Exam 21: The Simplest Short-Run Macro Model

Consider the simplest macroeconomic model,with a closed economy and no government.If we assume that desired investment is autonomous with respect to national income,then the investment function (which graphs desired investment against actual national income)will be

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.This economy's equilibrium level of national income is

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

Desired consumption divided by disposable income is called the

Consider a simple macro model with demand-determined output.If z is the marginal propensity to spend out of national income,Y is national income and A is autonomous expenditure,then the simple multiplier is equal to

Consider a simple macro model with a constant price level and demand-determined output.If national income is above its equilibrium level,it is likely that inventories are ________,and so national income tends to ________.

Which of the following correctly describes the meaning of the aggregate expenditure (AE)function?

Consider the following information describing a closed economy with no government.Aggregate output is demand determined and the price level is constant. TABLE 21-6 -Refer to Table 21-6.The simple multiplier in this economy is

For firms or individual households,desired expenditure is

The aggregate expenditure (AE)function is an upward-sloping curve that describes

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

Undesired or unplanned inventory decumulation is likely to occur when

In a simple macro model with the price level assumed to be constant,a change in firms' level of desired investment is predicted to influence equilibrium national income by

Suppose the price level is constant,output is demand-determined,and the economy is closed with no government.If the consumption function is C = (2/3)Y,then the simple multiplier is

The slope of the aggregate expenditure (AE)function is always equal to the marginal propensity to

In the simplest macroeconomic model,with a closed economy and no government,the aggregate expenditure (AE)function is the sum of

Investment expenditure is the ________ volatile component of GDP,and changes in investment are ________ associated with business-cycle fluctuations.

FIGURE 21-1 -Refer to Figure 21-1.If disposable income is equal to Y₃,desired consumption expenditure is equal to the vertical distance

Consider a simple macro model with demand-determined output.At the equilibrium level of national income,

Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions. TABLE 21-3 -Refer to Table 21-3.The correct expression for the aggregate expenditure function for this economy is