Question 1

An aggregate demand curve can be drawn by:​

Accepted Answer

A) shifting the 45-degree line. 
B) letting changes in autonomous spending shift the aggregate expenditure line. 
C) letting changes in the price level shift the aggregate expenditure line. 
D) letting changes in the level of income shift the aggregate expenditure line. 
E) letting changes in real GDP shift the aggregate expenditure line. 
A) shifting the 45-degree line. 
B) letting changes in autonomous spending shift the aggregate expenditure line. 
C) letting changes in the price level shift the aggregate expenditure line. 
D) letting changes in the level of income shift the aggregate expenditure line. 
E) letting changes in real GDP shift the aggregate expenditure line.

Question 2

A technological change that positively affects business expectations will:​

Accepted Answer

A) cause a rightward shift of the investment demand curve. 
B) cause a leftward shift of the investment demand curve. 
C) cause an upward movement along the investment demand curve. 
D) cause a downward movement along the investment demand curve. 
E) make the investment demand curve upward sloping. 
A) cause a rightward shift of the investment demand curve. 
B) cause a leftward shift of the investment demand curve. 
C) cause an upward movement along the investment demand curve. 
D) cause a downward movement along the investment demand curve. 
E) make the investment demand curve upward sloping.

Question 3

If planned spending exceeds planned output in an economy,the result is a(n)_____.​

Accepted Answer

A) increase in inventories 
B) decrease in gross domestic product​ 
C) decrease in imports​ 
D) increase in government purchases 
E) unintended decrease in inventories 
A) increase in inventories 
B) decrease in gross domestic product​ 
C) decrease in imports​ 
D) increase in government purchases 
E) unintended decrease in inventories

Question 4

Suppose an increase in disposable income from $3 trillion to $3.2 trillion increases consumption from $2.5 trillion to $2.6 trillion.The marginal propensity to consume is _____.​

Accepted Answer

A) 0.1 
B) 0.2​ 
C) 0.5​ 
D) 0.8​ 
E) 0.9​ 
A) 0.1 
B) 0.2​ 
C) 0.5​ 
D) 0.8​ 
E) 0.9​

Question 5

A decrease in the U.S.price level,other things constant,will _____.​

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 downward movement along a given aggregate demand curve​ 
D) discourage U.S.exports but stimulate imports,causing an upward movement along a given aggregate demand curve​ 
E) not affect U.S.net exports,so the aggregate quantity demanded will 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 downward movement along a given aggregate demand curve​ 
D) discourage U.S.exports but stimulate imports,causing an upward movement along a given aggregate demand curve​ 
E) not affect U.S.net exports,so the aggregate quantity demanded will remain constant​

Question 6

A decrease in the price level will _____.​

Accepted Answer

A) shift the consumption function upward 
B) make the consumption function steeper​ 
C) result in an upward movement along the consumption function​ 
D) result in a downward movement along the consumption function​ 
E) shift the consumption function downward​ 
A) shift the consumption function upward 
B) make the consumption function steeper​ 
C) result in an upward movement along the consumption function​ 
D) result in a downward movement along the consumption function​ 
E) shift the consumption function downward​

Question 7

Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?​

Accepted Answer

A) Real GDP is less than the equilibrium level of real GDP demanded. 
B) Real GDP is greater than the equilibrium level of real GDP demanded. 
C) Real GDP equals the equilibrium level of real GDP demanded. 
D) At equilibrium real GDP,there is no inflation. 
E) At equilibrium real GDP,there is no saving. 
A) Real GDP is less than the equilibrium level of real GDP demanded. 
B) Real GDP is greater than the equilibrium level of real GDP demanded. 
C) Real GDP equals the equilibrium level of real GDP demanded. 
D) At equilibrium real GDP,there is no inflation. 
E) At equilibrium real GDP,there is no saving.

Question 8

An increase in the market interest rate,other things equal,will _____.​

Accepted Answer

A) have no effect on investment 
B) increase the amount invested since the rate of return will be lower​ 
C) increase the amount invested because income will increase​ 
D) reduce the amount invested because the opportunity costs of investing will be higher​ 
E) increase the amount invested because the rate of return will be higher​ 
A) have no effect on investment 
B) increase the amount invested since the rate of return will be lower​ 
C) increase the amount invested because income will increase​ 
D) reduce the amount invested because the opportunity costs of investing will be higher​ 
E) increase the amount invested because the rate of return will be higher​

Question 9

Which of the following is true of disposable income?​

Accepted Answer

A) It excludes transfer payments. 
B) It is the portion of income that is used solely for consumption. 
C) It is that part of total earned income that is paid to the government in the form of taxes. 
D) It is the difference between income and saving. 
E) It equals consumption expenditures plus saving. 
A) It excludes transfer payments. 
B) It is the portion of income that is used solely for consumption. 
C) It is that part of total earned income that is paid to the government in the form of taxes. 
D) It is the difference between income and saving. 
E) It equals consumption expenditures plus saving.

Question 10

Which of the following is least likely to cause a shift of the consumption function?​

Accepted Answer

A) A change in the level of saving 
B) A change in consumer expectations about future prices​ 
C) A change in household wealth​ 
D) A change in investment spending​ 
E) A change in the interest rate​ 
A) A change in the level of saving 
B) A change in consumer expectations about future prices​ 
C) A change in household wealth​ 
D) A change in investment spending​ 
E) A change in the interest rate​

Question 11

If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy,then consumption spending will increase by:​

Accepted Answer

A) $6 billion. 
B) $14 billion. 
C) $20 billion. 
D) $28 billion. 
E) $67 billion. 
A) $6 billion. 
B) $14 billion. 
C) $20 billion. 
D) $28 billion. 
E) $67 billion.

Question 12

Expectations that the price level will decrease in the future will _____.​

Accepted Answer

A) make the current consumption function flatter 
B) shift the current consumption function downward​ 
C) result in an upward movement along the current consumption function​ 
D) result in a downward movement along the current consumption function​ 
E) make the current consumption function steeper​ 
A) make the current consumption function flatter 
B) shift the current consumption function downward​ 
C) result in an upward movement along the current consumption function​ 
D) result in a downward movement along the current consumption function​ 
E) make the current consumption function steeper​

Question 13

On a graph showing investment along the vertical axis and income along the horizontal axis,_____.​

Accepted Answer

A) the investment line will be downward sloping 
B) the investment line will be upward sloping​ 
C) the investment line will be horizontal​ 
D) the investment line will be vertical​ 
E) the investment line will be U-shaped​ 
A) the investment line will be downward sloping 
B) the investment line will be upward sloping​ 
C) the investment line will be horizontal​ 
D) the investment line will be vertical​ 
E) the investment line will be U-shaped​

Question 14

As the U.S.price level rises relative to price levels in other countries,U.S._____.​

Accepted Answer

A) consumption and net exports will both decrease 
B) consumption and net exports will both increase​ 
C) consumption would increase and net exports will decrease​ 
D) consumption would decrease and net exports will increase​ 
E) consumption and net exports will remain constant​ 
A) consumption and net exports will both decrease 
B) consumption and net exports will both increase​ 
C) consumption would increase and net exports will decrease​ 
D) consumption would decrease and net exports will increase​ 
E) consumption and net exports will remain constant​

Question 15

An increase in autonomous investment in an economy will _____.​

Accepted Answer

A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward​ 
C) result in an upward movement along the aggregate expenditure line​ 
D) result in a downward movement along the aggregate expenditure line​ 
E) increase aggregate expenditures only at high levels of income​ 
A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward​ 
C) result in an upward movement along the aggregate expenditure line​ 
D) result in a downward movement along the aggregate expenditure line​ 
E) increase aggregate expenditures only at high levels of income​

Question 16

A firm's level of investment depends on the market interest rate:​

Accepted Answer

A) only when the firm has to borrow funds to invest in new equipment. 
B) only when the firm has to borrow funds to buy stocks and bonds. 
C) only when the firm already has sufficient funds and could lend them. 
D) because the interest rate represents the opportunity cost of investing in capital. 
E) because investments are always made with borrowed funds. 
A) only when the firm has to borrow funds to invest in new equipment. 
B) only when the firm has to borrow funds to buy stocks and bonds. 
C) only when the firm already has sufficient funds and could lend them. 
D) because the interest rate represents the opportunity cost of investing in capital. 
E) because investments are always made with borrowed funds.

Question 17

A decrease in the price level in an economy will _____.​

Accepted Answer

A) shift the aggregate demand curve to the right 
B) shift the aggregate demand curve to the left​ 
C) increase the level of aggregate quantity demanded​ 
D) decrease the level of aggregate quantity demanded​ 
E) shift the aggregate expenditure line downward​ 
A) shift the aggregate demand curve to the right 
B) shift the aggregate demand curve to the left​ 
C) increase the level of aggregate quantity demanded​ 
D) decrease the level of aggregate quantity demanded​ 
E) shift the aggregate expenditure line downward​

Question 18

If incomes in the United States increase,other things equal,then U.S._____.​

Accepted Answer

A) imports increase and exports remain constant 
B) exports increase and imports decrease​ 
C) imports decrease and exports decrease​ 
D) imports remain constant and exports increase​ 
E) net exports remains constant​ 
A) imports increase and exports remain constant 
B) exports increase and imports decrease​ 
C) imports decrease and exports decrease​ 
D) imports remain constant and exports increase​ 
E) net exports remains constant​

Question 19

A decrease in the price level in an economy will _____.​

Accepted Answer

A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward 
C) cause an upward movement along the aggregate expenditure line 
D) cause a downward movement along the aggregate expenditure line 
E) shift the aggregate demand curve leftward 
A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward 
C) cause an upward movement along the aggregate expenditure line 
D) cause a downward movement along the aggregate expenditure line 
E) shift the aggregate demand curve leftward

Question 20

If the simple spending multiplier is 10,the marginal propensity to save (MPS)is:​

Accepted Answer

A) 1/10. 
B) 9/10. 
C) 1/9. 
D) 10/9. 
E) 9. 
A) 1/10. 
B) 9/10. 
C) 1/9. 
D) 10/9. 
E) 9.

An aggregate demand curve can be drawn by:

A technological change that positively affects business expectations will:

If planned spending exceeds planned output in an economy,the result is a(n)_____.

Suppose an increase in disposable income from $3 trillion to $3.2 trillion increases consumption from $2.5 trillion to $2.6 trillion.The marginal propensity to consume is _____.

A decrease in the U.S.price level,other things constant,will _____.

A decrease in the price level will _____.

Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?

An increase in the market interest rate,other things equal,will _____.

Which of the following is true of disposable income?

Which of the following is least likely to cause a shift of the consumption function?

If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy,then consumption spending will increase by:

Expectations that the price level will decrease in the future will _____.

On a graph showing investment along the vertical axis and income along the horizontal axis,_____.

As the U.S.price level rises relative to price levels in other countries,U.S._____.

An increase in autonomous investment in an economy will _____.

A firm's level of investment depends on the market interest rate:

A decrease in the price level in an economy will _____.

If incomes in the United States increase,other things equal,then U.S._____.

A decrease in the price level in an economy will _____.

If the simple spending multiplier is 10,the marginal propensity to save (MPS)is:

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

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

Economic Development

Filters

Exam 9: Aggregate Demand

An aggregate demand curve can be drawn by:​

A technological change that positively affects business expectations will:​

If planned spending exceeds planned output in an economy,the result is a(n)_____.​

Suppose an increase in disposable income from $3 trillion to $3.2 trillion increases consumption from $2.5 trillion to $2.6 trillion.The marginal propensity to consume is _____.​

A decrease in the U.S.price level,other things constant,will _____.​

A decrease in the price level will _____.​

Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?​

An increase in the market interest rate,other things equal,will _____.​

Which of the following is true of disposable income?​

Which of the following is least likely to cause a shift of the consumption function?​

If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy,then consumption spending will increase by:​

Expectations that the price level will decrease in the future will _____.​

On a graph showing investment along the vertical axis and income along the horizontal axis,_____.​

As the U.S.price level rises relative to price levels in other countries,U.S._____.​

An increase in autonomous investment in an economy will _____.​

A firm's level of investment depends on the market interest rate:​

A decrease in the price level in an economy will _____.​

If incomes in the United States increase,other things equal,then U.S._____.​

A decrease in the price level in an economy will _____.​

If the simple spending multiplier is 10,the marginal propensity to save (MPS)is:​

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

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

Economic Development

Filters

An aggregate demand curve can be drawn by:

A technological change that positively affects business expectations will:

If planned spending exceeds planned output in an economy,the result is a(n)_____.

Suppose an increase in disposable income from $3 trillion to $3.2 trillion increases consumption from $2.5 trillion to $2.6 trillion.The marginal propensity to consume is _____.

A decrease in the U.S.price level,other things constant,will _____.

A decrease in the price level will _____.

Suppose at a particular level of real gross domestic product (GDP),there are no unintended inventory adjustments.In this context,which of the following is true?

An increase in the market interest rate,other things equal,will _____.

Which of the following is true of disposable income?

Which of the following is least likely to cause a shift of the consumption function?

If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an economy,then consumption spending will increase by:

Expectations that the price level will decrease in the future will _____.

On a graph showing investment along the vertical axis and income along the horizontal axis,_____.

As the U.S.price level rises relative to price levels in other countries,U.S._____.

An increase in autonomous investment in an economy will _____.

A firm's level of investment depends on the market interest rate:

A decrease in the price level in an economy will _____.

If incomes in the United States increase,other things equal,then U.S._____.

A decrease in the price level in an economy will _____.

If the simple spending multiplier is 10,the marginal propensity to save (MPS)is: