Exam 23: Aggregate Expenditure and Output in the Short Run

The larger the MPS, the smaller the value of the multiplier.

Aggregate expenditure includes consumption spending, planned investment spending, government purchases, and net exports.

Which of the following will cause a direct increase in consumption spending?

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation. How will this affect U.S. net exports?

Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is -$2 million, government purchases are $10 million, and net export spending is $2 million. What is GDP?

Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume? C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

Table 23-14 -Refer to Table 23-14. Using the table above, answer the following questions. The numbers in the table are in billions of dollars. a. What is the equilibrium level of real GDP? b. What is the MPC? c. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? d. If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?

Intel is the world's largest semiconductor manufacturer and a major supplier of the microprocessors and memory chips found in most personal computers. During the recession of 2007-2009, Intel's revenues ________ and it ________ the size of its workforce.

Figure 23-2 -Refer to Figure 23-2. Suppose that the level of GDP associated with point K is potential GDP. If the U.S. economy is currently at point N,

A rising price level decreases consumption by decreasing the real value of household wealth.

If consumption is defined as C = 1,350 + 0.6Y, then the marginal propensity to consume is 0.6.

The aggregate demand curve illustrates the relationship between ________ and the ________, holding constant all other factors that affect aggregate expenditure.

Article Summary Although growing at only half the average rate following the seven previous recessions, consumer spending has increased 9 percent since the end of the 2007-2009 recession, and consumer confidence has been on the rise as household finances, the job market, and the housing market continue to improve. The Federal Reserve projects a 3% - 3.5% growth rate for the economy in 2014, up from the recent average of 2%. Debt payments have fallen to an average of 15.69% of after-tax income for households, the lowest level in 30 years, and lower debt payments leave households with more to spend on consumer goods. Source: Neil Shah, "Pocketbooks Begin to Open As Household Wealth Grows," Wall Street Journal, June 25, 2013. -Refer to the Article Summary. The increase in consumer spending discussed in the article summary was due in part to an improving housing market. This reason for the increase in consumer spending is most closely related to which of the following variables that determine the level of consumption?

If the consumption function is defined as C = 7,250 + 0.8Y, what is the marginal propensity to save?

Consumption spending will ________ when disposable income ________.

Table 23-15 -Refer to Table 23-15. Using the table above, answer the following questions. The numbers in the table are in billions of dollars. a. What is the equilibrium level of real GDP? b. What is the MPC? c. If investment spending declines by $10 billion, what will happen to equilibrium GDP?

From 1983-2013, net exports for the United States

What are the five main determinants of consumption spending? Which of these is the most important?

Discuss the leading causes of the Great Depression. Use the 45-degree line diagram to show how they caused a decline in GDP.

________ consumption is consumption that does not depend upon the level of GDP.