Exam 12: Aggregate Expenditure and Output in the Short Run

Given the equations for C,I,G,and NX below,what is the value of the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

Firms in a small economy anticipated that inventories would grow over the past year by $500,000.Over that year,inventories actually grew by only $400,000.This implies that

If an increase in investment spending of $20 million results in a $200 million increase in equilibrium real GDP,then

Table 12-3 -Refer to Table 12-3.Given the consumption schedule in the table above,the marginal propensity to save is

Disposable income is defined as

An increase in Social Security payments will

Suppose the United States experiences a long period of high inflation relative to other countries.How will this affect U.S.net exports?

Figure 12-4 -Refer to Figure 12-4.Potential GDP equals $500 billion.The economy is currently producing GDP₁ which is equal to $450 billion.If the MPC is 0.8,then how much must autonomous spending change for the economy to move to potential GDP?

Which of the following is a true statement about the multiplier?

Figure 12-1 -Refer to Figure 12-1.At point L in the figure above,which of the following is true?

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

Explain,in detail,how the adjustment to macroeconomic equilibrium occurs when spending is less than production.Be sure to discuss how inventories play a crucial role in the adjustment process.State what happens to GDP and employment during the adjustment process.

The larger the MPS,the smaller the value of the multiplier.

Which of the following is a true statement about the multiplier?

Table 12-12 -Refer to Table 12-12.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?

Investment spending will increase when

Figure 12-2 -Refer to Figure 12-2.If the U.S.economy is currently at point N,which of the following could cause it to move to point K?

________ consumption is consumption that does not depend upon the level of GDP.

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

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.