Question 1

If the consumption function is below the 45-degree line,

Accepted Answer

A) consumption is less than income and saving is positive. 
B) consumption is less than income and saving is negative. 
C) consumption exceeds income and saving is positive. 
D) consumption exceeds income and saving is negative. 
A) consumption is less than income and saving is positive. 
B) consumption is less than income and saving is negative. 
C) consumption exceeds income and saving is positive. 
D) consumption exceeds income and saving is negative.

Question 2

Which of the following is NOT considered investment?

Accepted Answer

A) the acquisition of capital goods 
B) the purchase of government bonds 
C) the increase in planned inventories 
D) the construction of a new factory 
A) the acquisition of capital goods 
B) the purchase of government bonds 
C) the increase in planned inventories 
D) the construction of a new factory

Question 3

Refer to the information provided in Figure 8.4 below to answer the questions that follow.   Figure 8.4
-Refer to Figure 8.4.If income is Y1,aggregate consumption is the greatest when the aggregate consumption function is

Accepted Answer

A) C3. 
B) C2. 
C) C1. 
D) cannot be determined from the figure 
A) C3. 
B) C2. 
C) C1. 
D) cannot be determined from the figure

Question 4

In a closed economy with no government,aggregate expenditure is

Accepted Answer

A) consumption plus investment. 
B) saving plus investment. 
C) consumption plus the MPC. 
D) MPC + MPS. 
A) consumption plus investment. 
B) saving plus investment. 
C) consumption plus the MPC. 
D) MPC + MPS.

Question 5

Refer to the information provided in Figure 8.11 below to answer the questions that follow.   Figure 8.11
-Refer to Figure 8.11.The equation for the aggregate expenditure function AE0 is

Accepted Answer

A) AE0 = 50 + 0.6Y. 
B) AE0 = 80 + 0.6Y. 
C) AE0 = 50 + 0.75Y. 
D) AE0 = 50 + 0.4Y. 
A) AE0 = 50 + 0.6Y. 
B) AE0 = 80 + 0.6Y. 
C) AE0 = 50 + 0.75Y. 
D) AE0 = 50 + 0.4Y.

Question 6

Refer to the information provided in Figure 8.2 below to answer the questions that follow.   Figure 8.2
-Refer to Figure 8.2.Along the segment AB,Jerry's

Accepted Answer

A) consumption is less than his income. 
B) saving is positive. 
C) consumption equals his income. 
D) saving is negative. 
A) consumption is less than his income. 
B) saving is positive. 
C) consumption equals his income. 
D) saving is negative.

Question 7

Assuming no government or foreign sector,the formula for the multiplier is

Accepted Answer

A) 1/MPC. 
B) 1/MPS. 
C) 1/(1 + MP
C) . 
D) 1 - MPC. 
A) 1/MPC. 
B) 1/MPS. 
C) 1/(1 + MP
C) . 
D) 1 - MPC.

Question 8

Refer to the information provided in Table 8.2 below to answer the questions that follow.
Table 8.2  
-Refer to Table 8.2.Assuming society's MPC is constant,at an aggregate income level of $900,aggregate consumption would be

Accepted Answer

A) $665. 
B) $910. 
C) $1,200. 
D) $1,750. 
A) $665. 
B) $910. 
C) $1,200. 
D) $1,750.

Question 9

If unplanned inventory investment is positive,then

Accepted Answer

A) planned investment must be zero. 
B) planned aggregate spending must be greater than aggregate output. 
C) planned aggregate spending must be less than aggregate output. 
D) planned aggregate spending must equal aggregate output. 
A) planned investment must be zero. 
B) planned aggregate spending must be greater than aggregate output. 
C) planned aggregate spending must be less than aggregate output. 
D) planned aggregate spending must equal aggregate output.

Question 10

Refer to the information provided in Figure 8.1 below to answer the questions that follow.   Figure 8.1
-Refer to Figure 8.1.This household consumes $2,000 at an income level of

Accepted Answer

A) $3,000. 
B) $2,275. 
C) $2,000. 
D) $1,840. 
A) $3,000. 
B) $2,275. 
C) $2,000. 
D) $1,840.

Question 11

Assume that in Jabara,planned investment is $30 billion,but actual investment is $45 billion.Unplanned inventory investment is

Accepted Answer

A) -$75 billion. 
B) -$15 billion. 
C) $15 billion. 
D) $75 billion. 
A) -$75 billion. 
B) -$15 billion. 
C) $15 billion. 
D) $75 billion.

Question 12

When aggregate expenditure is greater than aggregate output,there will be an unplanned build up of inventories.

Accepted Answer

A) True 
 B)False

Question 13

Refer to the information provided in Figure 8.12 below to answer the questions that follow.   Figure 8.12
-Refer to Figure 8.12.Suppose the economy's aggregate expenditure line is AE1.A $10 million increase in planned investment causes aggregate equilibrium output to increase to

Accepted Answer

A) $1,010.0 million. 
B) $1,016.7 million. 
C) $1,125.5 million. 
D) $1,215.6 million. 
A) $1,010.0 million. 
B) $1,016.7 million. 
C) $1,125.5 million. 
D) $1,215.6 million.

Question 14

If planned investment exceeds actual investment,

Accepted Answer

A) there will be an accumulation of inventories. 
B) there will be no change in inventories. 
C) there will be a decline in inventories. 
D) none of the above 
A) there will be an accumulation of inventories. 
B) there will be no change in inventories. 
C) there will be a decline in inventories. 
D) none of the above

Question 15

If the consumption function is of the form C = 80 + 0.4Y,the MPS equals

Accepted Answer

A) -0.6. 
B) -0.4. 
C) 0.4. 
D) 0.6. 
A) -0.6. 
B) -0.4. 
C) 0.4. 
D) 0.6.

Question 16

Refer to the information provided in Figure 8.11 below to answer the questions that follow.   Figure 8.11
-Refer to Figure 8.11.The value of the multiplier is

Accepted Answer

A) 2. 
B) 2.5. 
C) 3. 
D) 4. 
A) 2. 
B) 2.5. 
C) 3. 
D) 4.

Question 17

Without the government or the foreign sector in the income-expenditure model,planned aggregate expenditure equals

Accepted Answer

A) consumption plus actual investment. 
B) consumption plus inventory adjustment. 
C) consumption minus planned investment. 
D) consumption plus planned investment. 
A) consumption plus actual investment. 
B) consumption plus inventory adjustment. 
C) consumption minus planned investment. 
D) consumption plus planned investment.

Question 18

Refer to the information provided in Table 8.4 below to answer the questions that follow.
Table 8.4  
-Refer to Table 8.4.At an aggregate output level of $400 billion,planned expenditure equals

Accepted Answer

A) $450 billion. 
B) $500 billion. 
C) $550 billion. 
D) $850 billion. 
A) $450 billion. 
B) $500 billion. 
C) $550 billion. 
D) $850 billion.

Question 19

Refer to the information provided in Table 8.1 below to answer the questions that follow.
Table 8.1  
-Refer to Table 8.1.The equation for the aggregate consumption function is

Accepted Answer

A) C = 80 + 0.95Y. 
B) C = 80 + 0.9Y. 
C) C = 80 + 0.75Y. 
D) C = -80 + 0.45Y. 
A) C = 80 + 0.95Y. 
B) C = 80 + 0.9Y. 
C) C = 80 + 0.75Y. 
D) C = -80 + 0.45Y.

Question 20

The marginal propensity to consume is the change in consumption per change in income.

Accepted Answer

A) True 
 B)False

Exam 8: Aggregate Expenditure and Equilibrium Output

If the consumption function is below the 45-degree line,

Which of the following is NOT considered investment?

Refer to the information provided in Figure 8.4 below to answer the questions that follow. Figure 8.4 -Refer to Figure 8.4.If income is Y1,aggregate consumption is the greatest when the aggregate consumption function is

In a closed economy with no government,aggregate expenditure is

Refer to the information provided in Figure 8.11 below to answer the questions that follow. Figure 8.11 -Refer to Figure 8.11.The equation for the aggregate expenditure function AE0 is

Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2.Along the segment AB,Jerry's

Assuming no government or foreign sector,the formula for the multiplier is

Refer to the information provided in Table 8.2 below to answer the questions that follow. Table 8.2 -Refer to Table 8.2.Assuming society's MPC is constant,at an aggregate income level of $900,aggregate consumption would be

If unplanned inventory investment is positive,then

Refer to the information provided in Figure 8.1 below to answer the questions that follow. Figure 8.1 -Refer to Figure 8.1.This household consumes $2,000 at an income level of

Assume that in Jabara,planned investment is $30 billion,but actual investment is $45 billion.Unplanned inventory investment is

When aggregate expenditure is greater than aggregate output,there will be an unplanned build up of inventories.

Refer to the information provided in Figure 8.12 below to answer the questions that follow. Figure 8.12 -Refer to Figure 8.12.Suppose the economy's aggregate expenditure line is AE1.A $10 million increase in planned investment causes aggregate equilibrium output to increase to

If planned investment exceeds actual investment,

If the consumption function is of the form C = 80 + 0.4Y,the MPS equals

Refer to the information provided in Figure 8.11 below to answer the questions that follow. Figure 8.11 -Refer to Figure 8.11.The value of the multiplier is

Without the government or the foreign sector in the income-expenditure model,planned aggregate expenditure equals

Refer to the information provided in Table 8.4 below to answer the questions that follow. Table 8.4 -Refer to Table 8.4.At an aggregate output level of $400 billion,planned expenditure equals

Refer to the information provided in Table 8.1 below to answer the questions that follow. Table 8.1 -Refer to Table 8.1.The equation for the aggregate consumption function is

The marginal propensity to consume is the change in consumption per change in income.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

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