Question 1

If consumer spending increases,other things constant,the aggregate demand curve shifts inward.

Accepted Answer

A) True 
 B)False  False

Question 2

If autonomous investment decreases by $60 billion,equilibrium real GDP demanded will

Accepted Answer

A) increase by $60 billion 
B) decrease by $60 billion 
C) decrease by ($60 billion)$\times$ MPC 
D) decrease by $60 billion $\times$ (1 - MP
C)  
E) decrease by $60 billion/MPS 
A) increase by $60 billion 
B) decrease by $60 billion 
C) decrease by ($60 billion)$\times$ MPC 
D) decrease by $60 billion $\times$ (1 - MP
C)  
E) decrease by $60 billion/MPS E

Question 3

Which of the following would cause a rightward shift of the aggregate demand curve?

Accepted Answer

A) an increase in planned investment 
B) a drop in the price level 
C) a rise in the price level 
D) a decrease in autonomous consumption 
E) anything that causes an upward shift in the saving function 
A) an increase in planned investment 
B) a drop in the price level 
C) a rise in the price level 
D) a decrease in autonomous consumption 
E) anything that causes an upward shift in the saving function A

Question 4

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 5

On the aggregate expenditure graph,if autonomous investment increases by $20 billion,

Accepted Answer

A) the aggregate expenditure line shifts upward by $20 billion 
B) planned saving increases by $20 billion 
C) the aggregate expenditure line shifts downward by $20 billion 
D) planned saving decreases by $20 billion 
E) the equilibrium level of real GDP demanded increases by $20 billion 
A) the aggregate expenditure line shifts upward by $20 billion 
B) planned saving increases by $20 billion 
C) the aggregate expenditure line shifts downward by $20 billion 
D) planned saving decreases by $20 billion 
E) the equilibrium level of real GDP demanded increases by $20 billion

Question 6

If autonomous consumption rises by $0.8 trillion and the marginal propensity to consume (MPC)equals 3/4,the equilibrium level of output demanded will rise by

Accepted Answer

A) $0.2 trillion 
B) $0.6 trillion 
C) $1.07 trillion 
D) $2.4 trillion 
E) $3.2 trillion 
A) $0.2 trillion 
B) $0.6 trillion 
C) $1.07 trillion 
D) $2.4 trillion 
E) $3.2 trillion

Question 7

Which of the following is not a part of planned aggregate spending?

Accepted Answer

A) consumption 
B) investment 
C) government expenditures 
D) net exports 
E) saving 
A) consumption 
B) investment 
C) government expenditures 
D) net exports 
E) saving

Question 8

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 9

The simple multiplier

Accepted Answer

A) when divided by consumption spending equals saving 
B) is defined as 1.0 divided by the marginal propensity to save 
C) is defined as 1.0 divided by the marginal propensity to consume 
D) is equal to the MPS plus the MPC 
E) is equal to the MPS minus the MPC 
A) when divided by consumption spending equals saving 
B) is defined as 1.0 divided by the marginal propensity to save 
C) is defined as 1.0 divided by the marginal propensity to consume 
D) is equal to the MPS plus the MPC 
E) is equal to the MPS minus the MPC

Question 10

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

Question 11

If output exceeds planned aggregate spending,the result is unintended inventory increases.

Accepted Answer

A) True 
 B)False

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 downward. 
C) The equilibrium level of output demanded will rise. 
D) There will be downward 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 downward. 
C) The equilibrium level of output demanded will rise. 
D) There will be downward movement along a particular aggregate demand curve. 
E) The aggregate demand curve will shift rightward.

Question 13

If the price level decreases,

Accepted Answer

A) the aggregate expenditures line shifts downward; the economy moves down along the aggregate demand curve 
B) the aggregate expenditures line shifts upward; the economy moves up along the aggregate demand curve 
C) the aggregate demand curve shifts to the right; the economy moves along the aggregate expenditures line 
D) the aggregate demand curve shifts to the left; the economy moves along the aggregate expenditures line 
E) the aggregate expenditures line shifts upward; the economy moves down along the aggregate demand curve 
A) the aggregate expenditures line shifts downward; the economy moves down along the aggregate demand curve 
B) the aggregate expenditures line shifts upward; the economy moves up along the aggregate demand curve 
C) the aggregate demand curve shifts to the right; the economy moves along the aggregate expenditures line 
D) the aggregate demand curve shifts to the left; the economy moves along the aggregate expenditures line 
E) the aggregate expenditures line shifts upward; the economy moves down along the aggregate demand curve

Question 14

If the marginal propensity to consume is 4/5,the simple multiplier is

Accepted Answer

A) 1/6 
B) 6 
C) 5/6 
D) 6/5 
E) 5 
A) 1/6 
B) 6 
C) 5/6 
D) 6/5 
E) 5

Question 15

The slope of the aggregate expenditure line equals the marginal propensity to consume.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 9-9  
-The smaller the marginal propensity to save,other things constant,

Accepted Answer

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

Question 17

If the price level increases,other things constant,consumption spending

Accepted Answer

A) increases because real income rises 
B) decreases because real income rises 
C) increases because the real value of wealth increases 
D) decreases because the real value of wealth decreases 
E) increases because nominal income increases 
A) increases because real income rises 
B) decreases because real income rises 
C) increases because the real value of wealth increases 
D) decreases because the real value of wealth decreases 
E) increases because nominal income increases

Question 18

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

Question 19

At the equilibrium level of real GDP,unplanned inventory adjustment equals

Accepted Answer

A) planned investment 
B) saving 
C) zero 
D) actual investment 
E) consumption 
A) planned investment 
B) saving 
C) zero 
D) actual investment 
E) consumption

Question 20

A decrease in the price level will

Accepted Answer

A) shift the aggregate demand curve to the right 
B) shift the aggregate demand curve to the left 
C) result in a movement upward along the aggregate demand curve 
D) result in a movement downward along the aggregate demand curve 
E) change the slope of the aggregate demand curve 
A) shift the aggregate demand curve to the right 
B) shift the aggregate demand curve to the left 
C) result in a movement upward along the aggregate demand curve 
D) result in a movement downward along the aggregate demand curve 
E) change the slope of the aggregate demand curve

Exam 10: Baggregate Expenditure and Aggregate Demand

If consumer spending increases,other things constant,the aggregate demand curve shifts inward.

If autonomous investment decreases by $60 billion,equilibrium real GDP demanded will

Which of the following would cause a rightward shift of the aggregate demand curve?

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

On the aggregate expenditure graph,if autonomous investment increases by $20 billion,

If autonomous consumption rises by $0.8 trillion and the marginal propensity to consume (MPC)equals 3/4,the equilibrium level of output demanded will rise by

Which of the following is not a part of planned aggregate spending?

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

The simple multiplier

If the mps is 0.25,the simple multiplier is

If output exceeds planned aggregate spending,the result is unintended inventory increases.

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

If the price level decreases,

If the marginal propensity to consume is 4/5,the simple multiplier is

The slope of the aggregate expenditure line equals the marginal propensity to consume.

Exhibit 9-9 -The smaller the marginal propensity to save,other things constant,

If the price level increases,other things constant,consumption spending

The economy will expand if

At the equilibrium level of real GDP,unplanned inventory adjustment equals

A decrease in the price level will

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate 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

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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