Question 1

Table 12-4
  
-Refer to Table 12-4.Given the data in the table above,the marginal propensity to consume is

Accepted Answer

A) 0.5. 
B) 0.6. 
C) 0.75. 
D) 0.8. 
A) 0.5. 
B) 0.6. 
C) 0.75. 
D) 0.8.

Question 2

Table 12-1
  
-Refer to Table 12-1.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

Accepted Answer

The macroeconomic equilibrium is determi

Question 3

If disposable income increases by $500 million,and consumption increases by $400 million,then the marginal propensity to consume is

Accepted Answer

A) 1.25. 
B) 0.8. 
C) 0.6. 
D) 0.4. 
A) 1.25. 
B) 0.8. 
C) 0.6. 
D) 0.4.

Question 4

Figure 12-3  
-Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP2 to GDP1.If the MPC is 0.8,then what is the change in GDP?

Accepted Answer

A) -$4 million 
B) -$5 million 
C) -$25 million 
D) -$40 million 
A) -$4 million 
B) -$5 million 
C) -$25 million 
D) -$40 million

Question 5

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $27 million,what unplanned changes in inventories occurred?

Accepted Answer

A) There was an unplanned increase in inventories equal to $2 million. 
B) There was no unplanned change in inventories. 
C) There was an unplanned decrease in inventories equal to $2 million. 
D) There was an unplanned decrease in inventories equal to $19 million. 
A) There was an unplanned increase in inventories equal to $2 million. 
B) There was no unplanned change in inventories. 
C) There was an unplanned decrease in inventories equal to $2 million. 
D) There was an unplanned decrease in inventories equal to $19 million.

Question 6

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the marginal propensity to consume?

Accepted Answer

A) 0.1 
B) 0.9 
C) 5.5 
D) 6.1 
A) 0.1 
B) 0.9 
C) 5.5 
D) 6.1

Question 7

If inventories decline by more than analysts predict they will decline,this implies that

Accepted Answer

A) actual investment spending was greater than planned investment spending. 
B) actual investment spending was less than planned investment spending. 
C) actual investment spending was equal to than planned investment spending. 
D) there is no relationship between actual investment spending and planned investment spending. 
A) actual investment spending was greater than planned investment spending. 
B) actual investment spending was less than planned investment spending. 
C) actual investment spending was equal to than planned investment spending. 
D) there is no relationship between actual investment spending and planned investment spending.

Question 8

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP,then

Accepted Answer

A) the multiplier is 0.125. 
B) the multiplier is 3.5. 
C) the multiplier is 8. 
D) the multiplier is 50. 
A) the multiplier is 0.125. 
B) the multiplier is 3.5. 
C) the multiplier is 8. 
D) the multiplier is 50.

Question 9

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what is the value of the marginal propensity to consume? C = 5,000 + (MPC)Y
I = 1,500
G = 2,000
NX = -500

Accepted Answer

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

Question 10

How does a decrease in government spending affect the aggregate expenditure line?

Accepted Answer

A) It shifts the aggregate expenditure line upward. 
B) It shifts the aggregate expenditure line downward. 
C) It increases the slope of the aggregate expenditure line. 
D) It decreases the slope of the aggregate expenditure line. 
A) It shifts the aggregate expenditure line upward. 
B) It shifts the aggregate expenditure line downward. 
C) It increases the slope of the aggregate expenditure line. 
D) It decreases the slope of the aggregate expenditure line.

Question 11

Which of the following is not one of the four main categories of spending identified by John Maynard Keynes?

Accepted Answer

A) consumption 
B) planned investment 
C) government purchases 
D) transfer payments 
A) consumption 
B) planned investment 
C) government purchases 
D) transfer payments

Question 12

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Accepted Answer

A) consumer confidence 
B) the natural rate of unemployment 
C) the inflation rate 
D) the length of a business cycle 
A) consumer confidence 
B) the natural rate of unemployment 
C) the inflation rate 
D) the length of a business cycle

Question 13

If planned aggregate expenditure equals GDP,the economy is in macroeconomic equilibrium.

Accepted Answer

A) True 
 B)False

Question 14

If disposable income falls by $50 billion and consumption falls by $40 billion,then the slope of the consumption function is

Accepted Answer

A) 1.20. 
B) 0.80. 
C) 0.70. 
D) 0.10. 
A) 1.20. 
B) 0.80. 
C) 0.70. 
D) 0.10.

Question 15

An increase in the price level in the United States will have what effect on the aggregate expenditure line?

Accepted Answer

A) Aggregate expenditure will shift downward. 
B) Aggregate expenditure will become steeper. 
C) Aggregate expenditure will shift upward. 
D) Aggregate expenditure will not be affected by an increase in the price level in the United States. 
A) Aggregate expenditure will shift downward. 
B) Aggregate expenditure will become steeper. 
C) Aggregate expenditure will shift upward. 
D) Aggregate expenditure will not be affected by an increase in the price level in the United States.

Question 16

John Maynard Keynes argued that if many households decide at the same time to increase saving and reduce spending

Accepted Answer

A) this will increase investment spending in the short run and expand the economy in the long run. 
B) the economy will benefit in the short run but the effect will not last into the long run. 
C) this will have a major negative impact on the economy in both the short run and in the long run. 
D) they may make themselves worse off by causing aggregate expenditure to fall,thereby pushing the economy into a recession. 
A) this will increase investment spending in the short run and expand the economy in the long run. 
B) the economy will benefit in the short run but the effect will not last into the long run. 
C) this will have a major negative impact on the economy in both the short run and in the long run. 
D) they may make themselves worse off by causing aggregate expenditure to fall,thereby pushing the economy into a recession.

Question 17

The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the

Accepted Answer

A) MPC. 
B) multiplier. 
C) MPS. 
D) consumption function. 
A) MPC. 
B) multiplier. 
C) MPS. 
D) consumption function.

Question 18

If the economy is currently in equilibrium at a level of GDP that is below potential GDP,which of the following would move the economy back to potential GDP?

Accepted Answer

A) an increase in wealth 
B) an increase in interest rates 
C) a decrease in business confidence 
D) an increase in the value of the dollar relative to other currencies 
A) an increase in wealth 
B) an increase in interest rates 
C) a decrease in business confidence 
D) an increase in the value of the dollar relative to other currencies

Question 19

A general formula for the multiplier is

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    
A)    . 
B)    . 
C)    . 
D)

Question 20

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

Accepted Answer

A) There was an unplanned increase in inventories. 
B) Firms spent more on capital goods than they anticipated. 
C) Households bought more new homes than they anticipated. 
D) All of the above must be true when aggregate expenditure is less than GDP. 
A) There was an unplanned increase in inventories. 
B) Firms spent more on capital goods than they anticipated. 
C) Households bought more new homes than they anticipated. 
D) All of the above must be true when aggregate expenditure is less than GDP.

Table 12-4 -Refer to Table 12-4.Given the data in the table above,the marginal propensity to consume is

Table 12-1 -Refer to Table 12-1.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

If disposable income increases by $500 million,and consumption increases by $400 million,then the marginal propensity to consume is

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP₂ to GDP₁.If the MPC is 0.8,then what is the change in GDP?

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $27 million,what unplanned changes in inventories occurred?

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the marginal propensity to consume?

If inventories decline by more than analysts predict they will decline,this implies that

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP,then

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what is the value of the marginal propensity to consume? C = 5,000 + (MPC)Y I = 1,500 G = 2,000 NX = -500

How does a decrease in government spending affect the aggregate expenditure line?

Which of the following is not one of the four main categories of spending identified by John Maynard Keynes?

A decrease in ________ can put your job at risk if aggregate expenditures fall.

If planned aggregate expenditure equals GDP,the economy is in macroeconomic equilibrium.

If disposable income falls by $50 billion and consumption falls by $40 billion,then the slope of the consumption function is

An increase in the price level in the United States will have what effect on the aggregate expenditure line?

John Maynard Keynes argued that if many households decide at the same time to increase saving and reduce spending

The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the

If the economy is currently in equilibrium at a level of GDP that is below potential GDP,which of the following would move the economy back to potential GDP?

A general formula for the multiplier is

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

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

Table 12-4 -Refer to Table 12-4.Given the data in the table above,the marginal propensity to consume is

Table 12-1 -Refer to Table 12-1.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

If disposable income increases by $500 million,and consumption increases by $400 million,then the marginal propensity to consume is

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP2 to GDP1.If the MPC is 0.8,then what is the change in GDP?

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $27 million,what unplanned changes in inventories occurred?

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the marginal propensity to consume?

If inventories decline by more than analysts predict they will decline,this implies that

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP,then

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what is the value of the marginal propensity to consume? C = 5,000 + (MPC)Y I = 1,500 G = 2,000 NX = -500

How does a decrease in government spending affect the aggregate expenditure line?

Which of the following is not one of the four main categories of spending identified by John Maynard Keynes?

A decrease in ________ can put your job at risk if aggregate expenditures fall.

If planned aggregate expenditure equals GDP,the economy is in macroeconomic equilibrium.

If disposable income falls by $50 billion and consumption falls by $40 billion,then the slope of the consumption function is

An increase in the price level in the United States will have what effect on the aggregate expenditure line?

John Maynard Keynes argued that if many households decide at the same time to increase saving and reduce spending

The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the

If the economy is currently in equilibrium at a level of GDP that is below potential GDP,which of the following would move the economy back to potential GDP?

A general formula for the multiplier is

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

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

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP₂ to GDP₁.If the MPC is 0.8,then what is the change in GDP?