Question 1

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

Accepted Answer

A) Cellar-Kefauver Act 
B) Sherman Antitrust Act 
C) Clayton Act 
D) Smoot-Hawley Tariff Act 
A) Cellar-Kefauver Act 
B) Sherman Antitrust Act 
C) Clayton Act 
D) Smoot-Hawley Tariff Act

Question 2

________ spending follows a smooth trend whereas,________ spending is more volatile and subject to fluctuations.

Accepted Answer

A) Consumption; government 
B) Consumption; investment 
C) Investment; consumer 
D) Government; consumer 
A) Consumption; government 
B) Consumption; investment 
C) Investment; consumer 
D) Government; consumer

Question 3

Which of the following will decrease aggregate expenditure in the United States?

Accepted Answer

A) a decrease in the value of the dollar 
B) a decrease in the price level 
C) a decrease in interest rates 
D) a decrease in government purchases 
A) a decrease in the value of the dollar 
B) a decrease in the price level 
C) a decrease in interest rates 
D) a decrease in government purchases

Question 4

A decrease in consumer confidence can put your job at risk if

Accepted Answer

A) aggregate expenditures fall. 
B) consumers expect their incomes to rise in the future. 
C) aggregate expenditures rise. 
D) consumers expect firms to increase investment in the future. 
A) aggregate expenditures fall. 
B) consumers expect their incomes to rise in the future. 
C) aggregate expenditures rise. 
D) consumers expect firms to increase investment in the future.

Question 5

In the United States,spending on residential construction

Accepted Answer

A) rose slowly in the period just before the recession of 2007-2009,declined slowly during the recession,and recovered slowly thereafter. 
B) rose rapidly in the period just before the recession of 2007-2009,declined dramatically during the recession,and recovered rapidly thereafter. 
C) rose rapidly in the period just before the recession of 2007-2009,declined dramatically during the recession,and continued to decline slowly thereafter. 
D) rose rapidly in the period just before the recession of 2007-2009,declined dramatically during the recession,and recovered only slowly thereafter. 
A) rose slowly in the period just before the recession of 2007-2009,declined slowly during the recession,and recovered slowly thereafter. 
B) rose rapidly in the period just before the recession of 2007-2009,declined dramatically during the recession,and recovered rapidly thereafter. 
C) rose rapidly in the period just before the recession of 2007-2009,declined dramatically during the recession,and continued to decline slowly thereafter. 
D) rose rapidly in the period just before the recession of 2007-2009,declined dramatically during the recession,and recovered only slowly thereafter.

Question 6

The marginal propensity to save is defined as

Accepted Answer

A) saving divided by disposable income. 
B) disposable income divided by saving. 
C) the change in saving divided by the change in disposable income. 
D) the change in disposable income divided by the change in saving. 
A) saving divided by disposable income. 
B) disposable income divided by saving. 
C) the change in saving divided by the change in disposable income. 
D) the change in disposable income divided by the change in saving.

Question 7

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

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.8 
D) 10 
A) 0.2 
B) 0.8 
C) 1.8 
D) 10

Question 8

Figure 12-2  
-Refer to Figure 12-2.Suppose that the level of GDP associated with point N is potential GDP.If the U.S.economy is currently at point K,then

Accepted Answer

A) firms are operating above capacity. 
B) the economy is at full employment. 
C) the economy is in recession. 
D) the level of unemployment is equal to the natural rate. 
A) firms are operating above capacity. 
B) the economy is at full employment. 
C) the economy is in recession. 
D) the level of unemployment is equal to the natural rate.

Question 9

Figure 12-1  
-Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,then

Accepted Answer

A) the economy is in equilibrium. 
B) production is greater than spending. 
C) production is less than spending. 
D) inventories will increase above their desired level. 
A) the economy is in equilibrium. 
B) production is greater than spending. 
C) production is less than spending. 
D) inventories will increase above their desired level.

Question 10

Would a larger multiplier lead to longer and more severe recessions or shorter and less severe recessions? Briefly explain.

Accepted Answer

A larger multiplier would be l

Question 11

A rising price level decreases consumption by decreasing the real value of household wealth.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) $4,950 
B) $5,500 
C) $6,050 
D) $6,111 
A) $4,950 
B) $5,500 
C) $6,050 
D) $6,111

Question 13

Which of the following leads to an increase in real GDP?

Accepted Answer

A) a decrease in government spending 
B) a decrease in the inflation rate in other countries relative to the inflation rate in the United States 
C) a decrease in interest rates 
D) Households have increasingly pessimistic expectations about future income. 
A) a decrease in government spending 
B) a decrease in the inflation rate in other countries relative to the inflation rate in the United States 
C) a decrease in interest rates 
D) Households have increasingly pessimistic expectations about future income.

Question 14

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 1,000 + 0.8Y
I = 1,500
G =1,250
NX = 100

Accepted Answer

A) $3,080 
B) $3,850 
C) $6,930 
D) $19,250 
A) $3,080 
B) $3,850 
C) $6,930 
D) $19,250

Question 15

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?

Accepted Answer

A) Households expect future income to rise. 
B) Household wealth falls. 
C) Firm's cash flows rise as profits rise. 
D) Government expenditures increase. 
A) Households expect future income to rise. 
B) Household wealth falls. 
C) Firm's cash flows rise as profits rise. 
D) Government expenditures increase.

Question 16

What is the formula for the multiplier? Explain why this formula is considered to be too simple.

Accepted Answer

Multiplier = @#IMG-DLM& . The formula ignores the

Question 17

Increases in the price level will

Accepted Answer

A) lower consumption because goods and services are less affordable. 
B) raise consumption because some goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases. 
A) lower consumption because goods and services are less affordable. 
B) raise consumption because some goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases.

Question 18

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

Question 19

Table 12-6
  
-Given Table 12-6 below,fill in the values for saving.Assume taxes = $800.

Accepted Answer

Saving = national in

Question 20

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.25 
D) 5 
A) 0.2 
B) 0.8 
C) 1.25 
D) 5

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

spending follows a smooth trend whereas, spending is more volatile and subject to fluctuations.

Which of the following will decrease aggregate expenditure in the United States?

A decrease in consumer confidence can put your job at risk if

In the United States,spending on residential construction

The marginal propensity to save is defined as

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

Figure 12-2 -Refer to Figure 12-2.Suppose that the level of GDP associated with point N is potential GDP.If the U.S.economy is currently at point K,then

Figure 12-1 -Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,then

Would a larger multiplier lead to longer and more severe recessions or shorter and less severe recessions? Briefly explain.

A rising price level decreases consumption by decreasing the real value of household wealth.

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

Which of the following leads to an increase in real GDP?

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 1,000 + 0.8Y I = 1,500 G =1,250 NX = 100

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?

What is the formula for the multiplier? Explain why this formula is considered to be too simple.

Increases in the price level will

Macroeconomic equilibrium occurs when

Table 12-6 -Given Table 12-6 below,fill in the values for saving.Assume taxes = $800.

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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 Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 12: Aggregate Expenditure and Output in the Short Run

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

________ spending follows a smooth trend whereas,________ spending is more volatile and subject to fluctuations.

Which of the following will decrease aggregate expenditure in the United States?

A decrease in consumer confidence can put your job at risk if

In the United States,spending on residential construction

The marginal propensity to save is defined as

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

Figure 12-2 -Refer to Figure 12-2.Suppose that the level of GDP associated with point N is potential GDP.If the U.S.economy is currently at point K,then

Figure 12-1 -Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,then

Would a larger multiplier lead to longer and more severe recessions or shorter and less severe recessions? Briefly explain.

A rising price level decreases consumption by decreasing the real value of household wealth.

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

Which of the following leads to an increase in real GDP?

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 1,000 + 0.8Y I = 1,500 G =1,250 NX = 100

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?

What is the formula for the multiplier? Explain why this formula is considered to be too simple.

Increases in the price level will

Macroeconomic equilibrium occurs when

Table 12-6 -Given Table 12-6 below,fill in the values for saving.Assume taxes = $800.

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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 Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

spending follows a smooth trend whereas, spending is more volatile and subject to fluctuations.