Question 1

If disposable income decreases during a recession, there is

Accepted Answer

A)  a downward shift in the consumption function. 
B)  movement downward along the consumption function. 
C)  no change in consumption expenditures. 
D)  an upward shift in the consumption function. 
E)  movement upward along the consumption function. 
A)  a downward shift in the consumption function. 
B)  movement downward along the consumption function. 
C)  no change in consumption expenditures. 
D)  an upward shift in the consumption function. 
E)  movement upward along the consumption function.

Question 2

What is the relationship between the slope of the aggregate expenditure curve and the expenditure multiplier?

Accepted Answer

The expenditure multiplier equ

Question 3

In an economy in with no income taxes or imports, the expenditure multiplier equals

Accepted Answer

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

Question 4

The components of aggregate expenditure that are not influenced by GDP are known as

Accepted Answer

A)  unplanned expenditure. 
B)  induced expenditure. 
C)  planned expenditure. 
D)  autonomous expenditure. 
E)  fixed expenditure. 
A)  unplanned expenditure. 
B)  induced expenditure. 
C)  planned expenditure. 
D)  autonomous expenditure. 
E)  fixed expenditure.

Question 5

A change in the price level

Accepted Answer

A)  shifts the AE curve and creates a movement along the AD curve. 
B)  creates a movement along the AE curve and shifts the AD curve. 
C)  shifts the AE curve and the AD curve in the same direction. 
D)  shifts the AE curve and the AD curve in opposite directions. 
E)  creates a movement along both the AE curve and the AD curve. 
A)  shifts the AE curve and creates a movement along the AD curve. 
B)  creates a movement along the AE curve and shifts the AD curve. 
C)  shifts the AE curve and the AD curve in the same direction. 
D)  shifts the AE curve and the AD curve in opposite directions. 
E)  creates a movement along both the AE curve and the AD curve.

Question 6

The figure above shows a nation's aggregate expenditure curve.
-At which of the following points is the unplanned inventory change the largest positive amount?

Accepted Answer

A)  point B 
B)  point C 
C)  point D 
D)  point E 
E)  point F 
A)  point B 
B)  point C 
C)  point D 
D)  point E 
E)  point F

Question 7

If unplanned inventory changes are positive, what is the relationship between aggregate planned expenditure and real GDP?

Accepted Answer

If unplanned inventory changes

Question 8

On a graph of the consumption function, where the consumption function crosses the 45 degree line,

Accepted Answer

A)  disposable income is zero. 
B)  the maximum level of disposable income is earned. 
C)  there is no saving and no dissaving. 
D)  there are no tax payments. 
E)  induced consumption equals zero. 
A)  disposable income is zero. 
B)  the maximum level of disposable income is earned. 
C)  there is no saving and no dissaving. 
D)  there are no tax payments. 
E)  induced consumption equals zero.

Question 9

As real GDP ________, aggregate planned expenditure ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; remains the same, because it is independent from real GDP 
D)  increases; remains the same, because the increase in some components is precisely offset by the decrease in others 
E)  decreases; increases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; remains the same, because it is independent from real GDP 
D)  increases; remains the same, because the increase in some components is precisely offset by the decrease in others 
E)  decreases; increases

Question 10

The relationship between disposable income and consumption is

Accepted Answer

A)  positive. 
B)  negative. 
C)  nonexistent. 
D)  U-shaped. 
E)  not stable because it depends on whether the economy is in equilibrium or not. 
A)  positive. 
B)  negative. 
C)  nonexistent. 
D)  U-shaped. 
E)  not stable because it depends on whether the economy is in equilibrium or not.

Question 11

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The marginal propensity to consume in Syldavia is equal to

Accepted Answer

A)  0.80. 
B)  0.20. 
C)  5.00. 
D)  0.75. 
E)  0.40. 
A)  0.80. 
B)  0.20. 
C)  5.00. 
D)  0.75. 
E)  0.40.

Question 12

If aggregate planned expenditure is greater than GDP, then

Accepted Answer

A)  inventory investment is smaller than planned. 
B)  inventory investment is larger than planned. 
C)  production is too high. 
D)  a recession will result. 
E)  the consumption function will shift downward to restore the equilibrium. 
A)  inventory investment is smaller than planned. 
B)  inventory investment is larger than planned. 
C)  production is too high. 
D)  a recession will result. 
E)  the consumption function will shift downward to restore the equilibrium.

Question 13

The formula,, is the $\frac { 1 } { 1 - \text { slope of the AE curve } }$

Accepted Answer

A)  marginal propensity to consume. 
B)  marginal propensity to export. 
C)  expenditure multiplier. 
D)  marginal tax rate. 
E)  total amount of autonomous expenditure. 
A)  marginal propensity to consume. 
B)  marginal propensity to export. 
C)  expenditure multiplier. 
D)  marginal tax rate. 
E)  total amount of autonomous expenditure.

Question 14

If your planned consumption expenditure is $600 per month and your disposable income is $500 per month, your

Accepted Answer

A)  autonomous consumption must be zero per month. 
B)  dissaving is $100 per month. 
C)  autonomous consumption is -$100 per month. 
D)  saving is $100 per month. 
E)  induced consumption is $600. 
A)  autonomous consumption must be zero per month. 
B)  dissaving is $100 per month. 
C)  autonomous consumption is -$100 per month. 
D)  saving is $100 per month. 
E)  induced consumption is $600.

Question 15

When U.S.real GDP increases, U.S.imports

Accepted Answer

A)  decrease by the same amount. 
B)  increase by the same amount. 
C)  increase by less than the change in real GDP. 
D)  decrease by less than the change in real GDP. 
E)  increase by more than the change in real GDP. 
A)  decrease by the same amount. 
B)  increase by the same amount. 
C)  increase by less than the change in real GDP. 
D)  decrease by less than the change in real GDP. 
E)  increase by more than the change in real GDP.

Question 16

Define induced expenditure and autonomous expenditure.Which expenditure items are induced expenditure and which are autonomous expenditure?

Accepted Answer

Induced expenditure is aggregate expendi

Question 17

Induced expenditures are defined as that part of

Accepted Answer

A)  aggregate expenditure that responds to changes in real GDP. 
B)  real GDP that does not respond to changes in aggregate expenditure. 
C)  aggregate expenditure that does not respond to changes in real GDP. 
D)  autonomous expenditure that responds to changes in real GDP. 
E)  autonomous expenditure that does not respond to changes in real GDP. 
A)  aggregate expenditure that responds to changes in real GDP. 
B)  real GDP that does not respond to changes in aggregate expenditure. 
C)  aggregate expenditure that does not respond to changes in real GDP. 
D)  autonomous expenditure that responds to changes in real GDP. 
E)  autonomous expenditure that does not respond to changes in real GDP.

Question 18

The components of aggregate expenditure that make up the largest share of induced expenditure are

Accepted Answer

A)  consumption and imports. 
B)  consumption and exports. 
C)  imports and exports. 
D)  investment and government expenditure on goods and services. 
E)  consumption and government expenditure on goods and services. 
A)  consumption and imports. 
B)  consumption and exports. 
C)  imports and exports. 
D)  investment and government expenditure on goods and services. 
E)  consumption and government expenditure on goods and services.

Question 19

"When the price level increases, aggregate planned expenditure increases and equilibrium expenditure increases." Is the preceding statement correct or incorrect?
 Briefly explain your answer.

Accepted Answer

The statement is incorrect.An increase i

Question 20

As real U.S.GDP increases, U.S.income increases and so

Accepted Answer

A)  U.S.imports decrease. 
B)  U.S.exports decrease. 
C)  U.S.imports increase. 
D)  U.S.exports increase. 
E)  investment increases. 
A)  U.S.imports decrease. 
B)  U.S.exports decrease. 
C)  U.S.imports increase. 
D)  U.S.exports increase. 
E)  investment increases.

If disposable income decreases during a recession, there is

What is the relationship between the slope of the aggregate expenditure curve and the expenditure multiplier?

In an economy in with no income taxes or imports, the expenditure multiplier equals

The components of aggregate expenditure that are not influenced by GDP are known as

A change in the price level

The figure above shows a nation's aggregate expenditure curve. -At which of the following points is the unplanned inventory change the largest positive amount?

If unplanned inventory changes are positive, what is the relationship between aggregate planned expenditure and real GDP?

On a graph of the consumption function, where the consumption function crosses the 45 degree line,

As real GDP , aggregate planned expenditure .

The relationship between disposable income and consumption is

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The marginal propensity to consume in Syldavia is equal to

If aggregate planned expenditure is greater than GDP, then

The formula,, is the $\frac { 1 } { 1 - \text { slope of the AE curve } }$

If your planned consumption expenditure is $600 per month and your disposable income is $500 per month, your

When U.S.real GDP increases, U.S.imports

Define induced expenditure and autonomous expenditure.Which expenditure items are induced expenditure and which are autonomous expenditure?

Induced expenditures are defined as that part of

The components of aggregate expenditure that make up the largest share of induced expenditure are

"When the price level increases, aggregate planned expenditure increases and equilibrium expenditure increases." Is the preceding statement correct or incorrect? Briefly explain your answer.

As real U.S.GDP increases, U.S.income increases and so

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

If disposable income decreases during a recession, there is

What is the relationship between the slope of the aggregate expenditure curve and the expenditure multiplier?

In an economy in with no income taxes or imports, the expenditure multiplier equals

The components of aggregate expenditure that are not influenced by GDP are known as

A change in the price level

The figure above shows a nation's aggregate expenditure curve. -At which of the following points is the unplanned inventory change the largest positive amount?

If unplanned inventory changes are positive, what is the relationship between aggregate planned expenditure and real GDP?

On a graph of the consumption function, where the consumption function crosses the 45 degree line,

As real GDP ________, aggregate planned expenditure ________.

The relationship between disposable income and consumption is

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The marginal propensity to consume in Syldavia is equal to

If aggregate planned expenditure is greater than GDP, then

The formula,, is the 11− slope of the AE curve \frac { 1 } { 1 - \text { slope of the AE curve } }1− slope of the AE curve 1​

If your planned consumption expenditure is $600 per month and your disposable income is $500 per month, your

When U.S.real GDP increases, U.S.imports

Define induced expenditure and autonomous expenditure.Which expenditure items are induced expenditure and which are autonomous expenditure?

Induced expenditures are defined as that part of

The components of aggregate expenditure that make up the largest share of induced expenditure are

"When the price level increases, aggregate planned expenditure increases and equilibrium expenditure increases." Is the preceding statement correct or incorrect? Briefly explain your answer.

As real U.S.GDP increases, U.S.income increases and so

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

As real GDP , aggregate planned expenditure .

The formula,, is the $\frac { 1 } { 1 - \text { slope of the AE curve } }$