there are no unplanned inventory changes. 
C)  more than $6 trillion and unplanned inventory changes are negative. 
D)  equal to $6 trillion and unplanned inventory changes are negative. 
E)  equal to $6 trillion and unplanned inventory changes are positive. 
A)  less than $6 trillion and unplanned inventory changes are positive. 
B)  equal to $6 trillion and there are no unplanned inventory changes. 
C)  more than $6 trillion and unplanned inventory changes are negative. 
D)  equal to $6 trillion and unplanned inventory changes are negative. 
E)  equal to $6 trillion and unplanned inventory changes are positive.

Question 15

How does an increase in the price level affect the aggregate planned expenditure curve and the aggregate demand curve?

Accepted Answer

An increase in the price level

Question 16

The expenditure multiplier is equal to the change in ________ divided by the change in ________.

Accepted Answer

A)  autonomous expenditure; equilibrium expenditure 
B)  dependent expenditure; autonomous expenditure 
C)  real GDP; equilibrium expenditure 
D)  equilibrium expenditure; autonomous expenditure 
E)  the price level; real GDP 
A)  autonomous expenditure; equilibrium expenditure 
B)  dependent expenditure; autonomous expenditure 
C)  real GDP; equilibrium expenditure 
D)  equilibrium expenditure; autonomous expenditure 
E)  the price level; real GDP

Question 17

$$\begin{array} { c c c c c c } 
\begin{array} { c } 
\text { RealGDP, } Y \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { Consumption } \
\text { expenditure, C }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { (trillions of } \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { expenditure, } G \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { Exports, } X \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { Imports, } M \
\text { (trillions of }
\end{array} \
2005 \text { dollars) } & 2005 \text { dollars) } & 2005 \text { dollars) } & \text { 2005 dollars) } & \text { 2005 dollars) } & 2005 \text { dollars) } \
\hline 0.00 & 0.00 & 1.75 & 1.00 & 0.75 & 0.00 \
3.00 & 2.00 & 1.75 & 1.00 & 0.75 & 0.75 \
6.00 & 4.00 & 1.75 & 1.00 & 0.75 & 1.50 \
9.00 & 6.00 & 1.75 & 1.00 & 0.75 & 2.25 \
12.00 & 8.00 & 1.75 & 1.00 & 0.75 & 3.00
\end{array}$$
-The above table gives data for the nation of Mojo.At what level of real GDP is the unplanned inventory change equal to $1.75 trillion?

Accepted Answer

A)  $3.0 trillion 
B)  $6.0 trillion 
C)  $9.0 trillion 
D)  $12.0 trillion 
E)  $0.0 trillion. 
A)  $3.0 trillion 
B)  $6.0 trillion 
C)  $9.0 trillion 
D)  $12.0 trillion 
E)  $0.0 trillion.

Question 18

Define autonomous consumption and explain how it is represented on a consumption function graph.

Accepted Answer

Autonomous consumption is the consumptio

Question 19

An increase in the marginal tax rate

Accepted Answer

A)  increases the expenditure multiplier. 
B)  decreases the expenditure multiplier but cannot make it negative. 
C)  has no effect on the expenditure multiplier. 
D)  can either increase or decrease the expenditure multiplier. 
E)  decreases the expenditure multiplier and can make it negative. 
A)  increases the expenditure multiplier. 
B)  decreases the expenditure multiplier but cannot make it negative. 
C)  has no effect on the expenditure multiplier. 
D)  can either increase or decrease the expenditure multiplier. 
E)  decreases the expenditure multiplier and can make it negative.

Question 20

\[\begin{array} { c c c c c c } 
\begin{array} { c } 
\text { Consumption } \
\text { Real GDP, } Y \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { Investment, I } \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { expenditure, } G \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { Exports, } X \
\text { (trillions of }
\end{array} & \begin{array} { c } 
\text { Imports, } M \
\text { (trillions of }
\end{array} \
2005 \text { dollars) } & \text { 2005 dollars) } & \text { 2005 dollars) } & \text { 2005 dollars) } & \text { 2005 dollars) } & 2005 \text { dollars) } \
\hline 0 & 1.00 & 2 & 1 & 1 & 0.50 \
1 & 1.75 & 2 & 1 & 1 & 0.75 \
2 & 2.50 & 2 & 1 & 1 & 1.00 \
3 & 3.25 & 2 & 1 & 1 & 1.25 \
4 & 4.00 & 2 & 1 & 1 & 1.50 \
5 & 4.75 & 2 & 1 & 1 & 1.75 \
6 & 5.50 & 2 & 1 & 1 & 2.00 \
7 & 6.25 & 2 & 1 & 1 & 2.25 \
8 & 7.00 & 2 & 1 & 1 & 2.50 \
9 & 7.75 & 2 & 1 & 1 & 2.75 \
10 & 8.50 & 2 & 1 & 1 & 3.00
\end{array}\]
-The table above gives data for the nation of Mosh.If real GDP is $9 trillion, then unplanned inventory change equals

Accepted Answer

A)  0. 
B)  $5.5 trillion. 
C)  $1.25 trillion. 
D)  $5 trillion. 
E)  $9 trillion. 
A)  0. 
B)  $5.5 trillion. 
C)  $1.25 trillion. 
D)  $5 trillion. 
E)  $9 trillion.

The components of aggregate expenditure are consumption expenditure,

When aggregate planned expenditure exceeds real GDP,

Disposable income (trillions of 2005 dollars) Consumption expenditure (trillions of 2005 dollars) 0.0 1.8 1.0 2.6 2.0 3.2 3.0 4.0 4.0 5.8 -The above table has data from the nation of Atlantica.Based on these data, autonomous consumption is

If real GDP equals aggregate planned expenditure, then inventories

When the change in unplanned inventories is positive, then

Equilibrium expenditure is the level of expenditure at which

A rise in the real interest rate consumption expenditure and .

If aggregate planned expenditures are less than real GDP, then

When investment increases, the expenditure multiplier points out that

When the price level , equilibrium expenditure and the quantity of real GDP demanded .

A shift in the aggregate planned expenditure curve as a result of an increase in the price level results in

The MPC is equal to the

The marginal propensity to import is larger in Mexico than in the United States.As a result,

-In the figure above, if real GDP is $6 trillion, aggregate planned expenditure is

How does an increase in the price level affect the aggregate planned expenditure curve and the aggregate demand curve?

The expenditure multiplier is equal to the change in divided by the change in .

Define autonomous consumption and explain how it is represented on a consumption function graph.

An increase in the marginal tax rate

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 14: Aggregate Expenditure Multiplier

The components of aggregate expenditure are consumption expenditure,

When aggregate planned expenditure exceeds real GDP,

Disposable income (trillions of 2005 dollars) Consumption expenditure (trillions of 2005 dollars) 0.0 1.8 1.0 2.6 2.0 3.2 3.0 4.0 4.0 5.8 -The above table has data from the nation of Atlantica.Based on these data, autonomous consumption is

If real GDP equals aggregate planned expenditure, then inventories

When the change in unplanned inventories is positive, then

Equilibrium expenditure is the level of expenditure at which

A rise in the real interest rate ________ consumption expenditure and ________.

If aggregate planned expenditures are less than real GDP, then

When investment increases, the expenditure multiplier points out that

When the price level ________, equilibrium expenditure ________ and the quantity of real GDP demanded ________.

A shift in the aggregate planned expenditure curve as a result of an increase in the price level results in

The MPC is equal to the

The marginal propensity to import is larger in Mexico than in the United States.As a result,

-In the figure above, if real GDP is $6 trillion, aggregate planned expenditure is

How does an increase in the price level affect the aggregate planned expenditure curve and the aggregate demand curve?

The expenditure multiplier is equal to the change in ________ divided by the change in ________.

Define autonomous consumption and explain how it is represented on a consumption function graph.

An increase in the marginal tax rate

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

A rise in the real interest rate consumption expenditure and .

When the price level , equilibrium expenditure and the quantity of real GDP demanded .

The expenditure multiplier is equal to the change in divided by the change in .