Exam 11: The Aggregate Expenditures Model

The amount by which an aggregate expenditures schedule must shift upward to achieve the full-employment GDP is a(n):

From the perspective of classical macroeconomic theory, if aggregate spending was temporarily less than output:

All figures in the table below are in billions of dollars. Refer to the above data. If this economy were an open economy, the equilibrium GDP will be:

When the Federal government provides tax rebate checks to taxpayers, as it did in 2008, the intent is to push the aggregate expenditures schedule in the economy upwards.

When there are unplanned increases in inventories, then actual investment ends up being less than planned investment.

In the aggregate expenditures model of a private closed economy, we analyze a consumption schedule and an investment schedule both of which indicate that as income increases then consumption and investment will increase.

Leakages from the income-expenditure stream are:

If households and firms in an economy would save all extra income that they receive so that MPC = 0, then the multiplier in that economy is zero.

In a closed private economy, an unplanned decrease in inventories will cause firms to increase real GDP.

In a private closed economy, the two components of aggregate expenditures are:

Say's law in classical economics suggests that, over a period of time:

The table shows a private closed economy. All figures are in billions of dollars. Refer to the table above. An increase in the real interest rate from 2% to 6% will:

Assume that the marginal propensity to consume in an economy is 0.75. If the economy's full-employment real GDP is $900 billion and its equilibrium real GDP is $800 billion, there is a recessionary expenditure gap of:

In the aggregate expenditures model, we note that an increase in government purchases G and an increase in lump-sum taxes T of the same amount will have:

Refer to the above graph. If this economy was an open economy without a government sector, the level of GDP would be:

If the MPC in an economy is 0.8, government could close a recessionary expenditure gap of $100 billion by cutting taxes by:

Which event would most likely decrease an economy's exports?

In an open mixed economy, the inflationary expenditure gap may be described as the:

Over time, an increase in the real output and incomes of the trading partners of the United States will most likely:

The amount by which aggregate expenditures exceed those associated with the full-employment level of domestic output can best be described as: