Question 1

An increase in the U.S.price level,other things constant,would

Accepted Answer

A)  increase U.S.exports and decrease U.S.imports 
B)  increase U.S.exports and leave U.S.imports unchanged 
C)  decrease U.S.exports and increase U.S.imports 
D)  decrease U.S.exports and leave U.S.imports unchanged 
E)  leave both U.S.exports and U.S.imports unchanged 
A)  increase U.S.exports and decrease U.S.imports 
B)  increase U.S.exports and leave U.S.imports unchanged 
C)  decrease U.S.exports and increase U.S.imports 
D)  decrease U.S.exports and leave U.S.imports unchanged 
E)  leave both U.S.exports and U.S.imports unchanged

Question 2

A decrease in planned investment would shift the

Accepted Answer

A)  aggregate demand curve outward 
B)  aggregate demand curve inward 
C)  aggregate supply curve inward 
D)  aggregate supply curve outward 
E)  consumption function downward 
A)  aggregate demand curve outward 
B)  aggregate demand curve inward 
C)  aggregate supply curve inward 
D)  aggregate supply curve outward 
E)  consumption function downward

Question 3

Suppose that a pair of graphs represents a situation in which both the aggregate expenditure line and the aggregate demand curve have shifted.You can conclude that the shift of the aggregate expenditure line was caused by a change in

Accepted Answer

A)  disposable income 
B)  the price level 
C)  the level of income 
D)  autonomous investment 
E)  the level of real GDP 
A)  disposable income 
B)  the price level 
C)  the level of income 
D)  autonomous investment 
E)  the level of real GDP

Question 4

If the price level rises,

Accepted Answer

A)  the aggregate expenditures line shifts upward; the economy moves downward along the aggregate demand curve 
B)  the aggregate expenditures line shifts downward; the economy moves upward along the aggregate demand curve 
C)  the aggregate demand curve shifts to the right; the economy moves along the aggregate expenditure line 
D)  the aggregate demand curve shifts to the left; the economy moves along the aggregate expenditure line 
E)  the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right 
A)  the aggregate expenditures line shifts upward; the economy moves downward along the aggregate demand curve 
B)  the aggregate expenditures line shifts downward; the economy moves upward along the aggregate demand curve 
C)  the aggregate demand curve shifts to the right; the economy moves along the aggregate expenditure line 
D)  the aggregate demand curve shifts to the left; the economy moves along the aggregate expenditure line 
E)  the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right

Question 5

The larger the marginal propensity to save,other things constant,

Accepted Answer

A)  the larger the marginal propensity to consume 
B)  the larger the multiplier 
C)  the steeper the consumption function 
D)  the steeper the saving function 
E)  the flatter the saving function 
A)  the larger the marginal propensity to consume 
B)  the larger the multiplier 
C)  the steeper the consumption function 
D)  the steeper the saving function 
E)  the flatter the saving function

Question 6

If the simple multiplier is 8,the marginal propensity to consume is

Accepted Answer

A)  1/8 
B)  1/4 
C)  4/5 
D)  7/8 
E)  8 
A)  1/8 
B)  1/4 
C)  4/5 
D)  7/8 
E)  8

Question 7

Exhibit 10-3
  
-The MPS in the economy represented in Exhibit 10-3 is

Accepted Answer

A)  0 
B)  0.1 
C)  0.2 
D)  0.8 
E)  20 
A)  0 
B)  0.1 
C)  0.2 
D)  0.8 
E)  20

Question 8

Consumption plus saving equals disposable income at every level of real GDP demanded.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 10-1
  
-In Exhibit 10-1,which of the variables are autonomous?

Accepted Answer

A)  saving and consumption only 
B)  net taxes and government purchases only 
C)  net exports and government purchases only 
D)  consumption,investment,and net exports only 
E)  investment,net exports,net taxes,and government purchases 
A)  saving and consumption only 
B)  net taxes and government purchases only 
C)  net exports and government purchases only 
D)  consumption,investment,and net exports only 
E)  investment,net exports,net taxes,and government purchases

Question 10

Which of the following would cause a rightward shift of the aggregate demand curve?

Accepted Answer

A)  an increase in planned investment 
B)  a drop in the price level 
C)  a rise in the price level 
D)  a decrease in autonomous consumption 
E)  anything that causes an upward shift in the saving function 
A)  an increase in planned investment 
B)  a drop in the price level 
C)  a rise in the price level 
D)  a decrease in autonomous consumption 
E)  anything that causes an upward shift in the saving function

Question 11

A decline in the U.S.price level,other things constant,would

Accepted Answer

A)  stimulate U.S.exports,pushing the aggregate demand curve to the right 
B)  stimulate U.S.imports,pushing the aggregate demand curve to the right 
C)  stimulate U.S.exports but discourage imports,causing a rightward movement along a given aggregate demand curve 
D)  discourage U.S.exports but stimulate imports,causing a rightward movement along a given aggregate demand curve 
E)  not affect U.S.net exports,so aggregate quantity demanded would remain constant 
A)  stimulate U.S.exports,pushing the aggregate demand curve to the right 
B)  stimulate U.S.imports,pushing the aggregate demand curve to the right 
C)  stimulate U.S.exports but discourage imports,causing a rightward movement along a given aggregate demand curve 
D)  discourage U.S.exports but stimulate imports,causing a rightward movement along a given aggregate demand curve 
E)  not affect U.S.net exports,so aggregate quantity demanded would remain constant

Question 12

On the aggregate expenditure graph,if autonomous saving decreases by $15 billion,

Accepted Answer

A)  the aggregate expenditure line shifts upward by $15 billion 
B)  planned investment increases by $15 billion 
C)  the aggregate expenditure line shifts downward by $15 billion 
D)  planned investment decreases by $15 billion 
E)  the equilibrium level of real GDP demanded decreases by $15 billion 
A)  the aggregate expenditure line shifts upward by $15 billion 
B)  planned investment increases by $15 billion 
C)  the aggregate expenditure line shifts downward by $15 billion 
D)  planned investment decreases by $15 billion 
E)  the equilibrium level of real GDP demanded decreases by $15 billion

Question 13

Exhibit 10-1
  
-In Exhibit 10-1,the equilibrium level of income is

Accepted Answer

A)  $5.4 trillion 
B)  where real GDP = total planned expenditures 
C)  where disposable income = total planned expenditures 
D)  $4.8 trillion 
E)  where the government has a balanced budget,which is at each level of income in this example 
A)  $5.4 trillion 
B)  where real GDP = total planned expenditures 
C)  where disposable income = total planned expenditures 
D)  $4.8 trillion 
E)  where the government has a balanced budget,which is at each level of income in this example

Question 14

Which of the following best describes aggregate expenditure?

Accepted Answer

A)  C + I + G + (X - M) 
B)  C + S + G + (X - M) 
C)  C + I + G + (X + M) 
D)  C + I + T + (X - M) 
E)  C + I + T + (X + M) 
A)  C + I + G + (X - M) 
B)  C + S + G + (X - M) 
C)  C + I + G + (X + M) 
D)  C + I + T + (X - M) 
E)  C + I + T + (X + M)

Question 15

Exhibit 10-1
  
-In Exhibit 10-1,the marginal propensity to consume equals

Accepted Answer

A)  5/6 
B)  4/5 
C)  3/4 
D)  1/2 
E)  2/3 
A)  5/6 
B)  4/5 
C)  3/4 
D)  1/2 
E)  2/3

Question 16

To simplify the aggregate expenditure model,we assume that there is no

Accepted Answer

A)  consumption 
B)  income 
C)  government purchases 
D)  net private investment 
E)  capital depreciation nor business saving 
A)  consumption 
B)  income 
C)  government purchases 
D)  net private investment 
E)  capital depreciation nor business saving

Question 17

Which of the following is not a part of planned aggregate spending?

Accepted Answer

A)  consumption 
B)  investment 
C)  government expenditures 
D)  net exports 
E)  saving 
A)  consumption 
B)  investment 
C)  government expenditures 
D)  net exports 
E)  saving

Question 18

If the mps is 0.25,the simple multiplier is

Accepted Answer

A)  25 
B)  75 
C)  5 
D)  3/4 
E)  4 
A)  25 
B)  75 
C)  5 
D)  3/4 
E)  4

Question 19

If the marginal propensity to consume in your classmate's nation is 3/5 and the marginal propensity to save in your country is 1/10,which of the following must be true?

Accepted Answer

A)  The spending multiplier is larger in your classmate's nation than in your country. 
B)  The spending multiplier is smaller in your classmate's nation than in your country. 
C)  Autonomous consumption is higher in your classmate's nation than in your country. 
D)  Autonomous consumption is lower in your classmate's nation than in your country. 
E)  Total consumption is lower in your classmate's nation than in your country. 
A)  The spending multiplier is larger in your classmate's nation than in your country. 
B)  The spending multiplier is smaller in your classmate's nation than in your country. 
C)  Autonomous consumption is higher in your classmate's nation than in your country. 
D)  Autonomous consumption is lower in your classmate's nation than in your country. 
E)  Total consumption is lower in your classmate's nation than in your country.

Question 20

If the marginal propensity to consume is 3/4,the simple multiplier is

Accepted Answer

A)  3 
B)  7 
C)  4 
D)  25 
E)  3/10 
A)  3 
B)  7 
C)  4 
D)  25 
E)  3/10

Exam 10: Aggregate Expenditure and Aggregate Demand

An increase in the U.S.price level,other things constant,would

A decrease in planned investment would shift the

Suppose that a pair of graphs represents a situation in which both the aggregate expenditure line and the aggregate demand curve have shifted.You can conclude that the shift of the aggregate expenditure line was caused by a change in

If the price level rises,

The larger the marginal propensity to save,other things constant,

If the simple multiplier is 8,the marginal propensity to consume is

Exhibit 10-3 -The MPS in the economy represented in Exhibit 10-3 is

Consumption plus saving equals disposable income at every level of real GDP demanded.

Exhibit 10-1 -In Exhibit 10-1,which of the variables are autonomous?

Which of the following would cause a rightward shift of the aggregate demand curve?

A decline in the U.S.price level,other things constant,would

On the aggregate expenditure graph,if autonomous saving decreases by $15 billion,

Exhibit 10-1 -In Exhibit 10-1,the equilibrium level of income is

Which of the following best describes aggregate expenditure?

Exhibit 10-1 -In Exhibit 10-1,the marginal propensity to consume equals

To simplify the aggregate expenditure model,we assume that there is no

Which of the following is not a part of planned aggregate spending?

If the mps is 0.25,the simple multiplier is

If the marginal propensity to consume in your classmate's nation is 3/5 and the marginal propensity to save in your country is 1/10,which of the following must be true?

If the marginal propensity to consume is 3/4,the simple multiplier is

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Productivity and Growth

Tracking the US Economy

Unemployment and Inflation

Aggregate Expenditure

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Developing and Transitional Economies

Understanding Graphs

National Income Accounts

Variable Net Exports

Variable Net Exports Revisited

The Algebra of Income and Expenditure

The Algebra of Demand-Side Equilibrium

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