Question 1

What is the result if planned spending exceeds planned output?

Accepted Answer

A)  unintended inventory increases 
B)  a reduction in GDP 
C)  a decrease in imports 
D)  unintended inventory reductions 
A)  unintended inventory increases 
B)  a reduction in GDP 
C)  a decrease in imports 
D)  unintended inventory reductions D

Question 2

What shift would result from a decrease in planned investment?

Accepted Answer

A)  The aggregate demand curve would shift outward. 
B)  The aggregate demand curve would shift inward. 
C)  The aggregate supply curve would shift inward. 
D)  The aggregate supply curve would shift outward. 
A)  The aggregate demand curve would shift outward. 
B)  The aggregate demand curve would shift inward. 
C)  The aggregate supply curve would shift inward. 
D)  The aggregate supply curve would shift outward. B

Question 3

-Refer to the table in the exhibit.What is the equilibrium level of GDP?

Accepted Answer

A)  $5.0 trillion 
B)  $5.5 trillion 
C)  $6.0 trillion 
D)  $6.5 trillion 
A)  $5.0 trillion 
B)  $5.5 trillion 
C)  $6.0 trillion 
D)  $6.5 trillion C

Question 4

What does the aggregate expenditure line represent?

Accepted Answer

A)  total planned spending at each income level 
B)  total planned spending at each price level 
C)  total planned spending at each income level, holding the price level constant 
D)  total planned spending at each price level, holding the level of income constant 
A)  total planned spending at each income level 
B)  total planned spending at each price level 
C)  total planned spending at each income level, holding the price level constant 
D)  total planned spending at each price level, holding the level of income constant

Question 5

How will a decrease in the price level affect the aggregate expenditure line?

Accepted Answer

A)  It will shift the aggregate expenditure line upward. 
B)  It will shift the aggregate expenditure line downward. 
C)  It will cause a movement up along the aggregate expenditure line. 
D)  It will cause a movement down along the aggregate expenditure line. 
A)  It will shift the aggregate expenditure line upward. 
B)  It will shift the aggregate expenditure line downward. 
C)  It will cause a movement up along the aggregate expenditure line. 
D)  It will cause a movement down along the aggregate expenditure line.

Question 6

Suppose the full employment level of income is $1,200 billion, and the present level of income is $1,000 billion.Which of the following describes autonomous expenditure under these circumstances?

Accepted Answer

A)  Autonomous expenditure is at full employment equilibrium. 
B)  Autonomous expenditure is too low for a full employment equilibrium. 
C)  Autonomous expenditure is too high for a full employment equilibrium. 
D)  Autonomous expenditure is the difference between the present level of income and the full employment level of income. 
A)  Autonomous expenditure is at full employment equilibrium. 
B)  Autonomous expenditure is too low for a full employment equilibrium. 
C)  Autonomous expenditure is too high for a full employment equilibrium. 
D)  Autonomous expenditure is the difference between the present level of income and the full employment level of income.

Question 7

Which of the following would result from an increase in planned investment?

Accepted Answer

A)  an outward shift in the aggregate demand curve 
B)  an inward shift in the aggregate demand curve 
C)  an outward shift in the aggregate supply curve 
D)  an inward shift in the aggregate supply curve 
A)  an outward shift in the aggregate demand curve 
B)  an inward shift in the aggregate demand curve 
C)  an outward shift in the aggregate supply curve 
D)  an inward shift in the aggregate supply curve

Question 8

Suppose the price level increases.Other things constant, will consumption spending increase or decrease?

Accepted Answer

A)  increase, because real income rises 
B)  decrease, because real income rises 
C)  increase, because the real value of wealth increases 
D)  decrease, because the real value of wealth decreases 
A)  increase, because real income rises 
B)  decrease, because real income rises 
C)  increase, because the real value of wealth increases 
D)  decrease, because the real value of wealth decreases

Question 9

In the income-expenditure framework, suppose planned aggregate expenditures are greater than real GDP.How will inventories be affected?

Accepted Answer

A)  Inventories will stay the same. 
B)  Inventories will first increase, and then decrease. 
C)  Inventories will increase. 
D)  Inventories will decrease. 
A)  Inventories will stay the same. 
B)  Inventories will first increase, and then decrease. 
C)  Inventories will increase. 
D)  Inventories will decrease.

Question 10

How would an economist use an aggregate expenditure line to show how an aggregate demand curve shifts?

Accepted Answer

A)  by letting changes in autonomous spending shift the aggregate expenditure line 
B)  by letting changes in the price level shift the aggregate expenditure line 
C)  by letting changes in the level of income shift the aggregate expenditure line 
D)  by letting changes in real GDP shift the aggregate expenditure line 
A)  by letting changes in autonomous spending shift the aggregate expenditure line 
B)  by letting changes in the price level shift the aggregate expenditure line 
C)  by letting changes in the level of income shift the aggregate expenditure line 
D)  by letting changes in real GDP shift the aggregate expenditure line

Question 11

How will a decrease in autonomous investment affect the aggregate expenditure line?

Accepted Answer

A)  It will shift the aggregate expenditure line upward. 
B)  It will shift the aggregate expenditure line downward. 
C)  It will result in an upward movement along the aggregate expenditure line. 
D)  It will result in a downward movement along the aggregate expenditure line. 
A)  It will shift the aggregate expenditure line upward. 
B)  It will shift the aggregate expenditure line downward. 
C)  It will result in an upward movement along the aggregate expenditure line. 
D)  It will result in a downward movement along the aggregate expenditure line.

Question 12

Suppose the marginal propensity to consume in Spain is 3/5, and the marginal propensity to save in Portugal is 1/10.Which of the following characterizes how the economy of each nation will be affected?

Accepted Answer

A)  The spending multiplier will be larger in Spain than in Portugal. 
B)  The spending multiplier will be smaller in Spain nation than in Portugal. 
C)  Autonomous consumption will be higher in Spain than in Portugal. 
D)  Autonomous consumption will be lower in Spain than in Portugal. 
A)  The spending multiplier will be larger in Spain than in Portugal. 
B)  The spending multiplier will be smaller in Spain nation than in Portugal. 
C)  Autonomous consumption will be higher in Spain than in Portugal. 
D)  Autonomous consumption will be lower in Spain than in Portugal.

Question 13

-Refer to the graph in the exhibit.Suppose the price level increases.What will the new equilibrium level of real GDP be?

Accepted Answer

A)  $100 
A)  $100

Question 14

The many job losses that occurred soon after the September 11, 2001 attacks in the United States could be viewed as just part of the first round of reduced aggregate expenditure.When did the second round occur?

Accepted Answer

A)  when government starting spending more on national security 
B)  when people who lost jobs, or who feared they would lose their jobs, started spending less 
C)  when businesses invested in backup data centres in case their main computers were attacked 
D)  when consumers went back to shopping at the urging of government officials 
A)  when government starting spending more on national security 
B)  when people who lost jobs, or who feared they would lose their jobs, started spending less 
C)  when businesses invested in backup data centres in case their main computers were attacked 
D)  when consumers went back to shopping at the urging of government officials

Question 15

What does the aggregate demand curve illustrate?

Accepted Answer

A)  the relationship between interest rates and income levels 
B)  the relationship between the price level and real GDP 
C)  the relationship between the price level and interest rates 
D)  the relationship between income levels and real GDP levels 
A)  the relationship between interest rates and income levels 
B)  the relationship between the price level and real GDP 
C)  the relationship between the price level and interest rates 
D)  the relationship between income levels and real GDP levels

Question 16

-Refer to the table in the exhibit, where S + NT = I + G + (X - IM).What does this equal?

Accepted Answer

A)  $1.1 trillion 
B)  $1.2 trillion 
C)  $1.3 trillion 
D)  $1.4 trillion 
A)  $1.1 trillion 
B)  $1.2 trillion 
C)  $1.3 trillion 
D)  $1.4 trillion

Question 17

Suppose the price level decreases.Other things constant, will people consume more or less?

Accepted Answer

A)  more, because nominal income will fall 
B)  less, because nominal income will rise 
C)  more, because the real value of people's wealth will increase 
D)  less, because real income will decrease 
A)  more, because nominal income will fall 
B)  less, because nominal income will rise 
C)  more, because the real value of people's wealth will increase 
D)  less, because real income will decrease

Question 18

What is the effect of a decrease in the price level?

Accepted Answer

A)  a downward shift in the aggregate expenditure line 
B)  a fall in the equilibrium level of output demanded 
C)  a downward movement along a particular aggregate demand curve 
D)  a leftward shift in aggregate demand curve 
A)  a downward shift in the aggregate expenditure line 
B)  a fall in the equilibrium level of output demanded 
C)  a downward movement along a particular aggregate demand curve 
D)  a leftward shift in aggregate demand curve

Question 19

-Refer to the table in the exhibit.At the equilibrium level of GDP, what do injections equal?

Accepted Answer

A)  $1.0 trillion 
B)  $1.3 trillion 
C)  $1.4 trillion 
D)  $1.5 trillion 
A)  $1.0 trillion 
B)  $1.3 trillion 
C)  $1.4 trillion 
D)  $1.5 trillion

Question 20

Suppose the level of autonomous spending decreases at a given price level.How does this relate to the aggregate expenditure line and the aggregate demand curve?

Accepted Answer

A)  The aggregate expenditure line shifts upward, and the economy moves along the aggregate demand curve. 
B)  The aggregate expenditure line shifts downward, and the economy moves along the aggregate demand curve. 
C)  The aggregate expenditure line shifts upward, and the aggregate demand curve shifts to the right. 
D)  The aggregate expenditure line shifts downward, and the aggregate demand curve shifts to the left. 
A)  The aggregate expenditure line shifts upward, and the economy moves along the aggregate demand curve. 
B)  The aggregate expenditure line shifts downward, and the economy moves along the aggregate demand curve. 
C)  The aggregate expenditure line shifts upward, and the aggregate demand curve shifts to the right. 
D)  The aggregate expenditure line shifts downward, and the aggregate demand curve shifts to the left.

What is the result if planned spending exceeds planned output?

What shift would result from a decrease in planned investment?

-Refer to the table in the exhibit.What is the equilibrium level of GDP?

What does the aggregate expenditure line represent?

How will a decrease in the price level affect the aggregate expenditure line?

Suppose the full employment level of income is $1,200 billion, and the present level of income is $1,000 billion.Which of the following describes autonomous expenditure under these circumstances?

Which of the following would result from an increase in planned investment?

Suppose the price level increases.Other things constant, will consumption spending increase or decrease?

In the income-expenditure framework, suppose planned aggregate expenditures are greater than real GDP.How will inventories be affected?

How would an economist use an aggregate expenditure line to show how an aggregate demand curve shifts?

How will a decrease in autonomous investment affect the aggregate expenditure line?

Suppose the marginal propensity to consume in Spain is 3/5, and the marginal propensity to save in Portugal is 1/10.Which of the following characterizes how the economy of each nation will be affected?

-Refer to the graph in the exhibit.Suppose the price level increases.What will the new equilibrium level of real GDP be?

The many job losses that occurred soon after the September 11, 2001 attacks in the United States could be viewed as just part of the first round of reduced aggregate expenditure.When did the second round occur?

What does the aggregate demand curve illustrate?

-Refer to the table in the exhibit, where S + NT = I + G + (X - IM).What does this equal?

Suppose the price level decreases.Other things constant, will people consume more or less?

What is the effect of a decrease in the price level?

-Refer to the table in the exhibit.At the equilibrium level of GDP, what do injections equal?

Suppose the level of autonomous spending decreases at a given price level.How does this relate to the aggregate expenditure line and the aggregate demand curve?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

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Exam 10: Aggregate Expenditure and Aggregate Demand

What is the result if planned spending exceeds planned output?

What shift would result from a decrease in planned investment?

-Refer to the table in the exhibit.What is the equilibrium level of GDP?

What does the aggregate expenditure line represent?

How will a decrease in the price level affect the aggregate expenditure line?

Suppose the full employment level of income is $1,200 billion, and the present level of income is $1,000 billion.Which of the following describes autonomous expenditure under these circumstances?

Which of the following would result from an increase in planned investment?

Suppose the price level increases.Other things constant, will consumption spending increase or decrease?

In the income-expenditure framework, suppose planned aggregate expenditures are greater than real GDP.How will inventories be affected?

How would an economist use an aggregate expenditure line to show how an aggregate demand curve shifts?

How will a decrease in autonomous investment affect the aggregate expenditure line?

Suppose the marginal propensity to consume in Spain is 3/5, and the marginal propensity to save in Portugal is 1/10.Which of the following characterizes how the economy of each nation will be affected?

-Refer to the graph in the exhibit.Suppose the price level increases.What will the new equilibrium level of real GDP be?

The many job losses that occurred soon after the September 11, 2001 attacks in the United States could be viewed as just part of the first round of reduced aggregate expenditure.When did the second round occur?

What does the aggregate demand curve illustrate?

-Refer to the table in the exhibit, where S + NT = I + G + (X - IM).What does this equal?

Suppose the price level decreases.Other things constant, will people consume more or less?

What is the effect of a decrease in the price level?

-Refer to the table in the exhibit.At the equilibrium level of GDP, what do injections equal?

Suppose the level of autonomous spending decreases at a given price level.How does this relate to the aggregate expenditure line and the aggregate demand curve?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters