Exam 9: Aaggregate Expenditure and Aggregate Demand

The owners of the Morning Glory Coffee Shop are considering spending $3,000 on a new cappuccino machine.They expect to increase revenues by $200 per year if they do.The current interest rate is 8 percent.Which of the following is true?

New investment will be undertaken up to the point where the expected rate of return equals

Exhibit 9-4 -Consider an economy with a consumption function like C₁ in Exhibit 9-4.The economy is currently operating at A when the price level rises.This would produce a movement from A to

Which of the following is the most volatile component of GDP?

The interest rate is important to the investment decision

Expectations that disposable income will increase in the future will

The MPC is a relationship between

Along the aggregate consumption function,an increase in income will

An upward shift of the consumption function might be caused by

The primary determinant of consumption spending is the price level.

As disposable income increases,

The non-income determinants of consumption include all of the following except one.Which is the exception?

Suppose that when disposable income rises from $5.2 trillion to $6.0 trillion,consumption rises from $5.0 trillion to $5.6 trillion.What is the marginal propensity to save?

Imagine a macro investment demand curve that shows that,if the market interest rate is 4 percent,the quantity of investment demanded is $500 billion.Then,if the market rate rises to 5 percent,the most likely result is that the quantity of investment demanded

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

Consumption spending depends mainly on the level of

Out of disposable income,households

Induced saving

During recession years,

Exhibit 9-4 -Consider an economy with a consumption function like C₁ in Exhibit 9-4.The economy is currently operating at A when interest rates go down.This would produce a movement from A to