FIGURE 21-3 -Refer to Figure 21-3.If national income is Y1 and the aggregate expenditure function is AE1,then desired aggregate expenditure

A) exceeds income and income will rise. B) exceeds income and income will fall. C) is less than income and income will rise. D) is equal to income and income will not change. E) is less than income and income will fall. A) exceeds income and income will rise. B) exceeds income and income will fall. C) is less than income and income will rise. D) is equal to income and income will not change. E) is less than income and income will fall.

Exam 21: The Simplest Short-Run Macro Model

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Consider the simplest macro model with demand-determined output.Suppose an increase in business confidence leads firms to increase investment in new equipment by $100 million.The marginal propensity to spend in this economy is 0.75.What is the increase in expenditure in this economy during the initial first round of spending?

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Question 1

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Consider the simplest macro model with a constant price level and demand-determined output.If desired aggregate expenditure is less than actual national income,then

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Question 2

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A decrease in the marginal propensity to spend out of national income will cause

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Question 3

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Consider a simple macro model with demand-determined output.Using such a model,if economists want to estimate the effect of a given change in desired investment on equilibrium national income,they would multiply the change in desired investment by the reciprocal of one minus

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Question 4

FIGURE 21-3 -Refer to Figure 21-3.If national income is Y₁ and the aggregate expenditure function is AE₁,then desired aggregate expenditure

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Question 5

The marginal propensity to consume is defined to be

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Question 6

Suppose aggregate output is demand-determined.Suppose a decrease in autonomous investment expenditure of $20 million reduces equilibrium national income by $50 million.The marginal propensity to spend is equal to

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Question 7

Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend is 0.9,the simple multiplier is

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Question 8

Consider the following information concerning an economy with demand-determined output.There is no government or foreign trade. TABLE 21-7 -Refer to Table 21-7.The simple multiplier in this economy is

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Question 9

FIGURE 21-3 -Refer to Figure 21-3.A shift in the aggregate expenditure function downward from AE₁ to AE₀ could be caused by

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Question 10

A rise in the real rate of interest the opportunity cost of holding an inventory of a given size,and therefore desired investment expenditure.

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Question 11

If national income is demand-determined,the condition for national income to be in equilibrium can be stated as

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Question 12

Suppose there is an increase in the marginal propensity to spend out of national income.The result will be

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Question 13

The increase in aggregate planned expenditures divided by the change in national income that brought it about is called the

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Question 14

Consider the simplest macro model with demand-determined output.Suppose an increase in business confidence leads firms to increase investment in new equipment by $30 million.The marginal propensity to spend in this economy is 0.9.What is the eventual total new expenditure in this economy due to the increase in investment?

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Question 15

FIGURE 21-2 -Refer to Figure 21-2.The APC will be equal to one (1.0)when disposable income is

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Question 16

The percentage of disposable income that is saved by Canadian households has been changing over time.In 2014,it was estimated to be about ________ percent.

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Question 17

Consider the following news headline: "Increase in consumer confidence leads to increase in spending".Which of the following correctly describes the likely effect in our simple macro model?

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Question 18

Suppose aggregate output is demand-determined.If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending,then equilibrium income will and the marginal propensity to spend must equal .

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Question 19

When desired consumption exceeds disposable income,desired saving is ; when desired consumption is less than the disposable income,desired saving is .

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Question 20

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Exam 21: The Simplest Short-Run Macro Model

Consider the simplest macro model with a constant price level and demand-determined output.If desired aggregate expenditure is less than actual national income,then

A decrease in the marginal propensity to spend out of national income will cause

Consider a simple macro model with demand-determined output.Using such a model,if economists want to estimate the effect of a given change in desired investment on equilibrium national income,they would multiply the change in desired investment by the reciprocal of one minus

FIGURE 21-3 -Refer to Figure 21-3.If national income is Y1 and the aggregate expenditure function is AE1,then desired aggregate expenditure

The marginal propensity to consume is defined to be

Suppose aggregate output is demand-determined.Suppose a decrease in autonomous investment expenditure of $20 million reduces equilibrium national income by $50 million.The marginal propensity to spend is equal to

Consider a simple macro model with a constant price level and demand-determined output.If the marginal propensity to spend is 0.9,the simple multiplier is

Consider the following information concerning an economy with demand-determined output.There is no government or foreign trade. TABLE 21-7 -Refer to Table 21-7.The simple multiplier in this economy is

FIGURE 21-3 -Refer to Figure 21-3.A shift in the aggregate expenditure function downward from AE1 to AE0 could be caused by

A rise in the real rate of interest ________ the opportunity cost of holding an inventory of a given size,and therefore ________ desired investment expenditure.

If national income is demand-determined,the condition for national income to be in equilibrium can be stated as

Suppose there is an increase in the marginal propensity to spend out of national income.The result will be

The increase in aggregate planned expenditures divided by the change in national income that brought it about is called the

FIGURE 21-2 -Refer to Figure 21-2.The APC will be equal to one (1.0)when disposable income is

The percentage of disposable income that is saved by Canadian households has been changing over time.In 2014,it was estimated to be about ________ percent.

Consider the following news headline: "Increase in consumer confidence leads to increase in spending".Which of the following correctly describes the likely effect in our simple macro model?

Suppose aggregate output is demand-determined.If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending,then equilibrium income will ________ and the marginal propensity to spend must equal ________.

When desired consumption exceeds disposable income,desired saving is ________; when desired consumption is less than the disposable income,desired saving is ________.

Economic Issues and Concepts

Economic Theories,Data,and Graphs

Demand, Supply, and Price

Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets and Income Inequality

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

What Macroeconomics Is All About

The Measurement of National Income

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: The Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, Interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

FIGURE 21-3 -Refer to Figure 21-3.If national income is Y₁ and the aggregate expenditure function is AE₁,then desired aggregate expenditure

FIGURE 21-3 -Refer to Figure 21-3.A shift in the aggregate expenditure function downward from AE₁ to AE₀ could be caused by

A rise in the real rate of interest the opportunity cost of holding an inventory of a given size,and therefore desired investment expenditure.

Suppose aggregate output is demand-determined.If the simple multiplier is 4 and there is a $10 billion increase in planned investment spending,then equilibrium income will and the marginal propensity to spend must equal .

When desired consumption exceeds disposable income,desired saving is ; when desired consumption is less than the disposable income,desired saving is .