Question 1

In practice, the actual size of the multiplier is about

Accepted Answer

A)  1. 
B)  1.4. 
C)  2. 
D)  4. 
A)  1. 
B)  1.4. 
C)  2. 
D)  4.

Question 2

Refer to the information provided in Figure 8.5 below to answer the questions that follow.   Figure 8.5
-Refer to Figure 8.5. If aggregate income is $400 billion, aggregate saving is ________ billion.

Accepted Answer

A)  -$300 
B)  -$100 
C)  $0 
D)  $500 
A)  -$300 
B)  -$100 
C)  $0 
D)  $500

Question 3

Refer to the information provided in Figure 8.2 below to answer the questions that follow.   Figure 8.2
-Refer to Figure 8.2. Jerry's ________ equals ________ at income level Y1.

Accepted Answer

A)  consumption; saving 
B)  saving; zero 
C)  consumption; investment 
D)  consumption; zero 
A)  consumption; saving 
B)  saving; zero 
C)  consumption; investment 
D)  consumption; zero

Question 4

A multiplier of 1 means the MPS is equal to 1.

Accepted Answer

A) True 
 B)False

Question 5

If Inventory investment is higher than firms planned,

Accepted Answer

A)  actual and planned investment are equal. 
B)  actual investment is less than planned investment. 
C)  actual investment is greater than planned investment. 
D)  actual investment must be negative. 
A)  actual and planned investment are equal. 
B)  actual investment is less than planned investment. 
C)  actual investment is greater than planned investment. 
D)  actual investment must be negative.

Question 6

Refer to the information provided in Table 8.9 below to answer the questions that follow.
Table 8.9  
-Refer to Table 8.9. If aggregate output equals ________, there will be a $20 billion unplanned decrease in inventories.

Accepted Answer

A)  $100 billion 
B)  $200 billion 
C)  $300 billion 
D)  $400 billion 
A)  $100 billion 
B)  $200 billion 
C)  $300 billion 
D)  $400 billion

Question 7

Aggregate output will decrease if there is a(n)

Accepted Answer

A)  increase in saving. 
B)  unplanned rise in inventories. 
C)  unplanned fall in inventories. 
D)  decrease in consumption. 
A)  increase in saving. 
B)  unplanned rise in inventories. 
C)  unplanned fall in inventories. 
D)  decrease in consumption.

Question 8

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

Accepted Answer

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

Question 9

If the MPS is 0.05, the MPC is

Accepted Answer

A)  -0.05. 
B)  0.95. 
C)  1.05. 
D)  2.25. 
A)  -0.05. 
B)  0.95. 
C)  1.05. 
D)  2.25.

Question 10

If C = 200 + 0.5Y and I = 100, then the equilibrium level of income is

Accepted Answer

A)  175. 
B)  300. 
C)  400. 
D)  600. 
A)  175. 
B)  300. 
C)  400. 
D)  600.

Question 11

If consumption is $60,000 when income is $80,000, and consumption increases to $68,000 when income increases to $90,000, the MPC is

Accepted Answer

A)  0.2. 
B)  0.4. 
C)  0.6. 
D)  0.8. 
A)  0.2. 
B)  0.4. 
C)  0.6. 
D)  0.8.

Question 12

When the economy is in equilibrium, savings equals planned investment.

Accepted Answer

A) True 
 B)False

Question 13

If unplanned inventory investment is negative, 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 14

[Yd - C] equals

Accepted Answer

A)  spending. 
B)  the MPC. 
C)  saving. 
D)  the MPS. 
A)  spending. 
B)  the MPC. 
C)  saving. 
D)  the MPS.

Question 15

Refer to the information provided in Figure 8.2 below to answer the questions that follow.   Figure 8.2
-Refer to Figure 8.2. Jerry's saving equals zero at income level

Accepted Answer

A)  zero. 
B)  Y1. 
C)  Y2. 
D)  Y2 - Y1. 
A)  zero. 
B)  Y1. 
C)  Y2. 
D)  Y2 - Y1.

Question 16

Firms hold planned inventories in anticipation of sales.

Accepted Answer

A) True 
 B)False

Question 17

Refer to the information provided in Table 8.9 below to answer the questions that follow.
Table 8.9  
-Refer to Table 8.9. Planned saving equals planned investment at an aggregate output level of

Accepted Answer

A)  $500 billion. 
B)  $400 billion. 
C)  $300 billion. 
D)  $200 billion. 
A)  $500 billion. 
B)  $400 billion. 
C)  $300 billion. 
D)  $200 billion.

Question 18

Refer to the information provided in Table 8.7 below to answer the questions that follow.
Table 8.7  
-Refer to Table 8.7. Planned saving equals planned investment at an aggregate output level

Accepted Answer

A)  of $1,000 billion. 
B)  of $800 billion. 
C)  of $600 billion. 
D)  that cannot be determined from this information. 
A)  of $1,000 billion. 
B)  of $800 billion. 
C)  of $600 billion. 
D)  that cannot be determined from this information.

Question 19

Refer to the information provided in Figure 8.5 below to answer the questions that follow.   Figure 8.5
-Refer to Figure 8.5. Aggregate saving is -100 billion when aggregate income is ________ billion.

Accepted Answer

A)  -$50 
B)  $400 
C)  $800 
D)  $900 
A)  -$50 
B)  $400 
C)  $800 
D)  $900

Question 20

If the MPS is 0.60, MPC

Accepted Answer

A)  is 1.60. 
B)  is 0.40. 
C)  is 0.30. 
D)  cannot be determined by the given information. 
A)  is 1.60. 
B)  is 0.40. 
C)  is 0.30. 
D)  cannot be determined by the given information.

Exam 8: Aggregate Expenditure and Equilibrium Output

In practice, the actual size of the multiplier is about

Refer to the information provided in Figure 8.5 below to answer the questions that follow. Figure 8.5 -Refer to Figure 8.5. If aggregate income is $400 billion, aggregate saving is ________ billion.

Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's ________ equals ________ at income level Y1.

A multiplier of 1 means the MPS is equal to 1.

If Inventory investment is higher than firms planned,

Refer to the information provided in Table 8.9 below to answer the questions that follow. Table 8.9 -Refer to Table 8.9. If aggregate output equals ________, there will be a $20 billion unplanned decrease in inventories.

Aggregate output will decrease if there is a(n)

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

If the MPS is 0.05, the MPC is

If C = 200 + 0.5Y and I = 100, then the equilibrium level of income is

If consumption is $60,000 when income is $80,000, and consumption increases to $68,000 when income increases to $90,000, the MPC is

When the economy is in equilibrium, savings equals planned investment.

If unplanned inventory investment is negative, then

[Yd - C] equals

Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's saving equals zero at income level

Firms hold planned inventories in anticipation of sales.

Refer to the information provided in Table 8.9 below to answer the questions that follow. Table 8.9 -Refer to Table 8.9. Planned saving equals planned investment at an aggregate output level of

Refer to the information provided in Table 8.7 below to answer the questions that follow. Table 8.7 -Refer to Table 8.7. Planned saving equals planned investment at an aggregate output level

Refer to the information provided in Figure 8.5 below to answer the questions that follow. Figure 8.5 -Refer to Figure 8.5. Aggregate saving is -100 billion when aggregate income is ________ billion.

If the MPS is 0.60, MPC

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

Money, the Federal Reserve, and the Interest Rate

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

Policy Effects and Cost 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 Economies

Critical Thinking About Research

Filters

Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's equals at income level Y₁.

[Y_d - C] equals