Question 1

Table 12-4
  
-Refer to Table 12-4.Given the consumption schedule in the table above,the marginal propensity to consume is

Accepted Answer

A) 0.5. 
B) 0.6. 
C) 0.75. 
D) 0.8. 
A) 0.5. 
B) 0.6. 
C) 0.75. 
D) 0.8. B

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. B

Question 3

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

Accepted Answer

A) True 
 B)False  True

Question 4

C = 4,000 + 0.5Y
I = 1,500
G = 2,250
NX = -150
Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

Accepted Answer

Y = C + I + G + NX.
Y = 4,000

Question 5

________ is equal to consumption spending plus planned investment spending plus government purchases plus net exports.

Accepted Answer

A) Full employment GDP 
B) Short-run aggregate supply 
C) Planned inventory investment 
D) Planned aggregate expenditure 
A) Full employment GDP 
B) Short-run aggregate supply 
C) Planned inventory investment 
D) Planned aggregate expenditure

Question 6

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 7

Table 12-3
  
-Refer to Table 12-3.Given the consumption schedule in the table above,the marginal propensity to consume is

Accepted Answer

A) 0.1. 
B) 0.3. 
C) 0.6. 
D) 0.9. 
A) 0.1. 
B) 0.3. 
C) 0.6. 
D) 0.9.

Question 8

The change in consumption divided by the change in disposable income is equal to

Accepted Answer

A) the slope of the consumption function. 
B) aggregate expenditure. 
C) household saving. 
D) real GDP. 
A) the slope of the consumption function. 
B) aggregate expenditure. 
C) household saving. 
D) real GDP.

Question 9

Figure 12-1  
-Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,

Accepted Answer

A) the economy is in equilibrium. 
B) production is greater than spending. 
C) production is less than spending. 
D) inventories will increase above their desired level. 
A) the economy is in equilibrium. 
B) production is greater than spending. 
C) production is less than spending. 
D) inventories will increase above their desired level.

Question 10

The larger the MPS,the smaller the value of the multiplier.

Accepted Answer

A) True 
 B)False

Question 11

An unplanned decrease in inventories results in

Accepted Answer

A) a decrease in planned investment. 
B) an increase in planned investment. 
C) actual investment that is greater than planned investment. 
D) actual investment that is less than planned investment. 
A) a decrease in planned investment. 
B) an increase in planned investment. 
C) actual investment that is greater than planned investment. 
D) actual investment that is less than planned investment.

Question 12

An increase in taxes will ________ consumption spending,and a decrease in transfer payments will ________ consumption spending.

Accepted Answer

A) increase;increase 
B) decrease;increase 
C) increase;decrease 
D) decrease;decrease 
A) increase;increase 
B) decrease;increase 
C) increase;decrease 
D) decrease;decrease

Question 13

If economists forecast a decrease in aggregate expenditure,which of the following is likely to occur?

Accepted Answer

A) GDP will rise. 
B) GDP will fall. 
C) Wages will rise. 
D) Inventories will fall. 
A) GDP will rise. 
B) GDP will fall. 
C) Wages will rise. 
D) Inventories will fall.

Question 14

Consumption spending is $5 million,planned investment spending is $8 million,actual investment spending is $8 million,government purchases are $10 million,and net export spending is $2 million.Based on this information,which of the following is true?

Accepted Answer

A) There was an unplanned change in inventories. 
B) Aggregate expenditure is equal to GDP. 
C) Aggregate expenditure is greater than GDP. 
D) Aggregate expenditure is less than GDP. 
A) There was an unplanned change in inventories. 
B) Aggregate expenditure is equal to GDP. 
C) Aggregate expenditure is greater than GDP. 
D) Aggregate expenditure is less than GDP.

Question 15

Refer to the Article Summary.The increase in GDP discussed in the article summary was due in part to increases in commercial and residential construction.Increases in commercial and residential construction will cause a(n)________ the aggregate expenditure curve.

Accepted Answer

A) movement up along 
B) movement down along 
C) downward shift of 
D) upward shift of 
A) movement up along 
B) movement down along 
C) downward shift of 
D) upward shift of

Question 16

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 17

Figure 12-2  
-Refer to Figure 12-2.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 18

Investment spending ________ during a recession,and ________ during an expansion.

Accepted Answer

A) declines;increases 
B) increases;declines 
C) increases;increases 
D) declines;declines 
A) declines;increases 
B) increases;declines 
C) increases;increases 
D) declines;declines

Question 19

The formula for aggregate expenditure is

Accepted Answer

A) AE = C + I + G. 
B) AE = C + I + G - NX. 
C) AE = C + I + G + NX. 
D) AE = C + I + depreciation - NX. 
A) AE = C + I + G. 
B) AE = C + I + G - NX. 
C) AE = C + I + G + NX. 
D) AE = C + I + depreciation - NX.

Question 20

If planned aggregate expenditure is less than total production,

Accepted Answer

A) actual inventories will equal planned inventories. 
B) firms will experience an unplanned decrease in inventories. 
C) GDP will decrease. 
D) the economy is in equilibrium. 
A) actual inventories will equal planned inventories. 
B) firms will experience an unplanned decrease in inventories. 
C) GDP will decrease. 
D) the economy is in equilibrium.

Table 12-4 -Refer to Table 12-4.Given the consumption schedule in the table above,the marginal propensity to consume is

An increase in the real interest rate will

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

C = 4,000 + 0.5Y I = 1,500 G = 2,250 NX = -150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

________ is equal to consumption spending plus planned investment spending plus government purchases plus net exports.

Table 12-3 -Refer to Table 12-3.Given the consumption schedule in the table above,the marginal propensity to consume is

The change in consumption divided by the change in disposable income is equal to

Figure 12-1 -Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,

The larger the MPS,the smaller the value of the multiplier.

An unplanned decrease in inventories results in

An increase in taxes will consumption spending,and a decrease in transfer payments will consumption spending.

If economists forecast a decrease in aggregate expenditure,which of the following is likely to occur?

Consumption spending is $5 million,planned investment spending is $8 million,actual investment spending is $8 million,government purchases are $10 million,and net export spending is $2 million.Based on this information,which of the following is true?

Refer to the Article Summary.The increase in GDP discussed in the article summary was due in part to increases in commercial and residential construction.Increases in commercial and residential construction will cause a(n)________ the aggregate expenditure curve.

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

Figure 12-2 -Refer to Figure 12-2.If the U.S.economy is currently at point N,which of the following could cause it to move to point K?

Investment spending during a recession,and during an expansion.

The formula for aggregate expenditure is

If planned aggregate expenditure is less than total production,

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Exam 12: Aggregate Expenditure and Output in the Short Run

Table 12-4 -Refer to Table 12-4.Given the consumption schedule in the table above,the marginal propensity to consume is

An increase in the real interest rate will

If aggregate expenditure is more than GDP,then inventories fall and GDP rises.

C = 4,000 + 0.5Y I = 1,500 G = 2,250 NX = -150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

________ is equal to consumption spending plus planned investment spending plus government purchases plus net exports.

Table 12-3 -Refer to Table 12-3.Given the consumption schedule in the table above,the marginal propensity to consume is

The change in consumption divided by the change in disposable income is equal to

Figure 12-1 -Refer to Figure 12-1.If the economy is at a level of aggregate expenditure given by point K,

The larger the MPS,the smaller the value of the multiplier.

An unplanned decrease in inventories results in

An increase in taxes will ________ consumption spending,and a decrease in transfer payments will ________ consumption spending.

If economists forecast a decrease in aggregate expenditure,which of the following is likely to occur?

Consumption spending is $5 million,planned investment spending is $8 million,actual investment spending is $8 million,government purchases are $10 million,and net export spending is $2 million.Based on this information,which of the following is true?

Refer to the Article Summary.The increase in GDP discussed in the article summary was due in part to increases in commercial and residential construction.Increases in commercial and residential construction will cause a(n)________ the aggregate expenditure curve.

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

Figure 12-2 -Refer to Figure 12-2.If the U.S.economy is currently at point N,which of the following could cause it to move to point K?

Investment spending ________ during a recession,and ________ during an expansion.

The formula for aggregate expenditure is

If planned aggregate expenditure is less than total production,

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

An increase in taxes will consumption spending,and a decrease in transfer payments will consumption spending.

Investment spending during a recession,and during an expansion.