Question 1

The economy will expand if

Accepted Answer

A) leakages exceed injections 
B) injections exceed leakages 
C) leakages equal injections 
D) expenditures are less than output 
E) saving exceeds investment 
A) leakages exceed injections 
B) injections exceed leakages 
C) leakages equal injections 
D) expenditures are less than output 
E) saving exceeds investment B

Question 2

Other things being equal, a decrease in an economy's exports will

Accepted Answer

A) increase domestic aggregate expenditures and the equilibrium level of output 
B) decrease domestic aggregate expenditures and the equilibrium level of output 
C) have no impact on domestic aggregate expenditures or output 
D) decrease the marginal propensity to import 
E) change autonomous consumption 
A) increase domestic aggregate expenditures and the equilibrium level of output 
B) decrease domestic aggregate expenditures and the equilibrium level of output 
C) have no impact on domestic aggregate expenditures or output 
D) decrease the marginal propensity to import 
E) change autonomous consumption B

Question 3

Which of the following is true about the relationship between the aggregate demand curve and the aggregate expenditure line?

Accepted Answer

A) If the aggregate expenditure line shifts while prices are constant, the resulting change in equilibrium output demanded can be depicted as a movement along the aggregate demand curve. 
B) If the aggregate expenditure line shifts while prices are constant, the resulting change in equilibrium output demanded can be depicted as a shift of the aggregate demand curve. 
C) Any time the aggregate expenditure line shifts, the aggregate demand curve shifts as well. 
D) Any time there is a movement along the aggregate expenditure curve, there is movement along the aggregate demand curve as well. 
E) Any time the price level changes, the aggregate demand curve shifts. 
A) If the aggregate expenditure line shifts while prices are constant, the resulting change in equilibrium output demanded can be depicted as a movement along the aggregate demand curve. 
B) If the aggregate expenditure line shifts while prices are constant, the resulting change in equilibrium output demanded can be depicted as a shift of the aggregate demand curve. 
C) Any time the aggregate expenditure line shifts, the aggregate demand curve shifts as well. 
D) Any time there is a movement along the aggregate expenditure curve, there is movement along the aggregate demand curve as well. 
E) Any time the price level changes, the aggregate demand curve shifts. B

Question 4

Exhibit 10-6
  
-According to the graph in Exhibit 10-6, if the price level increases, the new equilibrium level of real GDP must be

Accepted Answer

A) less than $20 
B) less than $100 
C) zero 
D) greater than $100 
E) greater than $200 
A) less than $20 
B) less than $100 
C) zero 
D) greater than $100 
E) greater than $200

Question 5

An increase in the price level will

Accepted Answer

A) shift the aggregate demand curve to the left 
B) shift the aggregate demand curve to the right 
C) result in a movement up to the left along the aggregate demand curve 
D) result in a movement down to the right along the aggregate demand curve 
E) have no effect on the aggregate quantity demanded 
A) shift the aggregate demand curve to the left 
B) shift the aggregate demand curve to the right 
C) result in a movement up to the left along the aggregate demand curve 
D) result in a movement down to the right along the aggregate demand curve 
E) have no effect on the aggregate quantity demanded

Question 6

In the income-expenditure framework, if planned aggregate expenditures are less than real GDP,

Accepted Answer

A) then saving must be larger than consumption 
B) the price level will increase 
C) inventories will increase 
D) inventories will decrease 
E) consumption will decrease 
A) then saving must be larger than consumption 
B) the price level will increase 
C) inventories will increase 
D) inventories will decrease 
E) consumption will decrease

Question 7

Which of the following is not true about a change in the price level?

Accepted Answer

A) It will shift the aggregate demand curve. 
B) It will shift the aggregate expenditure curve. 
C) It will result in a new value of equilibrium real GDP demanded. 
D) It will change the real value of dollar-denominated assets. 
E) It will shift the consumption function. 
A) It will shift the aggregate demand curve. 
B) It will shift the aggregate expenditure curve. 
C) It will result in a new value of equilibrium real GDP demanded. 
D) It will change the real value of dollar-denominated assets. 
E) It will shift the consumption function.

Question 8

If autonomous investment increases by $100 billion, equilibrium real GDP demanded will

Accepted Answer

A) increase by $100 billion 
B) not change 
C) increase by ($100 billion)/MPC 
D) increase by $100 billion × MPC 
E) increase by $100 billion/MPS 
A) increase by $100 billion 
B) not change 
C) increase by ($100 billion)/MPC 
D) increase by $100 billion × MPC 
E) increase by $100 billion/MPS

Question 9

Suppose that a pair of graphs represents a situation in which both the aggregate expenditure line and the aggregate demand curve have shifted. You can conclude that the shift of the aggregate expenditure line was caused by a change in

Accepted Answer

A) disposable income 
B) the price level 
C) the level of income 
D) autonomous investment 
E) the level of real GDP 
A) disposable income 
B) the price level 
C) the level of income 
D) autonomous investment 
E) the level of real GDP

Question 10

Suppose that planned autonomous investment increases by $200 billion and that the marginal propensity to consume equals 0.80. The equilibrium level of real GDP will increase by

Accepted Answer

A) $40 billion 
B) $160 billion 
C) $200 billion 
D) $250 billion 
E) $1,000 billion 
A) $40 billion 
B) $160 billion 
C) $200 billion 
D) $250 billion 
E) $1,000 billion

Question 11

Which of the following is not true at the equilibrium quantity of GDP demanded?

Accepted Answer

A) aggregate expenditure equals real GDP 
B) planned investment equals actual investment 
C) planned investment equals saving 
D) planned investment is greater than unintended inventory adjustment 
E) planned injections into the circular flow are less than planned leakages out of the flow 
A) aggregate expenditure equals real GDP 
B) planned investment equals actual investment 
C) planned investment equals saving 
D) planned investment is greater than unintended inventory adjustment 
E) planned injections into the circular flow are less than planned leakages out of the flow

Question 12

What is the effect of an increase in the price level?

Accepted Answer

A) The real value of dollar-denominated assets will rise. 
B) The aggregate expenditure line will shift upward. 
C) The equilibrium level of output demanded will rise. 
D) There will be upward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift rightward. 
A) The real value of dollar-denominated assets will rise. 
B) The aggregate expenditure line will shift upward. 
C) The equilibrium level of output demanded will rise. 
D) There will be upward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift rightward.

Question 13

If an increase in planned investment of $70 billion causes equilibrium output demanded to rise by $280 billion, the value of the marginal propensity to consume is

Accepted Answer

A) 4 
B) 4/3 
C) 1/3 
D) 1/4 
E) 3/4 
A) 4 
B) 4/3 
C) 1/3 
D) 1/4 
E) 3/4

Question 14

A decrease in the price level will have which of the following effects?

Accepted Answer

A) The real value of dollar-denominated assets will rise. 
B) The aggregate expenditure line will shift downward. 
C) The equilibrium level of output demanded will fall. 
D) There will be upward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift leftward. 
A) The real value of dollar-denominated assets will rise. 
B) The aggregate expenditure line will shift downward. 
C) The equilibrium level of output demanded will fall. 
D) There will be upward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift leftward.

Question 15

If the multiplier is 3, a $20 billion increase in autonomous consumption will cause a

Accepted Answer

A) $20 billion increase in equilibrium consumption 
B) $60 billion increase in equilibrium consumption 
C) $20 billion increase in equilibrium real GDP demanded 
D) $60 billion increase in equilibrium real GDP demanded 
E) $60 billion decrease in autonomous saving 
A) $20 billion increase in equilibrium consumption 
B) $60 billion increase in equilibrium consumption 
C) $20 billion increase in equilibrium real GDP demanded 
D) $60 billion increase in equilibrium real GDP demanded 
E) $60 billion decrease in autonomous saving

Question 16

A decrease in the price level will have which of the following effects?

Accepted Answer

A) The real value of dollar-denominated assets will fall. 
B) The aggregate expenditure line will shift upward. 
C) The equilibrium level of output demanded will fall. 
D) There will be upward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift rightward. 
A) The real value of dollar-denominated assets will fall. 
B) The aggregate expenditure line will shift upward. 
C) The equilibrium level of output demanded will fall. 
D) There will be upward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift rightward.

Question 17

The larger the marginal propensity to save, other things constant,

Accepted Answer

A) the larger the marginal propensity to consume 
B) the larger the multiplier 
C) the steeper the consumption function 
D) the steeper the saving function 
E) the flatter the saving function 
A) the larger the marginal propensity to consume 
B) the larger the multiplier 
C) the steeper the consumption function 
D) the steeper the saving function 
E) the flatter the saving function

Question 18

Exhibit 10-2
  
-The marginal propensity to save (MPS) in Exhibit 10-2 equals

Accepted Answer

A) 0.80 or 4/5 
B) 0.60 or 3/5 
C) 0.40 or 2/5 
D) 0.10 or 1/10 
E) 0.20 or 1/5 
A) 0.80 or 4/5 
B) 0.60 or 3/5 
C) 0.40 or 2/5 
D) 0.10 or 1/10 
E) 0.20 or 1/5

Question 19

Which of the following is true concerning the relationship between the marginal propensity to consume and the consumption function?

Accepted Answer

A) the larger the MPC, the higher the level of autonomous consumption 
B) the larger the MPC, the steeper the consumption function 
C) the larger the MPC, the larger the MPS 
D) The smaller the MPC, the steeper the consumption function 
E) The larger the MPC, the larger the level of autonomous consumption 
A) the larger the MPC, the higher the level of autonomous consumption 
B) the larger the MPC, the steeper the consumption function 
C) the larger the MPC, the larger the MPS 
D) The smaller the MPC, the steeper the consumption function 
E) The larger the MPC, the larger the level of autonomous consumption

Question 20

If the mps is 0.25, the simple multiplier is

Accepted Answer

A) 25 
B) 75 
C) 5 
D) 3/4 
E) 4 
A) 25 
B) 75 
C) 5 
D) 3/4 
E) 4

Exam 11: Aggregate Expenditure and Aggregate Demand

The economy will expand if

Other things being equal, a decrease in an economy's exports will

Which of the following is true about the relationship between the aggregate demand curve and the aggregate expenditure line?

Exhibit 10-6 -According to the graph in Exhibit 10-6, if the price level increases, the new equilibrium level of real GDP must be

An increase in the price level will

In the income-expenditure framework, if planned aggregate expenditures are less than real GDP,

Which of the following is not true about a change in the price level?

If autonomous investment increases by $100 billion, equilibrium real GDP demanded will

Suppose that a pair of graphs represents a situation in which both the aggregate expenditure line and the aggregate demand curve have shifted. You can conclude that the shift of the aggregate expenditure line was caused by a change in

Suppose that planned autonomous investment increases by $200 billion and that the marginal propensity to consume equals 0.80. The equilibrium level of real GDP will increase by

Which of the following is not true at the equilibrium quantity of GDP demanded?

What is the effect of an increase in the price level?

If an increase in planned investment of $70 billion causes equilibrium output demanded to rise by $280 billion, the value of the marginal propensity to consume is

A decrease in the price level will have which of the following effects?

If the multiplier is 3, a $20 billion increase in autonomous consumption will cause a

A decrease in the price level will have which of the following effects?

The larger the marginal propensity to save, other things constant,

Exhibit 10-2 -The marginal propensity to save (MPS) in Exhibit 10-2 equals

Which of the following is true concerning the relationship between the marginal propensity to consume and the consumption function?

If the mps is 0.25, the simple multiplier is

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

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