Question 1

Suppose the Canadian price level rises relative to price levels in other countries.How would Canada's consumption and exports be affected?

Accepted Answer

A)  Consumption and net exports would decline. 
B)  Consumption and net exports would increase. 
C)  Consumption would increase and net exports would decrease. 
D)  Consumption would decrease and net exports would increase. 
A)  Consumption and net exports would decline. 
B)  Consumption and net exports would increase. 
C)  Consumption would increase and net exports would decrease. 
D)  Consumption would decrease and net exports would increase.

Question 2

How will an increase 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 3

Suppose autonomous investment expenditures decline because of higher interest rates.How will this affect aggregate demand?

Accepted Answer

A)  Aggregate demand will increase. 
B)  Aggregate demand will decrease. 
C)  Aggregate demand will remain the same. 
D)  Aggregate demand will become negative. 
A)  Aggregate demand will increase. 
B)  Aggregate demand will decrease. 
C)  Aggregate demand will remain the same. 
D)  Aggregate demand will become negative.

Question 4

A grocery store manager must decide whether to buy a carpet-cleaning machine so that the store can rent it to customers.The machine costs $800.It is expected to yield $200 in income per year.What is the expected annual return from the carpet-cleaning machine?

Accepted Answer

A)  25 percent 
B)  50 percent 
C)  75 percent 
D)  400 percent 
A)  25 percent 
B)  50 percent 
C)  75 percent 
D)  400 percent

Question 5

Which of the following will cause the economy to expand?

Accepted Answer

A)  if leakages exceed injections 
B)  if injections exceed leakages 
C)  if leakages equal injections 
D)  if saving exceeds investment 
A)  if leakages exceed injections 
B)  if injections exceed leakages 
C)  if leakages equal injections 
D)  if saving exceeds investment

Question 6

-Refer to the graph in the exhibit.Which of the following best describes the situation at point C?

Accepted Answer

A)  Consumption expenditures exceed disposable income. 
B)  Producers are experiencing an unexpected loss in inventory. 
C)  Aggregate expenditure is exactly equal to real GDP. 
D)  Real GDP exceeds aggregate expenditure. 
A)  Consumption expenditures exceed disposable income. 
B)  Producers are experiencing an unexpected loss in inventory. 
C)  Aggregate expenditure is exactly equal to real GDP. 
D)  Real GDP exceeds aggregate expenditure.

Question 7

-Refer to the table in the exhibit.What does the marginal propensity to consume (MPC) equal?

Accepted Answer

A)  0.20, or 1/5 
B)  0.40, or 2/5 
C)  0.80, or 4/5 
D)  0.90, or 9/10 
A)  0.20, or 1/5 
B)  0.40, or 2/5 
C)  0.80, or 4/5 
D)  0.90, or 9/10

Question 8

How will an increase 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 result in a movement upward along the aggregate expenditure line. 
D)  It will result in a movement downward 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 a movement upward along the aggregate expenditure line. 
D)  It will result in a movement downward along the aggregate expenditure line.

Question 9

Suppose the marginal propensity to consume is 4/5.What is the value of the simple multiplier?

Accepted Answer

A)  4/5 
B)  5/4 
C)  4 
D)  5 
A)  4/5 
B)  5/4 
C)  4 
D)  5

Question 10

-Refer to the table in the exhibit.What is the state of the government's budget?

Accepted Answer

A)  The government's budget has a deficit of $2 trillion. 
B)  The government's budget has a deficit of $1 trillion. 
C)  The government's budget is balanced. 
D)  The government's budget has a surplus of $1 trillion. 
A)  The government's budget has a deficit of $2 trillion. 
B)  The government's budget has a deficit of $1 trillion. 
C)  The government's budget is balanced. 
D)  The government's budget has a surplus of $1 trillion.

Question 11

When does the equilibrium quantity of aggregate output occur?

Accepted Answer

A)  when the economy reaches the full employment of labour 
B)  when planned aggregate expenditure equals income generated from production 
C)  when actual aggregate expenditures equal real GDP 
D)  when inventories of goods and services are increasing 
A)  when the economy reaches the full employment of labour 
B)  when planned aggregate expenditure equals income generated from production 
C)  when actual aggregate expenditures equal real GDP 
D)  when inventories of goods and services are increasing

Question 12

Which of the following is NOT a part of planned aggregate spending?

Accepted Answer

A)  consumption 
B)  investment 
C)  government expenditures 
D)  saving 
A)  consumption 
B)  investment 
C)  government expenditures 
D)  saving

Question 13

Suppose that at a particular level of real GDP, the unintended change in inventories is zero.How will this affect the level of real GDP?

Accepted Answer

A)  The level of real GDP will be less than the equilibrium level of real GDP demanded. 
B)  The level of real GDP will be greater than the equilibrium level of real GDP demanded. 
C)  The level of real GDP will be the equilibrium level of real GDP demanded. 
D)  The level of real GDP will first be greater, and then less, than the equilibrium level of real GDP. 
A)  The level of real GDP will be less than the equilibrium level of real GDP demanded. 
B)  The level of real GDP will be greater than the equilibrium level of real GDP demanded. 
C)  The level of real GDP will be the equilibrium level of real GDP demanded. 
D)  The level of real GDP will first be greater, and then less, than the equilibrium level of real GDP.

Question 14

Suppose autonomous consumption rises by $0.8 trillion and the marginal propensity to consume equals three-quarters.By what amount will the equilibrium level of output demanded rise?

Accepted Answer

A)  by $0.2 trillion 
B)  by $0.6 trillion 
C)  by $1.07 trillion 
D)  by $3.2 trillion 
A)  by $0.2 trillion 
B)  by $0.6 trillion 
C)  by $1.07 trillion 
D)  by $3.2 trillion

Question 15

Which of the following best describes aggregate expenditure?

Accepted Answer

A)  C + I + G + (X - IM) 
B)  C + S + G + (X - IM) 
C)  C + I + G + (X + IM) 
D)  C + I + T + (X - IM) 
A)  C + I + G + (X - IM) 
B)  C + S + G + (X - IM) 
C)  C + I + G + (X + IM) 
D)  C + I + T + (X - IM)

Question 16

Suppose that a pair of graphs represents a situation in which the aggregate expenditure line has shifted but the aggregate demand curve has NOT.What change will cause the aggregate expenditure line to shift?

Accepted Answer

A)  a change in the marginal propensity to consume 
B)  a change in the price level 
C)  a change in autonomous investment 
D)  a change in autonomous saving 
A)  a change in the marginal propensity to consume 
B)  a change in the price level 
C)  a change in autonomous investment 
D)  a change in autonomous saving

Question 17

Consider an economic model with no income taxes and no international trade.Suppose the marginal propensity to consume in Canada is 3/5, and the marginal propensity to save in India is 1/10.Which of the following characterizes how the Indian and Canadian economies would be affected?

Accepted Answer

A)  Increases in government purchases would increase real GDP demanded more per dollar in India than in Canada. 
B)  Decreases in government purchases would increase real GDP demanded more per dollar in India than in Canada. 
C)  Increases in autonomous saving would increase real GDP demanded more per dollar in India than in Canada. 
D)  Real GDP demanded would be higher in India than in Canada. 
A)  Increases in government purchases would increase real GDP demanded more per dollar in India than in Canada. 
B)  Decreases in government purchases would increase real GDP demanded more per dollar in India than in Canada. 
C)  Increases in autonomous saving would increase real GDP demanded more per dollar in India than in Canada. 
D)  Real GDP demanded would be higher in India than in Canada.

Question 18

On the aggregate expenditure graph, suppose autonomous saving increases by $15 billion.What will be the effect on the aggregate expenditure line?

Accepted Answer

A)  The aggregate expenditure line will shift upward by $15 billion. 
B)  The aggregate expenditure line will stay in the same position. 
C)  The aggregate expenditure line will shift downward by $15 billion. 
D)  The aggregate expenditure line will first shift downward, and then it will shift upward by $15 billion. 
A)  The aggregate expenditure line will shift upward by $15 billion. 
B)  The aggregate expenditure line will stay in the same position. 
C)  The aggregate expenditure line will shift downward by $15 billion. 
D)  The aggregate expenditure line will first shift downward, and then it will shift upward by $15 billion.

Question 19

How will an increase 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 20

Suppose the simple multiplier is 10.What is the marginal propensity to save?

Accepted Answer

A)  1/10 
B)  1/9 
C)  10/9 
D)  9 
A)  1/10 
B)  1/9 
C)  10/9 
D)  9

Suppose the Canadian price level rises relative to price levels in other countries.How would Canada's consumption and exports be affected?

How will an increase in the price level affect the aggregate expenditure line?

Suppose autonomous investment expenditures decline because of higher interest rates.How will this affect aggregate demand?

A grocery store manager must decide whether to buy a carpet-cleaning machine so that the store can rent it to customers.The machine costs $800.It is expected to yield $200 in income per year.What is the expected annual return from the carpet-cleaning machine?

Which of the following will cause the economy to expand?

-Refer to the graph in the exhibit.Which of the following best describes the situation at point C?

-Refer to the table in the exhibit.What does the marginal propensity to consume (MPC) equal?

How will an increase in the price level affect the aggregate expenditure line?

Suppose the marginal propensity to consume is 4/5.What is the value of the simple multiplier?

-Refer to the table in the exhibit.What is the state of the government's budget?

When does the equilibrium quantity of aggregate output occur?

Which of the following is NOT a part of planned aggregate spending?

Suppose that at a particular level of real GDP, the unintended change in inventories is zero.How will this affect the level of real GDP?

Suppose autonomous consumption rises by $0.8 trillion and the marginal propensity to consume equals three-quarters.By what amount will the equilibrium level of output demanded rise?

Which of the following best describes aggregate expenditure?

Suppose that a pair of graphs represents a situation in which the aggregate expenditure line has shifted but the aggregate demand curve has NOT.What change will cause the aggregate expenditure line to shift?

Consider an economic model with no income taxes and no international trade.Suppose the marginal propensity to consume in Canada is 3/5, and the marginal propensity to save in India is 1/10.Which of the following characterizes how the Indian and Canadian economies would be affected?

On the aggregate expenditure graph, suppose autonomous saving increases by $15 billion.What will be the effect on the aggregate expenditure line?

How will an increase in autonomous investment affect the aggregate expenditure line?

Suppose the simple multiplier is 10.What is the marginal propensity to save?

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

Suppose the Canadian price level rises relative to price levels in other countries.How would Canada's consumption and exports be affected?

How will an increase in the price level affect the aggregate expenditure line?

Suppose autonomous investment expenditures decline because of higher interest rates.How will this affect aggregate demand?

A grocery store manager must decide whether to buy a carpet-cleaning machine so that the store can rent it to customers.The machine costs $800.It is expected to yield $200 in income per year.What is the expected annual return from the carpet-cleaning machine?

Which of the following will cause the economy to expand?

-Refer to the graph in the exhibit.Which of the following best describes the situation at point C?

-Refer to the table in the exhibit.What does the marginal propensity to consume (MPC) equal?

How will an increase in the price level affect the aggregate expenditure line?

Suppose the marginal propensity to consume is 4/5.What is the value of the simple multiplier?

-Refer to the table in the exhibit.What is the state of the government's budget?

When does the equilibrium quantity of aggregate output occur?

Which of the following is NOT a part of planned aggregate spending?

Suppose that at a particular level of real GDP, the unintended change in inventories is zero.How will this affect the level of real GDP?

Suppose autonomous consumption rises by $0.8 trillion and the marginal propensity to consume equals three-quarters.By what amount will the equilibrium level of output demanded rise?

Which of the following best describes aggregate expenditure?

Suppose that a pair of graphs represents a situation in which the aggregate expenditure line has shifted but the aggregate demand curve has NOT.What change will cause the aggregate expenditure line to shift?

Consider an economic model with no income taxes and no international trade.Suppose the marginal propensity to consume in Canada is 3/5, and the marginal propensity to save in India is 1/10.Which of the following characterizes how the Indian and Canadian economies would be affected?

On the aggregate expenditure graph, suppose autonomous saving increases by $15 billion.What will be the effect on the aggregate expenditure line?

How will an increase in autonomous investment affect the aggregate expenditure line?

Suppose the simple multiplier is 10.What is the marginal propensity to save?

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