Question 1

Why do economists care about aggregate expenditures?

Accepted Answer

Increases and decreases in aggregate exp

Question 2

Explain how a stock market crash has the potential to lead to a recession in an economy.

Accepted Answer

A stock market crash is essentially a su

Question 3

The aggregate expenditure model focuses on the short-run relationship between ________ and ________.

Accepted Answer

A) real spending;real GDP 
B) unemployment;inflation 
C) nominal spending;nominal GDP 
D) planned inventories;unplanned inventories 
A) real spending;real GDP 
B) unemployment;inflation 
C) nominal spending;nominal GDP 
D) planned inventories;unplanned inventories

Question 4

Table 23-10
 $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Real GDP } & \text { Consumption } & \begin{array} { c } 
\text { Planned } \
\text { Investment }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { Purchases }
\end{array} & \text { Net Exports } \
\hline \$ 2,000 & \$ 1,600 & \$ 250 & \$ 250 & \$ 100 \
\hline 2,500 & 2,000 & 250 & 250 & 100 \
\hline 3,000 & 2,400 & 250 & 250 & 100 \
\hline 3,500 & 2,800 & 250 & 250 & 100 \
\hline
\end{array}$$
-At each of the three points in the following graph,indicate whether planned aggregate expenditure is greater than,equal to,or less than GDP?

Accepted Answer

At point J,planned aggregate e

Question 5

For all points below the 45-degree line,planned aggregate expenditure will be less than GDP.

Accepted Answer

A) True 
 B)False

Question 6

On the 45-degree line diagram,the 45-degree line shows points where real aggregate expenditure equals

Accepted Answer

A) unplanned investment. 
B) planned investment. 
C) real GDP. 
D) nominal GDP. 
A) unplanned investment. 
B) planned investment. 
C) real GDP. 
D) nominal GDP.

Question 7

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Accepted Answer

A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million 
A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million

Question 8

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is GDP?

Accepted Answer

A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million 
A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million

Question 9

If an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP,then

Accepted Answer

A) the MPC is 0.25. 
B) the MPC is 0.75. 
C) the MPC is 0.8. 
D) the MPC is 2.5. 
A) the MPC is 0.25. 
B) the MPC is 0.75. 
C) the MPC is 0.8. 
D) the MPC is 2.5.

Question 10

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 1,000 + 0.8Y
I = 1,500
G =1,250
NX = 100

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.8 
D) 10 
A) 0.2 
B) 0.8 
C) 1.8 
D) 10

Question 11

If an increase in investment spending of $20 million results in a $200 million increase in equilibrium real GDP,then

Accepted Answer

A) the multiplier is 0.1. 
B) the multiplier is 1. 
C) the multiplier is 10. 
D) the multiplier is 100. 
A) the multiplier is 0.1. 
B) the multiplier is 1. 
C) the multiplier is 10. 
D) the multiplier is 100.

Question 12

Use a 45-degree diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

Accepted Answer

@#IMG-DLM& Macroeconomic equilibrium occ

Question 13

The National Restaurant Association states that the restaurant industry has an economic effect of more than $1.7 trillion annually in the United States,with every dollar spent in restaurants generating an estimated total of $2.05 in spending in the economy.This indicates that the spending multiplier for the restaurant industry is equal to

Accepted Answer

A) 1.21. 
B) 1.70. 
C) 2.05. 
D) 4.25. 
A) 1.21. 
B) 1.70. 
C) 2.05. 
D) 4.25.

Question 14

Intel is the world's largest semiconductor manufacturer and a major supplier of the microprocessors and memory chips found in most personal computers.During the recession of 2007-2009,Intel's revenues ________ and it ________ the size of its workforce.

Accepted Answer

A) fell;increased 
B) fell;decreased 
C) rose;increased 
D) rose;decreased 
A) fell;increased 
B) fell;decreased 
C) rose;increased 
D) rose;decreased

Question 15

What is the difference between aggregate expenditure and aggregate demand?

Accepted Answer

Aggregate expenditure is the t

Question 16

If the consumption function is defined as C = 7,250 + 0.8Y,what is the marginal propensity to save?

Accepted Answer

A) 0.2 
B) 0.8 
C) 5.8 
D) 9.1 
A) 0.2 
B) 0.8 
C) 5.8 
D) 9.1

Question 17

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following will cause a direct increase in consumption spending?

Accepted Answer

A) an increase in planned investment 
B) an increase in government spending 
C) an increase in disposable income 
D) a decrease in net export spending 
A) an increase in planned investment 
B) an increase in government spending 
C) an increase in disposable income 
D) a decrease in net export spending

Question 19

Figure 23-1  
-Refer to Figure 23-1.At point J in the figure above,which of the following is true?

Accepted Answer

A) Aggregate expenditure is less than GDP. 
B) The economy has achieved macroeconomic equilibrium. 
C) Actual inventories are less than planned inventories. 
D) GDP will be decreasing. 
A) Aggregate expenditure is less than GDP. 
B) The economy has achieved macroeconomic equilibrium. 
C) Actual inventories are less than planned inventories. 
D) GDP will be decreasing.

Question 20

Given the equations for C,I,G,and NX below,what is the marginal propensity to save? C = 1,000 + 0.8Y
I = 1,500
G =1,250
NX = 100

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.8 
D) 10 
A) 0.2 
B) 0.8 
C) 1.8 
D) 10

Exam 23: Aggregate Expenditure and Output in the Short Run

Why do economists care about aggregate expenditures?

Explain how a stock market crash has the potential to lead to a recession in an economy.

The aggregate expenditure model focuses on the short-run relationship between ________ and ________.

For all points below the 45-degree line,planned aggregate expenditure will be less than GDP.

On the 45-degree line diagram,the 45-degree line shows points where real aggregate expenditure equals

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is GDP?

If an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP,then

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 1,000 + 0.8Y I = 1,500 G =1,250 NX = 100

If an increase in investment spending of $20 million results in a $200 million increase in equilibrium real GDP,then

Use a 45-degree diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

Intel is the world's largest semiconductor manufacturer and a major supplier of the microprocessors and memory chips found in most personal computers.During the recession of 2007-2009,Intel's revenues ________ and it ________ the size of its workforce.

What is the difference between aggregate expenditure and aggregate demand?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the marginal propensity to save?

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

Which of the following will cause a direct increase in consumption spending?

Figure 23-1 -Refer to Figure 23-1.At point J in the figure above,which of the following is true?

Given the equations for C,I,G,and NX below,what is the marginal propensity to save? C = 1,000 + 0.8Y I = 1,500 G =1,250 NX = 100

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

The aggregate expenditure model focuses on the short-run relationship between and .

Intel is the world's largest semiconductor manufacturer and a major supplier of the microprocessors and memory chips found in most personal computers.During the recession of 2007-2009,Intel's revenues and it the size of its workforce.