Question 1

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP,then

Accepted Answer

A) the multiplier is 0.125. 
B) the multiplier is 3.5. 
C) the multiplier is 8. 
D) the multiplier is 50. 
A) the multiplier is 0.125. 
B) the multiplier is 3.5. 
C) the multiplier is 8. 
D) the multiplier is 50.

Question 2

An increase in the real interest rate will

Accepted Answer

A) cause consumers to spend more and save less. 
B) most likely lower consumers' purchases of durable goods. 
C) most likely lower the reward to savings. 
D) most likely lower the cost of borrowing. 
A) cause consumers to spend more and save less. 
B) most likely lower consumers' purchases of durable goods. 
C) most likely lower the reward to savings. 
D) most likely lower the cost of borrowing.

Question 3

A decrease in aggregate expenditure has what result on equilibrium GDP?

Accepted Answer

A) Equilibrium GDP rises. 
B) Equilibrium GDP is not affected by a decrease in aggregate expenditure. 
C) Equilibrium GDP falls. 
D) Equilibrium GDP may rise or fall depending on the size of the decrease in aggregate expenditure relative to the initial level of GDP. 
A) Equilibrium GDP rises. 
B) Equilibrium GDP is not affected by a decrease in aggregate expenditure. 
C) Equilibrium GDP falls. 
D) Equilibrium GDP may rise or fall depending on the size of the decrease in aggregate expenditure relative to the initial level of GDP.

Question 4

If the consumption function is defined as C = 7,250 + 0.8Y,what is the autonomous level of consumption expenditure?

Accepted Answer

A) $5,800 
B) $7,250 
C) $9,062.50 
D) $9,700 
A) $5,800 
B) $7,250 
C) $9,062.50 
D) $9,700

Question 5

The Apple iPhone is sold in a box labeled "Made in China," but a study by economists at the Asian Development Bank found that the actual percentage of the price of the iPhone accounted for by the only work done in China,which is assembly,is

Accepted Answer

A) 4 percent. 
B) 12 percent. 
C) 25 percent. 
D) 65 percent. 
A) 4 percent. 
B) 12 percent. 
C) 25 percent. 
D) 65 percent.

Question 6

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

Accepted Answer

A) True 
 B)False

Question 7

Investment spending will increase when

Accepted Answer

A) the interest rate rises. 
B) the corporate income tax increases. 
C) business cash flow increases. 
D) firms become more pessimistic about earning future profits. 
A) the interest rate rises. 
B) the corporate income tax increases. 
C) business cash flow increases. 
D) firms become more pessimistic about earning future profits.

Question 8

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

Accepted Answer

A) Cellar-Kefauver Act 
B) Sherman Antitrust Act 
C) Clayton Act 
D) Smoot-Hawley Tariff 
A) Cellar-Kefauver Act 
B) Sherman Antitrust Act 
C) Clayton Act 
D) Smoot-Hawley Tariff

Question 9

Figure 23-2  
-Refer to Figure 23-2.If the U.S.economy is currently at point N,which of the following could cause it to move to point K?

Accepted Answer

A) Households expect future income to rise. 
B) Household wealth falls. 
C) Firm's cash flows rise as profits rise. 
D) Government expenditures increase. 
A) Households expect future income to rise. 
B) Household wealth falls. 
C) Firm's cash flows rise as profits rise. 
D) Government expenditures increase.

Question 10

The aggregate demand curve illustrates the relationship between ________ and the ________,holding constant all other factors that affect aggregate expenditure.

Accepted Answer

A) the price level;quantity of planned aggregate expenditure 
B) the inflation rate;quantity of planned aggregate expenditure 
C) the price level;quantity of planned investment expenditure 
D) the price level;quantity of consumption expenditure 
A) the price level;quantity of planned aggregate expenditure 
B) the inflation rate;quantity of planned aggregate expenditure 
C) the price level;quantity of planned investment expenditure 
D) the price level;quantity of consumption expenditure

Question 11

What is the main reason for changes in GDP in the short run?

Accepted Answer

The main reason for changes in

Question 12

If the multiplier is 10,the marginal propensity to consume must be 0.1.

Accepted Answer

A) True 
 B)False

Question 13

When Javier's income increases by $5,000,he spends an additional $3,750 dollars.This implies that his marginal propensity to consume is 0.75.

Accepted Answer

A) True 
 B)False

Question 14

If the marginal propensity to save is 0.1,then a $10 million decrease in disposable income will

Accepted Answer

A) increase consumption by $9 million. 
B) increase consumption by $1 million. 
C) decrease consumption by $9 million. 
D) decrease consumption by $1 million. 
A) increase consumption by $9 million. 
B) increase consumption by $1 million. 
C) decrease consumption by $9 million. 
D) decrease consumption by $1 million.

Question 15

Equilibrium GDP is equal to

Accepted Answer

A) autonomous expenditure times the marginal propensity to consume. 
B) autonomous expenditure times the marginal propensity to save. 
C) autonomous expenditure times the multiplier. 
D) autonomous expenditure. 
A) autonomous expenditure times the marginal propensity to consume. 
B) autonomous expenditure times the marginal propensity to save. 
C) autonomous expenditure times the multiplier. 
D) autonomous expenditure.

Question 16

Consumption spending refers to ________ spending on goods and services.

Accepted Answer

A) household 
B) business 
C) government 
D) foreign 
A) household 
B) business 
C) government 
D) foreign

Question 17

An increase in the price level in the United States will have what effect on the aggregate expenditure line?

Accepted Answer

A) Aggregate expenditure will shift downward. 
B) Aggregate expenditure will become steeper. 
C) Aggregate expenditure will shift upward. 
D) Aggregate expenditure will not be affected by an increase in the price level in the United States. 
A) Aggregate expenditure will shift downward. 
B) Aggregate expenditure will become steeper. 
C) Aggregate expenditure will shift upward. 
D) Aggregate expenditure will not be affected by an increase in the price level in the United States.

Question 18

Autonomous expenditure times the multiplier equals

Accepted Answer

A) autonomous saving. 
B) autonomous consumption. 
C) equilibrium GDP. 
D) planned autonomous investment. 
A) autonomous saving. 
B) autonomous consumption. 
C) equilibrium GDP. 
D) planned autonomous investment.

Question 19

Household wealth is defined as the value of a household's

Accepted Answer

A) assets minus the value of its liabilities. 
B) assets plus the value of its liabilities. 
C) assets. 
D) liabilities. 
A) assets minus the value of its liabilities. 
B) assets plus the value of its liabilities. 
C) assets. 
D) liabilities.

Question 20

If planned investment is greater than actual investment,then aggregate expenditure is less than GDP.

Accepted Answer

A) True 
 B)False

Exam 23: Aggregate Expenditure and Output in the Short Run

If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP,then

An increase in the real interest rate will

A decrease in aggregate expenditure has what result on equilibrium GDP?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the autonomous level of consumption expenditure?

The Apple iPhone is sold in a box labeled "Made in China," but a study by economists at the Asian Development Bank found that the actual percentage of the price of the iPhone accounted for by the only work done in China,which is assembly,is

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

Investment spending will increase when

The passage of the ________ in 1930 sparked a trade war that caused net exports to decrease and real GDP to decrease.

Figure 23-2 -Refer to Figure 23-2.If the U.S.economy is currently at point N,which of the following could cause it to move to point K?

The aggregate demand curve illustrates the relationship between ________ and the ________,holding constant all other factors that affect aggregate expenditure.

What is the main reason for changes in GDP in the short run?

If the multiplier is 10,the marginal propensity to consume must be 0.1.

When Javier's income increases by $5,000,he spends an additional $3,750 dollars.This implies that his marginal propensity to consume is 0.75.

If the marginal propensity to save is 0.1,then a $10 million decrease in disposable income will

Equilibrium GDP is equal to

Consumption spending refers to ________ spending on goods and services.

An increase in the price level in the United States will have what effect on the aggregate expenditure line?

Autonomous expenditure times the multiplier equals

Household wealth is defined as the value of a household's

If planned investment is greater than actual investment,then aggregate expenditure is less than GDP.

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 demand curve illustrates the relationship between and the ,holding constant all other factors that affect aggregate expenditure.