Question 1

All of the following are true statements about the multiplier except

Accepted Answer

A) The formula for the multiplier overstates the real world multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate. 
B) The larger the MPC, the larger the multiplier. 
C) The multiplier is the ratio of the change in real GDP to the change in autonomous expenditure. 
D) The multiplier makes the economy less sensitive to changes in autonomous expenditure. 
E) The multiplier applies to all changes in autonomous expenditure. 
A) The formula for the multiplier overstates the real world multiplier when we take into account the impact of changes in GDP on imports, inflation and the interest rate. 
B) The larger the MPC, the larger the multiplier. 
C) The multiplier is the ratio of the change in real GDP to the change in autonomous expenditure. 
D) The multiplier makes the economy less sensitive to changes in autonomous expenditure. 
E) The multiplier applies to all changes in autonomous expenditure.

Question 2

If firms sell what they expected to sell, which of the following will be true?

Accepted Answer

A) Aggregate expenditure will be greater than GDP. 
B) There will be no unplanned change in inventories. 
C) Inventories will rise and GDP and employment will fall. 
D) Aggregate expenditure will be less than GDP. 
E) Employment will rise. 
A) Aggregate expenditure will be greater than GDP. 
B) There will be no unplanned change in inventories. 
C) Inventories will rise and GDP and employment will fall. 
D) Aggregate expenditure will be less than GDP. 
E) Employment will rise.

Question 3

Ceteris paribus, how does a recession in the United States affect Canadian net exports?

Accepted Answer

As GDP decreases in the United States du

Question 4

Suppose Canada experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect Canadian net exports?

Accepted Answer

If inflation in Canada is lower than inf

Question 5

Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 million, government purchases are $10 million, and net export spending is $2 million. What is aggregate expenditure?

Accepted Answer

A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million 
E) $29 million 
A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million 
E) $29 million

Question 6

Equations for C, I, G, and NX are given below.If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume? C = 1,500 + (MPC)Y
I = 1,000
G = 2,000
NX = -200

Accepted Answer

A) 0.67 
B) 0.75 
C) 0.8 
D) 0.9 
E) 1 
A) 0.67 
B) 0.75 
C) 0.8 
D) 0.9 
E) 1

Question 7

Why is the aggregate demand curve downward sloping while the aggregate expenditure line is upward sloping?

Accepted Answer

A downward sloping aggregate demand curv

Question 8

You review a salesman's income over a 5-year period.You note it fluctuates tremendously from year to year, yet his consumption of goods and services remains consistently at the same level, year after year.Does this mean that income is not a determinant of consumption, or could something else explain his behaviour?

Accepted Answer

The salesman is not making purchase deci

Question 9

National income =

Accepted Answer

A) Consumption + Saving - Taxes. 
B) Consumption - Saving - Taxes. 
C) Consumption - Saving +Taxes. 
D) Consumption + Saving + Taxes. 
A) Consumption + Saving - Taxes. 
B) Consumption - Saving - Taxes. 
C) Consumption - Saving +Taxes. 
D) Consumption + Saving + Taxes.

Question 10

Macroeconomic equilibrium occurs when

Accepted Answer

A) aggregate expenditure = GDP. 
B) aggregate expenditure = C+ I + G + net transfers. 
C) aggregate income = planned inventories. 
D) aggregate expenditure = planned inventories. 
E) exports = imports. 
A) aggregate expenditure = GDP. 
B) aggregate expenditure = C+ I + G + net transfers. 
C) aggregate income = planned inventories. 
D) aggregate expenditure = planned inventories. 
E) exports = imports.

Question 11

If consumption is defined as C = 2,000 + 0.8Y, then the marginal propensity to save is 0.8.

Accepted Answer

A) True 
 B)False

Question 12

If the consumption function is defined as C = 5,500 + 0.9Y, what is the value of the multiplier?

Accepted Answer

A) 0.1 
B) 0.9 
C) 2 
D) 9 
E) 10 
A) 0.1 
B) 0.9 
C) 2 
D) 9 
E) 10

Question 13

________ is defined as the value of a household's assets minus the value of its liabilities.

Accepted Answer

A) Household income 
B) Household wealth 
C) Personal household consumption 
D) Planned household investment 
E) Household financial planning 
A) Household income 
B) Household wealth 
C) Personal household consumption 
D) Planned household investment 
E) Household financial planning

Question 14

________ is equal to consumption spending plus planned investment spending plus government purchases plus net exports.

Accepted Answer

A) Full employment GDP 
B) Short-run aggregate supply 
C) Planned inventory investment 
D) Planned aggregate expenditure 
E) Equilibrium GDP 
A) Full employment GDP 
B) Short-run aggregate supply 
C) Planned inventory investment 
D) Planned aggregate expenditure 
E) Equilibrium GDP

Question 15

If planned aggregate expenditure is greater than total production,

Accepted Answer

A) actual inventories will equal planned inventories. 
B) firms will experience an unplanned decrease in inventories. 
C) GDP will decrease. 
D) the economy is in equilibrium. 
E) firms are likely to cut back on production. 
A) actual inventories will equal planned inventories. 
B) firms will experience an unplanned decrease in inventories. 
C) GDP will decrease. 
D) the economy is in equilibrium. 
E) firms are likely to cut back on production.

All of the following are true statements about the multiplier except

If firms sell what they expected to sell, which of the following will be true?

Ceteris paribus, how does a recession in the United States affect Canadian net exports?

Suppose Canada experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect Canadian net exports?

Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 million, government purchases are $10 million, and net export spending is $2 million. What is aggregate expenditure?

Equations for C, I, G, and NX are given below.If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume? C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

Why is the aggregate demand curve downward sloping while the aggregate expenditure line is upward sloping?

National income =

Macroeconomic equilibrium occurs when

If consumption is defined as C = 2,000 + 0.8Y, then the marginal propensity to save is 0.8.

If the consumption function is defined as C = 5,500 + 0.9Y, what is the value of the multiplier?

________ is defined as the value of a household's assets minus the value of its liabilities.

________ is equal to consumption spending plus planned investment spending plus government purchases plus net exports.

If planned aggregate expenditure is greater than total production,

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 8: Aggregate Expenditure and Output in the Short Run

All of the following are true statements about the multiplier except

If firms sell what they expected to sell, which of the following will be true?

Ceteris paribus, how does a recession in the United States affect Canadian net exports?

Suppose Canada experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect Canadian net exports?

Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is $2 million, government purchases are $10 million, and net export spending is $2 million. What is aggregate expenditure?

Equations for C, I, G, and NX are given below.If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume? C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

Why is the aggregate demand curve downward sloping while the aggregate expenditure line is upward sloping?

National income =

Macroeconomic equilibrium occurs when

If consumption is defined as C = 2,000 + 0.8Y, then the marginal propensity to save is 0.8.

If the consumption function is defined as C = 5,500 + 0.9Y, what is the value of the multiplier?

________ is defined as the value of a household's assets minus the value of its liabilities.

________ is equal to consumption spending plus planned investment spending plus government purchases plus net exports.

If planned aggregate expenditure is greater than total production,

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters