Exam 8: Aggregate Expenditure and Output in the Short Run

Which of the following will reduce consumer expenditures?

If consumption is defined as C = 4,500 + 0.75Y, then the marginal propensity to save is 0.25.

Assume proponents of public funding for a new stadium argue that every dollar spent building the sports and entertainment facility will generate a total of $2.05 in spending in the economy.This indicates that the spending multiplier for the construction industry is equal to

Goods that have been produced but not yet sold are referred to as

Figure 8.4 Alt text for Figure 8.4: In figure 8.4, a graph comparing real GDP and real aggregate expenditure. Long description for Figure 8.4: The x-axis is labelled, real GDP, Y (trillions of 2002 dollars).The y-axis is labelled, real aggregate expenditure, AE (trillions of 2002 dollars).Line AE1, begins a little less than half way along the x-axis and slopes up to the end of the x-axis.Line AE2, begins half way along the x-axis and slopes up to the top right corner.Line AE2 is to the right of line AE1 and is on a similar path as line AE1.Line Y = AE, originates at the vertex and slopes up to the top right corner.Line Y = AE meets line AE2 at point K, half way along both lines.Line Y = AE meets line AE1 at point N, plotted close to the right end of line AE1.Point J is plotted a little less than half way along line AE2, to the left of point K.Point L is marked close to the right end of line AE2, to the right of point K. -Refer to Figure 8.4.If the Canadian economy is currently at point N, which of the following could cause it to move to point K?

Figure 8.3 Alt text for Figure 8.3: In figure 8.3, a graph comparing real GDP and real aggregate expenditure. Long description for Figure 8.3: The x-axis is labelled, real GDP, Y (trillions of 2002 dollars).The y-axis is labelled, real aggregate expenditure, AE (trillions of 2002 dollars).Line Y = AE, originates at the vertex and slopes up to the top right corner.Line AE1, begins a little less than half way along the x-axis and slopes up to the end of the x-axis.Both these lines intersect at point K, approximately 3 quarters of the way along both lines.Point J is plotted a little less than half way along line AE1, to the left of point K.Point L is marked close to the right end of the line AE1, to the right of point K. -Refer to Figure 8.3.According to the figure above, at what point is aggregate expenditure less than GDP?

If the consumption function is defined as C = 5,500 + 0.9Y, what is the autonomous level of consumption expenditure?

If the multiplier is 5, the marginal propensity to consume must be 0.8.

The Conference Board of Canada's Consumer Confidence Index measures

Autonomous expenditure is a type of expenditure that does not depend on

Household wealth is defined as the value of a household's

A stock market boom which causes stock prices to rise should cause

The equations for C, I, G, and Nx are all given below. What is the equilibrium level of GDP? C = 1252 + 0.7*Y I = 870 G = 927 NX = 388

The marginal propensity to consume is defined as

An increase in the price level in Canada will reduce exports and increase imports.

Figure 8.2 Alt text for Figure 8.2: In figure 8.2, a graph comparing real GDP and real aggregate expenditure. Long description for Figure 8.2: Line AE1, begins a little less than half way along the x-axis and slopes up toward the end of the x-axis.Line AE2, begins at a point half way on the x-axis and slopes up to the top right corner.Line AE2 is to the left of AE1, and is on a similar path as the line AE1.Line Y = AE, originates at the vertex and slopes upward toward the top right corner.Line Y = AE meets line AE1 at point K, half way along both lines, and meets line AE2 at point N, plotted close to the right end of the line AE2.Point J is plotted a little less than half way along the line AE1, to the left of point K.Another point L is marked close to the right end of line AE1, to the right of point K. -Refer to Figure 8.2.Suppose that the level of GDP associated with point N is potential GDP.If the Canadian economy is currently at point K,

If planned aggregate expenditure is less than total production,

An increase in transfer payments will

If aggregate expenditure is more than GDP, then inventories fall and GDP rises.

Given Table 8.5 below, fill in the values for saving.Assume taxes = $800. Table 8.5