Question 1

Figure 12-1  
-Refer to Figure 12-1.What will happen next when the economy is at point J?

Accepted Answer

A) Inventories have fallen below their desired level,and firms decrease production. 
B) Inventories have fallen below their desired level,and firms increase production. 
C) Inventories have risen above their desired level,and firms decrease production. 
D) Inventories have risen above their desired level,and firms increase production. 
A) Inventories have fallen below their desired level,and firms decrease production. 
B) Inventories have fallen below their desired level,and firms increase production. 
C) Inventories have risen above their desired level,and firms decrease production. 
D) Inventories have risen above their desired level,and firms increase production.

Question 2

On the 45 degree-line diagram,for points that lie below the 45 degree line

Accepted Answer

A) planned aggregate expenditure is greater than GDP. 
B) planned aggregate expenditure is less than GDP. 
C) planned aggregate expenditure is equal to GDP. 
D) planned aggregate expenditure is less than aggregate income. 
A) planned aggregate expenditure is greater than GDP. 
B) planned aggregate expenditure is less than GDP. 
C) planned aggregate expenditure is equal to GDP. 
D) planned aggregate expenditure is less than aggregate income.

Question 3

What are the four categories of aggregate expenditure?

Accepted Answer

The four categories are consum

Question 4

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

Accepted Answer

Firms will decrease

Question 5

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $21,500,what is the value of the marginal propensity to consume? C = 1,500 + (MPC)Y
I = 1,000
G = 2,000
NX = -200

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 6

The change in consumption divided by the change in disposable income is equal to

Accepted Answer

A) the slope of the consumption function. 
B) aggregate expenditure. 
C) household saving. 
D) real GDP. 
A) the slope of the consumption function. 
B) aggregate expenditure. 
C) household saving. 
D) real GDP.

Question 7

An increase in the price level ________ real wealth,which causes consumption to ________.

Accepted Answer

A) lowers; increase 
B) lowers; decrease 
C) raises; increase 
D) raises; decrease 
A) lowers; increase 
B) lowers; decrease 
C) raises; increase 
D) raises; decrease

Question 8

If planned aggregate expenditure is less than total production

Accepted Answer

A) actual inventories will equal planned inventories. 
B) firms will experience an unplanned increase in inventories. 
C) GDP will increase. 
D) the economy is in equilibrium. 
A) actual inventories will equal planned inventories. 
B) firms will experience an unplanned increase in inventories. 
C) GDP will increase. 
D) the economy is in equilibrium.

Question 9

An example of assets that are included in ________ would be stocks,bonds,and savings accounts.

Accepted Answer

A) household wealth 
B) household income 
C) planned investment 
D) consumer purchases 
A) household wealth 
B) household income 
C) planned investment 
D) consumer purchases

Question 10

If planned aggregate expenditure is less than real GDP,some firms will experience unplanned increases in inventories.

Accepted Answer

A) True 
 B)False

Question 11

If national income increases by $75 million and consumption increases by $15 million,the marginal propensity to consume is

Accepted Answer

A) 5. 
B) 0.75. 
C) 0.20. 
D) 0.15. 
A) 5. 
B) 0.75. 
C) 0.20. 
D) 0.15.

Question 12

At each of the three points in the following graph,indicate whether planned aggregate expenditure is greater than,equal to,or less than GDP?

Accepted Answer

At point J,planned aggregate e

Question 13

National income =

Accepted Answer

A) Consumption + Saving - Taxes 
B) Consumption - Saving - Taxes 
C) Consumption - Saving +Taxes 
D) Consumption + Saving + Taxes 
A) Consumption + Saving - Taxes 
B) Consumption - Saving - Taxes 
C) Consumption - Saving +Taxes 
D) Consumption + Saving + Taxes

Question 14

If disposable income increases by $100 million,and consumption increases by $90 million,then the marginal propensity to consume is

Accepted Answer

A) 0.9. 
B) 0.8. 
C) 0.75. 
D) 0.6. 
A) 0.9. 
B) 0.8. 
C) 0.75. 
D) 0.6.

Question 15

Actual investment will equal planned investment only when

Accepted Answer

A) there is an unplanned increase in inventories. 
B) there is an unplanned decrease in inventories. 
C) there is no unplanned change in inventories. 
D) companies have no inventories. 
A) there is an unplanned increase in inventories. 
B) there is an unplanned decrease in inventories. 
C) there is no unplanned change in inventories. 
D) companies have no inventories.

Question 16

If firms sell what they expected to sell,which of the following will be true?

Accepted Answer

A) Aggregate expenditure will be greater than GDP. 
B) There is no unplanned change in inventories. 
C) Inventories will rise,and GDP and employment will fall. 
D) Aggregate expenditure will be less than GDP. 
A) Aggregate expenditure will be greater than GDP. 
B) There is no unplanned change in inventories. 
C) Inventories will rise,and GDP and employment will fall. 
D) Aggregate expenditure will be less than GDP.

Question 17

An decrease in the price level in the United States will shift the aggregate expenditure line downward.

Accepted Answer

A) True 
 B)False

Question 18

Actual investment spending does not include

Accepted Answer

A) spending on consumer durable goods. 
B) spending on new capital equipment. 
C) spending on new houses. 
D) changes in inventories. 
A) spending on consumer durable goods. 
B) spending on new capital equipment. 
C) spending on new houses. 
D) changes in inventories.

Question 19

Decreases in the price level will

Accepted Answer

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

Question 20

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

Accepted Answer

A) True 
 B)False

Figure 12-1 -Refer to Figure 12-1.What will happen next when the economy is at point J?

On the 45 degree-line diagram,for points that lie below the 45 degree line

What are the four categories of aggregate expenditure?

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $21,500,what is the value of the marginal propensity to consume? C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

The change in consumption divided by the change in disposable income is equal to

An increase in the price level real wealth,which causes consumption to .

If planned aggregate expenditure is less than total production

An example of assets that are included in ________ would be stocks,bonds,and savings accounts.

If planned aggregate expenditure is less than real GDP,some firms will experience unplanned increases in inventories.

If national income increases by $75 million and consumption increases by $15 million,the marginal propensity to consume is

At each of the three points in the following graph,indicate whether planned aggregate expenditure is greater than,equal to,or less than GDP?

National income =

If disposable income increases by $100 million,and consumption increases by $90 million,then the marginal propensity to consume is

Actual investment will equal planned investment only when

If firms sell what they expected to sell,which of the following will be true?

An decrease in the price level in the United States will shift the aggregate expenditure line downward.

Actual investment spending does not include

Decreases in the price level will

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

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

Figure 12-1 -Refer to Figure 12-1.What will happen next when the economy is at point J?

On the 45 degree-line diagram,for points that lie below the 45 degree line

What are the four categories of aggregate expenditure?

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $21,500,what is the value of the marginal propensity to consume? C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

The change in consumption divided by the change in disposable income is equal to

An increase in the price level ________ real wealth,which causes consumption to ________.

If planned aggregate expenditure is less than total production

An example of assets that are included in ________ would be stocks,bonds,and savings accounts.

If planned aggregate expenditure is less than real GDP,some firms will experience unplanned increases in inventories.

If national income increases by $75 million and consumption increases by $15 million,the marginal propensity to consume is

At each of the three points in the following graph,indicate whether planned aggregate expenditure is greater than,equal to,or less than GDP?

National income =

If disposable income increases by $100 million,and consumption increases by $90 million,then the marginal propensity to consume is

Actual investment will equal planned investment only when

If firms sell what they expected to sell,which of the following will be true?

An decrease in the price level in the United States will shift the aggregate expenditure line downward.

Actual investment spending does not include

Decreases in the price level will

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

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

An increase in the price level real wealth,which causes consumption to .