Exam 8: Aggregate Expenditures

Assume that the MPC is 0.75.Full employment is considered to be at a GDP level of $500 billion.The GDP is $600 billion.What should the government do to achieve full employment?

If income is $5,000 per month and consumption spending is $4,500 per month,what is the average propensity to consume?

If autonomous investment spending falls by $1,000 and the marginal propensity to consume is 0.75,the total effect on the economy is a decrease of _____ in income or output.

Spending by the government (federal,state,and local)is more than 60% of GDP today.

Which of the following did classical economists believe would happen if the product markets accrued surpluses?

The following table shows some data on consumption at various levels of income. Income Consumption $0 $200 $1,000 $1,000 $2,000 $1,800 $3,000 $2,600 $4,000 $3,400 $5,000 $4,200 $6,000 $5,000 Investment spending is $600.If there is no government spending or net exports,the equilibrium income level is:

Increases in government spending ____ equilibrium income,and increases in taxes ____ equilibrium income.

The rate of return on investment is the main determinant of investment spending.

Assume that the marginal propensity to consume is 0.75.John's Clean Clones builds a factory that costs $1 billion.How much does the macroeconomic equilibrium increase?

In the simple Keynesian model,the economy will be in equilibrium when:

Decreases in government spending ____ equilibrium income,and increases in taxes ____ equilibrium income.

The average propensity to save is calculated by dividing savings by income.

Consumption expenditures play a minor role in the U.S.economy.

If income rises from $10,000 to $20,000 and savings increases from $9,000 to $16,000,then the marginal propensity to save is:

One implication of a straight line aggregate expenditure curve is that:

If disposable income is $250 and saving is $50,how much is the average propensity to consume?

If there is no government and no foreign sector in the economy:

If the marginal propensity to save is 0.2,then the multiplier is 4.

During the millennium scare of 2000,Rufus reduced his monthly spending by $1,000 and buried his money in the backyard.If the marginal propensity to consume is 0.75,by how much did national income fall?

If disposable income is $3,000 and saving is $1,200,how much is the average propensity to consume?