Question 1

If the marginal propensity to save is 0.4,then a $2 million increase in disposable income will

Accepted Answer

A) increase consumption by $5 million. 
B) increase consumption by $1.2 million. 
C) decrease consumption by $5 million. 
D) decrease consumption by $1.2 million. 
A) increase consumption by $5 million. 
B) increase consumption by $1.2 million. 
C) decrease consumption by $5 million. 
D) decrease consumption by $1.2 million.

Question 2

If the marginal propensity to save is 0.35,the multiplier is 2.86.

Accepted Answer

A) True 
 B)False

Question 3

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the marginal propensity to save?

Accepted Answer

A) 0.2 
B) 0.8 
C) 5.8 
D) 7.25 
A) 0.2 
B) 0.8 
C) 5.8 
D) 7.25

Question 4

Which is the smallest component of aggregate expenditure?

Accepted Answer

A) planned investment expenditures 
B) consumption expenditures 
C) government expenditures 
D) net export expenditures 
A) planned investment expenditures 
B) consumption expenditures 
C) government expenditures 
D) net export expenditures

Question 5

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

Accepted Answer

A) True 
 B)False

Question 6

Higher interest rates increase both consumption and investment spending.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) Aggregate expenditure is less than GDP. 
B) The economy has achieved macroeconomic equilibrium. 
C) Actual inventories are less than planned inventories. 
D) GDP will be decreasing. 
A) Aggregate expenditure is less than GDP. 
B) The economy has achieved macroeconomic equilibrium. 
C) Actual inventories are less than planned inventories. 
D) GDP will be decreasing.

Question 8

C = 2,550 + (MPC)Y
I = 800
G = 1,100
NX = 50
If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Accepted Answer

Y = C + I + G + NX. 11,250 = 2

Question 9

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Accepted Answer

A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million 
A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million

Question 10

Which of the following will cause a direct increase in consumption spending?

Accepted Answer

A) an increase in planned investment 
B) an increase in government spending 
C) an increase in disposable income 
D) a decrease in net export spending 
A) an increase in planned investment 
B) an increase in government spending 
C) an increase in disposable income 
D) a decrease in net export spending

Question 11

If the consumption function is defined as C = 7,250 + 0.8Y,what is the autonomous level of consumption expenditure?

Accepted Answer

A) $5,800 
B) $7,250 
C) $9,062.50 
D) $9,700 
A) $5,800 
B) $7,250 
C) $9,062.50 
D) $9,700

Question 12

The aggregate expenditure model focuses on the short-run relationship between ________ and ________.

Accepted Answer

A) real spending; real GDP 
B) unemployment; inflation 
C) nominal spending; nominal GDP 
D) planned inventories; unplanned inventories 
A) real spending; real GDP 
B) unemployment; inflation 
C) nominal spending; nominal GDP 
D) planned inventories; unplanned inventories

Question 13

An increase in the price level in the United States will shift the aggregate expenditure line upward.

Accepted Answer

A) True 
 B)False

Question 14

When Javier's income increases by $5,000,he spends an additional $3,750 dollars.This implies that his marginal propensity to consume is 0.75.

Accepted Answer

A) True 
 B)False

Question 15

C = 3,600 + (MPC)Y
I = 1,200
G = 1,400
NX = -200
If the equilibrium level of GDP is $30,000,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Accepted Answer

Y = C + I + G + NX. 30,000 = 3

Question 16

MPC + MPS =

Accepted Answer

A) 0. 
B) 0.5. 
C) 1. 
D) 100. 
A) 0. 
B) 0.5. 
C) 1. 
D) 100.

Question 17

A decrease in the price level results in a(n)________ in household consumption spending and a(n)________ in investment spending.

Accepted Answer

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

Question 18

Table 12-5
  
-Given Table 12-5 below,fill in the values for saving.Assume there are no taxes.

Accepted Answer

When taxes are zero,saving is

Question 19

Figure 12-3  
-Refer to Figure 12-3.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?

Accepted Answer

A) $10 billion 
B) $100 billion 
C) $200 billion 
D) $300 billion 
A) $10 billion 
B) $100 billion 
C) $200 billion 
D) $300 billion

Question 20

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

Accepted Answer

A) 0.3. 
B) 0.4. 
C) 0.5. 
D) 0.6. 
A) 0.3. 
B) 0.4. 
C) 0.5. 
D) 0.6.

If the marginal propensity to save is 0.4,then a $2 million increase in disposable income will

If the marginal propensity to save is 0.35,the multiplier is 2.86.

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the marginal propensity to save?

Which is the smallest component of aggregate expenditure?

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

Higher interest rates increase both consumption and investment spending.

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

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Which of the following will cause a direct increase in consumption spending?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the autonomous level of consumption expenditure?

The aggregate expenditure model focuses on the short-run relationship between and .

An increase in the price level in the United States will shift the aggregate expenditure line upward.

When Javier's income increases by $5,000,he spends an additional $3,750 dollars.This implies that his marginal propensity to consume is 0.75.

C = 3,600 + (MPC)Y I = 1,200 G = 1,400 NX = -200 If the equilibrium level of GDP is $30,000,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

MPC + MPS =

A decrease in the price level results in a(n) in household consumption spending and a(n) in investment spending.

Table 12-5 -Given Table 12-5 below,fill in the values for saving.Assume there are no taxes.

Figure 12-3 -Refer to Figure 12-3.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?

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

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

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Exam 12: Aggregate Expenditure and Output in the Short Run

If the marginal propensity to save is 0.4,then a $2 million increase in disposable income will

If the marginal propensity to save is 0.35,the multiplier is 2.86.

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the marginal propensity to save?

Which is the smallest component of aggregate expenditure?

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

Higher interest rates increase both consumption and investment spending.

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

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Which of the following will cause a direct increase in consumption spending?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the autonomous level of consumption expenditure?

The aggregate expenditure model focuses on the short-run relationship between ________ and ________.

An increase in the price level in the United States will shift the aggregate expenditure line upward.

When Javier's income increases by $5,000,he spends an additional $3,750 dollars.This implies that his marginal propensity to consume is 0.75.

C = 3,600 + (MPC)Y I = 1,200 G = 1,400 NX = -200 If the equilibrium level of GDP is $30,000,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

MPC + MPS =

A decrease in the price level results in a(n)________ in household consumption spending and a(n)________ in investment spending.

Table 12-5 -Given Table 12-5 below,fill in the values for saving.Assume there are no taxes.

Figure 12-3 -Refer to Figure 12-3.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?

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

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

The aggregate expenditure model focuses on the short-run relationship between and .

A decrease in the price level results in a(n) in household consumption spending and a(n) in investment spending.

Figure 12-3 -Refer to Figure 12-3.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?