Exam 14: Aggregate Expenditure Multiplier

The smaller the slope of the aggregate planned expenditure (AE) curve, the

The marginal propensity to consume equals

Suppose the economy has no income taxes or imports.The MPC equals 0.8.What does the expenditure model predict will be the change in real GDP if investment increases by $200 billion?

Autonomous expenditure includes

Real GDP, Y Consumption expenditure, C Government (billionvestment, I expenditure, G Exports, X (b) 2005 (billions of 2005 (billions of 2005 (billions of 2005 (billions of Imports, M (billions of dollars) dollars) dollars) dollars) 2005 dollars) 2005 dollars) 200 260 100 100 50 70 400 420 100 100 50 90 600 580 100 100 50 110 800 740 100 100 50 130 1,000 900 100 100 50 150 1,200 1,060 100 100 50 170 1,400 1,220 100 100 50 190 1,600 1,380 100 100 50 210 1,800 1,540 100 100 50 230 -The above table gives information for the nation of East Hampton. a. Find aggregate planned expenditure for each level of real GDP. b. What is the MPC? c. What is the equilibrium level of real GDP?

Aggregate planned expenditure decreases if

The consumption function is the relationship between ________, other things remaining the same.

What is unplanned investment? How does it occur?

Disposable income (trillions of 2005 dollars) Consumption expenditure (trillions of 2005 dollars) 0.0 1.5 2.0 3.0 4.0 4.5 6.0 6.0 8.0 7.5 -The above table has data from the nation of Atlantica.Based on these data, what is marginal propensity to consume?

Disposable income (trillions of 2005 dollars) Consumption expenditure (trillions of 2005 dollars) 0.0 0.8 1.0 1.6 2.0 2.4 3.0 3.2 4.0 4.0 -The above table has data on the consumption function in the nation of Mojo. a. What is the amount of autonomous consumption expenditure? b. What is the marginal propensity to consume?

According to the aggregate expenditure model, when faced with unwanted inventory firms

If aggregate planned expenditures exceed real GDP, then

During 2010, a country reported that its real GDP increased by $3.0 billion.If the slope of its aggregate planned expenditure curve is 0.9, then which of the following might have lead to the increase in real GDP?

Which components of aggregate expenditure change as a result of real GDP changing?

"If aggregate planned expenditure exceeds real GDP, then aggregate expenditure and real GDP will increase." Explain whether the previous sentence is correct or incorrect.

When aggregate planned expenditure exceeds real GDP, there is

Real GDP, Y (billions of 2005 dollars) Consumption expenditure, C Investment, I Government expenditure, G (billions of 2005 dollars) (billions of 2005 dollars) (billions of 2005 dollars) 100 150 150 100 200 200 150 100 300 250 150 100 400 300 150 100 500 350 150 100 600 400 150 100 700 450 150 100 800 500 150 100 900 550 150 100 -The above table gives data for the nation of South Hampton.There are no imports into or exports from South Hampton.The equilibrium level of real GDP is

14.5 Chapter Figures The above figure shows a nation's consumption function. -Using this consumption function, autonomous consumption is

When disposable income increases, consumption expenditure

If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increase consumption expenditure by $1.2 trillion. If the marginal propensity to consume is ________, then a $2 trillion increase in disposable income increases consumption expenditures by $1.6 trillion