Question 1

An increase 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 2

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

Accepted Answer

A) aggregate expenditure that year was equal to GDP that year. 
B) there was an unplanned increase in inventories that year. 
C) there was an unplanned decrease in inventories that year. 
D) aggregate expenditure that year was greater than GDP that year. 
A) aggregate expenditure that year was equal to GDP that year. 
B) there was an unplanned increase in inventories that year. 
C) there was an unplanned decrease in inventories that year. 
D) aggregate expenditure that year was greater than GDP that year.

Question 3

What impact does an increase in the price level in the United States have on net exports and why?

Accepted Answer

A) An increase in the price level decreases net exports because higher prices decrease the value of the dollar. 
B) An increase in the price level decreases net exports by increasing the relative cost of American goods. 
C) An increase in the price level increases net exports because higher prices lower the value of the dollar. 
D) An increase in the price level increases net exports because higher prices decrease American spending on imports. 
A) An increase in the price level decreases net exports because higher prices decrease the value of the dollar. 
B) An increase in the price level decreases net exports by increasing the relative cost of American goods. 
C) An increase in the price level increases net exports because higher prices lower the value of the dollar. 
D) An increase in the price level increases net exports because higher prices decrease American spending on imports.

Question 4

Figure 12-3  
-Refer to Figure 12-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2.If the MPC is 0.9,then what is the change in GDP?

Accepted Answer

A) $9 million 
B) $10 million 
C) $90 million 
D) $100 million 
A) $9 million 
B) $10 million 
C) $90 million 
D) $100 million

Question 5

The Apple iPhone is sold in a box labeled "Made in China," but a study by economists at the Asian Development Bank found that the actual percentage of the price of the iPhone accounted for by the only work done in China,which is assembly,is

Accepted Answer

A) less than 4 percent. 
B) 12 percent. 
C) 25 percent. 
D) more than 65 percent. 
A) less than 4 percent. 
B) 12 percent. 
C) 25 percent. 
D) more than 65 percent.

Question 6

Use a 45 degree-line diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

Accepted Answer

@#IMG-DLM& Macroeconomic equilibrium occ

Question 7

When aggregate expenditure = GDP

Accepted Answer

A) macroeconomic equilibrium occurs. 
B) the federal budget is balanced. 
C) net exports equal zero. 
D) saving equals zero. 
A) macroeconomic equilibrium occurs. 
B) the federal budget is balanced. 
C) net exports equal zero. 
D) saving equals zero.

Question 8

The difference between GDP and disposable income is

Accepted Answer

A) national income. 
B) actual investment spending. 
C) net taxes. 
D) unplanned investment spending. 
A) national income. 
B) actual investment spending. 
C) net taxes. 
D) unplanned investment spending.

Question 9

Discuss the leading causes of the Great Depression.Use the 45-degree line diagram to show how they caused a decline in GDP.

Accepted Answer

Several events lowered aggregate expendi

Question 10

On the 45 degree-line diagram,the 45 degree line shows points where

Accepted Answer

A) real income equals real GDP. 
B) real aggregate expenditure equals C + I. 
C) real aggregate expenditure equals real GDP. 
D) real aggregate output equals the quantity produced. 
A) real income equals real GDP. 
B) real aggregate expenditure equals C + I. 
C) real aggregate expenditure equals real GDP. 
D) real aggregate output equals the quantity produced.

Question 11

The slope of the consumption function is equal to

Accepted Answer

A) the change in consumption divided by the change in disposable income. 
B) the change in consumption divided by the change in personal income. 
C) the change in disposable income divided by the change in consumption. 
D) the change in national income divided by the change in consumption. 
A) the change in consumption divided by the change in disposable income. 
B) the change in consumption divided by the change in personal income. 
C) the change in disposable income divided by the change in consumption. 
D) the change in national income divided by the change in consumption.

Question 12

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

Accepted Answer

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

Question 13

In the aggregate expenditure model,________ has both an autonomous component and an induced component.

Accepted Answer

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

Question 14

Each of the following is one of the four main categories of spending identified by John Maynard Keynes except

Accepted Answer

A) consumption. 
B) net exports. 
C) government purchases. 
D) taxes. 
A) consumption. 
B) net exports. 
C) government purchases. 
D) taxes.

Question 15

If an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP,then

Accepted Answer

A) the MPC is 0.25. 
B) the MPC is 0.75. 
C) the MPC is 0.8. 
D) the MPC is 2.5. 
A) the MPC is 0.25. 
B) the MPC is 0.75. 
C) the MPC is 0.8. 
D) the MPC is 2.5.

Question 16

If consumption is defined as C = 2,400 + 0.9Y,then the value of the marginal propensity to consume is 0.9.

Accepted Answer

A) True 
 B)False

Question 17

The multiplier is calculated as the

Accepted Answer

A) change in real GDP/ change in autonomous expenditure. 
B) change in autonomous expenditure/ change in real GDP. 
C) change in nominal GDP/ change in autonomous expenditure. 
D) change in real GDP/ change in induced spending. 
A) change in real GDP/ change in autonomous expenditure. 
B) change in autonomous expenditure/ change in real GDP. 
C) change in nominal GDP/ change in autonomous expenditure. 
D) change in real GDP/ change in induced spending.

Question 18

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 $200 billion.If the MPC is 0.8,then what is the distance between N and L or by how much did government spending change?

Accepted Answer

A) $16 billion 
B) $40 billion 
C) $200 billion 
D) $1,000 billion 
A) $16 billion 
B) $40 billion 
C) $200 billion 
D) $1,000 billion

Question 19

Goods that have been produced but not yet sold are referred to as

Accepted Answer

A) understocks. 
B) inventories. 
C) pre-sold goods. 
D) capital goods. 
A) understocks. 
B) inventories. 
C) pre-sold goods. 
D) capital goods.

Question 20

Investment spending ________ during a recession,and ________ during an expansion.

Accepted Answer

A) declines; increases 
B) increases; declines 
C) increases; increases 
D) declines; declines 
A) declines; increases 
B) increases; declines 
C) increases; increases 
D) declines; declines

An increase in the price level results in a(n) in household consumption spending and a(n) in investment spending.

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

What impact does an increase in the price level in the United States have on net exports and why?

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP₁ to GDP₂.If the MPC is 0.9,then what is the change in GDP?

The Apple iPhone is sold in a box labeled "Made in China," but a study by economists at the Asian Development Bank found that the actual percentage of the price of the iPhone accounted for by the only work done in China,which is assembly,is

Use a 45 degree-line diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

When aggregate expenditure = GDP

The difference between GDP and disposable income is

Discuss the leading causes of the Great Depression.Use the 45-degree line diagram to show how they caused a decline in GDP.

On the 45 degree-line diagram,the 45 degree line shows points where

The slope of the consumption function is equal to

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

In the aggregate expenditure model,________ has both an autonomous component and an induced component.

Each of the following is one of the four main categories of spending identified by John Maynard Keynes except

If an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP,then

If consumption is defined as C = 2,400 + 0.9Y,then the value of the marginal propensity to consume is 0.9.

The multiplier is calculated as the

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 $200 billion.If the MPC is 0.8,then what is the distance between N and L or by how much did government spending change?

Goods that have been produced but not yet sold are referred to as

Investment spending during a recession,and during an expansion.

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

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

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

What impact does an increase in the price level in the United States have on net exports and why?

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2.If the MPC is 0.9,then what is the change in GDP?

The Apple iPhone is sold in a box labeled "Made in China," but a study by economists at the Asian Development Bank found that the actual percentage of the price of the iPhone accounted for by the only work done in China,which is assembly,is

Use a 45 degree-line diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

When aggregate expenditure = GDP

The difference between GDP and disposable income is

Discuss the leading causes of the Great Depression.Use the 45-degree line diagram to show how they caused a decline in GDP.

On the 45 degree-line diagram,the 45 degree line shows points where

The slope of the consumption function is equal to

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

In the aggregate expenditure model,________ has both an autonomous component and an induced component.

Each of the following is one of the four main categories of spending identified by John Maynard Keynes except

If an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP,then

If consumption is defined as C = 2,400 + 0.9Y,then the value of the marginal propensity to consume is 0.9.

The multiplier is calculated as the

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 $200 billion.If the MPC is 0.8,then what is the distance between N and L or by how much did government spending change?

Goods that have been produced but not yet sold are referred to as

Investment spending ________ during a recession,and ________ during an expansion.

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 results in a(n) in household consumption spending and a(n) in investment spending.

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP₁ to GDP₂.If the MPC is 0.9,then what is the change in GDP?

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 $200 billion.If the MPC is 0.8,then what is the distance between N and L or by how much did government spending change?

Investment spending during a recession,and during an expansion.