Exam 21: The Simplest Short-Run Macro Model

In each of the four expenditure categories,national income accounts measure ________ expenditures,while the theoretical model of the economy deals with ________ expenditures.

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.At the equilibrium level of national income,desired consumption expenditure ($billions)will be

FIGURE 21-1 -Refer to Figure 21-1.The marginal propensity to save can be expressed as

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 21-4 -Refer to Table 21-4.The equilibrium level of national income ($billions)will be

Consider the equation: AE = C + I + G + (X - IM).Which of the following statements correctly describes this sum?

Consider the simplest macro model in which aggregate output is demand-determined.If autonomous consumption increases by $2 billion causing equilibrium national income to rise by $6 billion,the marginal propensity to spend must be

FIGURE 21-3 -Refer to Figure 21-3.The simple multiplier could be measured by the ratio

In a simple model of the economy with demand-determined output,the equilibrium level of national income is at an income

Other things being equal,higher real interest rates tend to

FIGURE 21-1 -Refer to Figure 21-1.The APC will be equal to one (1.0)when disposable income is equal to

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 -Refer to Table 21-1.The marginal propensity to save is equal to

FIGURE 21-3 -Refer to Figure 21-3.Assuming AE₀ is the prevailing aggregate expenditure function,at a level of national income equal to Y₃ we can state that

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.At the equilibrium level of national income,desired saving ($billions)is

Consider a simple macro model with a constant price level and demand-determined output.Using this 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

21.2 Equilibrium National Income FIGURE 21-3 -Refer to Figure 21-3.Consider the simplest macro model with no government and no foreign trade,and the aggregate expenditure function AE = C + I.If there was zero autonomous expenditure and the marginal propensity to consume was equal to one,then the AE function would be

FIGURE 21-1 -Refer to Figure 21-1.Desired consumption expenditures will equal disposable income at an income level of