Exam 8: Aggregate Expenditure and Output in the Short Run

An unplanned decrease in inventories results in

Macroeconomic equilibrium can occur at any point on the 45-degree line.

What is the difference between aggregate expenditure and aggregate demand?

Table 8.13 -Refer to Table 8.13.Using the table above, answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If investment spending declines by $50 billion, what will happen to equilibrium GDP?

Figure 8.5 Alt text for Figure 8.5: In figure 8.5, a graph comparing real GDP and real aggregate expenditure. Long description for Figure 8.5: The x-axis is labelled, real GDP, Y (billions of 2007 dollars)with values GDP1 and GDP2 marked.The y-axis is labelled, real aggregate expenditure, AE (billions of 2007 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 at a point half way along the x-axis and slopes up to the top right corner.Line AE2 is to the left 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 AE1 at point K, half way along both lines.Line Y = AE meets the line AE2 at point N, plotted close to the right end of line AE2.Point J is marked a little less than half way along line AE1, to the left of point K.Point L is plotted close to the right end of line AE1, to the right of point K.Points K, L, and N are connected to their respective coordinates, GDP1 and GDP2, on the x-axis with dotted lines. -Refer to Figure 8.5.Suppose that government spending increases, shifting up the aggregate expenditure line.GDP increases from GDP₁ to GDP₂, and this amount is $400 billion.If the MPC is 0.75, then what is the distance between N and L or by how much did government spending change?

Household spending on goods and services is known as

What is the difference between aggregate expenditure and consumption spending?

When aggregate expenditure is less than GDP, which of the following is true?

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP, then

A general formula for the multiplier is

Consumption spending is $16 billion, planned investment spending is $4 billion, unplanned investment spending is $2 billion, government purchases are $6 billion, and net export spending is $1 billion.What is aggregate expenditure?

What are inventories? What usually happens to inventories at the beginning of a recession, and what usually happens to inventories at the beginning of an expansion?

If inflation in Canada is higher than inflation in other countries, what will be the effect on net exports for Canada?

When Jack's income increases by $1,000, he spends an additional $850 dollars.This implies that his marginal propensity to consume is 0.85.

How does an increase in government spending affect the aggregate expenditure line?

The difference between GDP and net taxes is

Given the equations for C, I, G, and NX below, what is the marginal propensity to save? C = 1,000 + 0.8Y I = 1,500 G = 1,250 NX = 100

________ usually increase(s)when the Canadian economy is in a recession and decrease(s)when the Canadian economy is expanding.

Table 8.12 -Refer to Table 8.12.Using the table above, answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If potential GDP is $7,000 billion, is the economy at full employment? If not, what is the condition of the economy? d.If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?

What impact does a decrease in the price level in Canada have on net exports and why?