Exam 12: Aggregate Expenditure and Output in the Short Run

Figure 12-1 -Refer to Figure 12-1.According to the figure above,at what point is aggregate expenditure greater than GDP?

At macroeconomic equilibrium,total ________ equals total ________.

Investment spending increases during ________,and decreases during ________.

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

Table 12-14 -Refer to Table 12-14.Using the table above,answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If potential GDP is $4,000 billion,is the economy at full employment? If not,what is the condition of the economy? d.Refer to part c.If the economy is not at full employment,by how much should government spending increase so that the economy can move to the full employment level of GDP?

C = 4,000 + 0.5Y I = 1,500 G =2,250 NX = -150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

You review a salesman's income over a 5-year period.You note it fluctuates tremendously from year to year,yet his consumption of goods and services remains consistently at the same level,year after year.Does this mean that income is not a determinant of consumption,or could something else explain his behavior?

Consumption spending refers to ________ spending on goods and services.

Figure 12-1 -Refer to Figure 12-1.If the economy is at point L,what will happen?

For all points below the 45 degree line,planned aggregate expenditure will be less than GDP.

Table 12-15 -Refer to Table 12-15.Using the table above,answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If investment spending declines by $10 billion,what will happen to equilibrium GDP?

A stock market boom which causes stock prices to rise should cause

A decrease in aggregate expenditure has what result on equilibrium GDP?

Assume that inventories declined by more than what analysts predicted.This implies that

During the Great Depression,economists first began studying the relationship between

________ is defined as the value of a household's assets minus the value of its liabilities.

All of the following are true statements about the multiplier except

When we graph consumption as a function of national income rather than as a function of ________,the slope of this consumption function is the ________.

Table 12-10 -Refer to Table 12-10.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP?

Equilibrium GDP is equal to