Question 1

What is the marginal propensity to consume?

Accepted Answer

A)  the change in consumption expenditure divided by the change in disposable income 
B)  the percentage of disposable income that is consumed 
C)  one minus the fraction of total disposable income that is saved 
D)  the percentage of total income that is consumed 
A)  the change in consumption expenditure divided by the change in disposable income 
B)  the percentage of disposable income that is consumed 
C)  one minus the fraction of total disposable income that is saved 
D)  the percentage of total income that is consumed A

Question 2

The multiplier shows that as ________ changes,real GDP changes by a ________ amount.

Accepted Answer

A)  induced expenditure; larger 
B)  induced expenditure; smaller 
C)  autonomous expenditure; larger 
D)  autonomous expenditure; smaller 
A)  induced expenditure; larger 
B)  induced expenditure; smaller 
C)  autonomous expenditure; larger 
D)  autonomous expenditure; smaller C

Question 3

Read the two statements below and indicate if they are true or false. I. Autonomous expenditures change when GDP changes.
II) Aggregate planned expenditure is the sum of planned consumption expenditure,investment,government expenditure,and net exports.

Accepted Answer

A)  I and II are both true. 
B)  I and II are both false. 
C)  I is true and II is false 
D)  I is false and II is true. 
A)  I and II are both true. 
B)  I and II are both false. 
C)  I is true and II is false 
D)  I is false and II is true. D

Question 4

In a simple economy in which prices are constant and with no income taxes or imports,the slope of the AE curve is 0.8.In order to increase real GDP by $500 billion,then

Accepted Answer

A)  consumption expenditure needs to increase by $500 billion. 
B)  saving needs to be reduced by $500 billion will lead to the increase of $500 billion. 
C)  an increase in investment of $200 billion will lead to the increase of $500 billion. 
D)  an increase in autonomous expenditure of $100 billion will lead to the increase of $500 billion. 
A)  consumption expenditure needs to increase by $500 billion. 
B)  saving needs to be reduced by $500 billion will lead to the increase of $500 billion. 
C)  an increase in investment of $200 billion will lead to the increase of $500 billion. 
D)  an increase in autonomous expenditure of $100 billion will lead to the increase of $500 billion.

Question 5

Because of changes in the ________,the long-run effect of a $10 increase in investment on real GDP equals ________.

Accepted Answer

A)  interest rate; zero 
B)  interest rate; $10 
C)  money wage rate and price level; zero 
D)  money wage rate and price level; $10 
A)  interest rate; zero 
B)  interest rate; $10 
C)  money wage rate and price level; zero 
D)  money wage rate and price level; $10

Question 6

If aggregate planned expenditure is less than real GDP,in the short run

Accepted Answer

A)  aggregate planned expenditure will increase. 
B)  exports change to restore equilibrium. 
C)  the price level will fall. 
D)  real GDP will decrease. 
A)  aggregate planned expenditure will increase. 
B)  exports change to restore equilibrium. 
C)  the price level will fall. 
D)  real GDP will decrease.

Question 7

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

Accepted Answer

The sentence is correct.If aggregate pla

Question 8

1 - MPC equals

Accepted Answer

A)  autonomous consumption. 
B)  the marginal propensity to save. 
C)  induced consumption. 
D)  the net national product. 
A)  autonomous consumption. 
B)  the marginal propensity to save. 
C)  induced consumption. 
D)  the net national product.

Question 9

As globalization has increased,the trend in the U.S.marginal propensity to import has been for it to

Accepted Answer

A)  decrease to less than 0.8. 
B)  increase. 
C)  remain steady. 
D)  decrease to more than 0.8. 
A)  decrease to less than 0.8. 
B)  increase. 
C)  remain steady. 
D)  decrease to more than 0.8.

Question 10

The multiplier is greater than 1 because the change in autonomous expenditure leads to ________.

Accepted Answer

A)  more investment 
B)  more saving 
C)  less consumption expenditure 
D)  more induced expenditure 
A)  more investment 
B)  more saving 
C)  less consumption expenditure 
D)  more induced expenditure

Question 11

Aggregate expenditure equals

Accepted Answer

A)  C + I + G + X - M. 
B)  G + X - M. 
C)  C + I + G. 
D)  C + I + G + X. 
A)  C + I + G + X - M. 
B)  G + X - M. 
C)  C + I + G. 
D)  C + I + G + X.

Question 12

The marginal propensity to consume refers to

Accepted Answer

A)  the additional saving that occurs out of an additional dollar of disposable income. 
B)  the additional consumption expenditure that occurs out of an additional dollar of disposable income. 
C)  the additional consumption expenditure that occurs out of an additional dollar of investment. 
D)  total consumption expenditure divided by total disposable income. 
A)  the additional saving that occurs out of an additional dollar of disposable income. 
B)  the additional consumption expenditure that occurs out of an additional dollar of disposable income. 
C)  the additional consumption expenditure that occurs out of an additional dollar of investment. 
D)  total consumption expenditure divided by total disposable income.

Question 13

In general,the flatter the aggregate expenditure curve,the

Accepted Answer

A)  greater the autonomous expenditure. 
B)  larger the marginal propensity to consume. 
C)  larger the multiplier. 
D)  smaller the multiplier. 
A)  greater the autonomous expenditure. 
B)  larger the marginal propensity to consume. 
C)  larger the multiplier. 
D)  smaller the multiplier.

Question 14

Autonomous consumption

Accepted Answer

A)  increases with income. 
B)  is independent of income. 
C)  is independent of income and must be equal to zero. 
D)  decreases with income. 
A)  increases with income. 
B)  is independent of income. 
C)  is independent of income and must be equal to zero. 
D)  decreases with income.

Question 15

Suppose that the slope of the AE curve is 0.80.Then an increase of investment of $10 billion leads to an increase in equilibrium real GDP equal to

Accepted Answer

A)  $8.0 billion. 
B)  $10.0 billion. 
C)  $12.5 billion. 
D)  $50.0 billion. 
A)  $8.0 billion. 
B)  $10.0 billion. 
C)  $12.5 billion. 
D)  $50.0 billion.

Question 16

As disposable income increases,consumption expenditures

Accepted Answer

A)  increase by the same amount. 
B)  increase by a smaller amount. 
C)  increase by a larger amount. 
D)  remain constant. 
A)  increase by the same amount. 
B)  increase by a smaller amount. 
C)  increase by a larger amount. 
D)  remain constant.

Question 17

A movement along the saving function occurs when

Accepted Answer

A)  the real interest rate rises. 
B)  wealth increases. 
C)  disposable income decreases. 
D)  None of the above answers is correct. 
A)  the real interest rate rises. 
B)  wealth increases. 
C)  disposable income decreases. 
D)  None of the above answers is correct.

Question 18

-Suppose the price level is fixed.If investment increases by $1 trillion and the aggregate expenditure curve is shown in the figure above,in response equilibrium expenditure increases by ________.

Accepted Answer

A)  $1 trillion. 
B)  $3 trillion. 
C)  less than $1 trillion. 
D)  None of the above answers are correct. 
A)  $1 trillion. 
B)  $3 trillion. 
C)  less than $1 trillion. 
D)  None of the above answers are correct.

Question 19

When disposable income equals $800 billion,planned consumption expenditure equals $600 billion,and when disposable income equals $1,000 billion,planned consumption expenditure equals $640 billion.What is planned saving when disposable income is $800 billion?

Accepted Answer

A)  $200 billion 
B)  $360 billion 
C)  $560 billion 
D)  $1,400 billion 
A)  $200 billion 
B)  $360 billion 
C)  $560 billion 
D)  $1,400 billion

Question 20

If there are no taxes or imports and MPC = 0.5,the multiplier equals

Accepted Answer

A)  0.5. 
B)  5.0. 
C)  6.0. 
D)  2.0. 
A)  0.5. 
B)  5.0. 
C)  6.0. 
D)  2.0.

What is the marginal propensity to consume?

The multiplier shows that as changes,real GDP changes by a amount.

Read the two statements below and indicate if they are true or false. I. Autonomous expenditures change when GDP changes. II) Aggregate planned expenditure is the sum of planned consumption expenditure,investment,government expenditure,and net exports.

In a simple economy in which prices are constant and with no income taxes or imports,the slope of the AE curve is 0.8.In order to increase real GDP by $500 billion,then

Because of changes in the ,the long-run effect of a $10 increase in investment on real GDP equals .

If aggregate planned expenditure is less than real GDP,in the short run

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

1 - MPC equals

As globalization has increased,the trend in the U.S.marginal propensity to import has been for it to

The multiplier is greater than 1 because the change in autonomous expenditure leads to ________.

Aggregate expenditure equals

The marginal propensity to consume refers to

In general,the flatter the aggregate expenditure curve,the

Autonomous consumption

Suppose that the slope of the AE curve is 0.80.Then an increase of investment of $10 billion leads to an increase in equilibrium real GDP equal to

As disposable income increases,consumption expenditures

A movement along the saving function occurs when

-Suppose the price level is fixed.If investment increases by $1 trillion and the aggregate expenditure curve is shown in the figure above,in response equilibrium expenditure increases by ________.

When disposable income equals $800 billion,planned consumption expenditure equals $600 billion,and when disposable income equals $1,000 billion,planned consumption expenditure equals $640 billion.What is planned saving when disposable income is $800 billion?

If there are no taxes or imports and MPC = 0.5,the multiplier equals

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 11: Expenditure Multipliers

What is the marginal propensity to consume?

The multiplier shows that as ________ changes,real GDP changes by a ________ amount.

Read the two statements below and indicate if they are true or false. I. Autonomous expenditures change when GDP changes. II) Aggregate planned expenditure is the sum of planned consumption expenditure,investment,government expenditure,and net exports.

In a simple economy in which prices are constant and with no income taxes or imports,the slope of the AE curve is 0.8.In order to increase real GDP by $500 billion,then

Because of changes in the ________,the long-run effect of a $10 increase in investment on real GDP equals ________.

If aggregate planned expenditure is less than real GDP,in the short run

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

1 - MPC equals

As globalization has increased,the trend in the U.S.marginal propensity to import has been for it to

The multiplier is greater than 1 because the change in autonomous expenditure leads to ________.

Aggregate expenditure equals

The marginal propensity to consume refers to

In general,the flatter the aggregate expenditure curve,the

Autonomous consumption

Suppose that the slope of the AE curve is 0.80.Then an increase of investment of $10 billion leads to an increase in equilibrium real GDP equal to

As disposable income increases,consumption expenditures

A movement along the saving function occurs when

-Suppose the price level is fixed.If investment increases by $1 trillion and the aggregate expenditure curve is shown in the figure above,in response equilibrium expenditure increases by ________.

When disposable income equals $800 billion,planned consumption expenditure equals $600 billion,and when disposable income equals $1,000 billion,planned consumption expenditure equals $640 billion.What is planned saving when disposable income is $800 billion?

If there are no taxes or imports and MPC = 0.5,the multiplier equals

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

The multiplier shows that as changes,real GDP changes by a amount.

Because of changes in the ,the long-run effect of a $10 increase in investment on real GDP equals .