Question 1

If inflation in the United States is higher than inflation in other countries,what will be the effect on net exports for the United States?

Accepted Answer

A) Net exports will rise as U.S.exports increase. 
B) Net exports will rise as U.S.imports decrease. 
C) Net exports will decrease as U.S.exports decrease. 
D) Net exports will decrease as U.S.imports decrease. 
A) Net exports will rise as U.S.exports increase. 
B) Net exports will rise as U.S.imports decrease. 
C) Net exports will decrease as U.S.exports decrease. 
D) Net exports will decrease as U.S.imports decrease.

Question 2

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.25 
D) 5 
A) 0.2 
B) 0.8 
C) 1.25 
D) 5

Question 3

Which is the largest component of aggregate expenditure?

Accepted Answer

A) planned investment expenditures 
B) consumption expenditures 
C) government expenditures 
D) net export expenditures 
A) planned investment expenditures 
B) consumption expenditures 
C) government expenditures 
D) net export expenditures

Question 4

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 5

Net exports usually ________ when the U.S.economy is in a recession and ________ when the U.S.economy is expanding.

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 6

C = 2,550 + (MPC)Y
I = 800
G = 1,100
NX = 50
If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Accepted Answer

Y = C + I + G + NX.
11,250 = 2

Question 7

Aggregate expenditure includes consumption spending,planned investment spending,government purchases,and net exports.

Accepted Answer

A) True 
 B)False

Question 8

The difference between GDP and disposable income is

Accepted Answer

A) national income. 
B) actual investment spending. 
C) net taxes. 
D) unplanned investment spending. 
A) national income. 
B) actual investment spending. 
C) net taxes. 
D) unplanned investment spending.

Question 9

Which of the following leads to a decrease in real GDP?

Accepted Answer

A) an increase in government spending 
B) an increase in the inflation rate in other countries,relative to the inflation in the United States 
C) an increase in interest rates 
D) Households have increasingly optimistic expectations about future income. 
A) an increase in government spending 
B) an increase in the inflation rate in other countries,relative to the inflation in the United States 
C) an increase in interest rates 
D) Households have increasingly optimistic expectations about future income.

Question 10

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 11

The multiplier is calculated as the change in ________ divided by the change in ________.

Accepted Answer

A) real GDP;autonomous expenditure 
B) autonomous expenditure;real GDP 
C) nominal GDP;autonomous expenditure 
D) real GDP;induced spending 
A) real GDP;autonomous expenditure 
B) autonomous expenditure;real GDP 
C) nominal GDP;autonomous expenditure 
D) real GDP;induced spending

Question 12

Increases in the price level will

Accepted Answer

A) lower consumption because goods and services are less affordable. 
B) raise consumption because some goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases. 
A) lower consumption because goods and services are less affordable. 
B) raise consumption because some goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases.

Question 13

Economists think that the marginal propensity to consume for the U.S.economy is somewhere around 0.9.Based on our simple multiplier formula,this would imply that the multiplier for the United States should be around 10.However,economists agree that the spending multiplier is closer to 2.What might explain this supposed anomaly?

Accepted Answer

The formula for the multiplier,M = @#IMG-DLM& ,is

Question 14

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 15

If planned aggregate expenditure is less than total production,

Accepted Answer

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

Question 16

Figure 12-1  
-Refer to Figure 12-1.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 17

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

Accepted Answer

A) 0.1 
B) 0.9 
C) 9 
D) 10 
A) 0.1 
B) 0.9 
C) 9 
D) 10

Question 18

If the marginal propensity to save is 0.25,then a $10,000 decrease in disposable income will

Accepted Answer

A) increase consumption by $7,500. 
B) increase consumption by $2,500. 
C) decrease consumption by $7,500. 
D) decrease consumption by $2,500. 
A) increase consumption by $7,500. 
B) increase consumption by $2,500. 
C) decrease consumption by $7,500. 
D) decrease consumption by $2,500.

Question 19

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

Accepted Answer

A) aggregate expenditure that year was equal to GDP that year. 
B) there was an unplanned increase in inventories that year. 
C) there was an unplanned decrease in inventories that year. 
D) aggregate expenditure that year was greater than GDP that year. 
A) aggregate expenditure that year was equal to GDP that year. 
B) there was an unplanned increase in inventories that year. 
C) there was an unplanned decrease in inventories that year. 
D) aggregate expenditure that year was greater than GDP that year.

Question 20

If the marginal propensity to save is 0.4,the multiplier is 2.5.

Accepted Answer

A) True 
 B)False

If inflation in the United States is higher than inflation in other countries,what will be the effect on net exports for the United States?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Which is the largest component of aggregate expenditure?

Autonomous expenditure times the multiplier equals

Net exports usually when the U.S.economy is in a recession and when the U.S.economy is expanding.

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Aggregate expenditure includes consumption spending,planned investment spending,government purchases,and net exports.

The difference between GDP and disposable income is

Which of the following leads to a decrease in real GDP?

Equilibrium GDP is equal to

The multiplier is calculated as the change in divided by the change in .

Increases in the price level will

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

If planned aggregate expenditure is less than total production,

Figure 12-1 -Refer to Figure 12-1.At point J in the figure above,which of the following is true?

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

If the marginal propensity to save is 0.25,then a $10,000 decrease in disposable income will

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

If the marginal propensity to save is 0.4,the multiplier is 2.5.

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

If inflation in the United States is higher than inflation in other countries,what will be the effect on net exports for the United States?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Which is the largest component of aggregate expenditure?

Autonomous expenditure times the multiplier equals

Net exports usually ________ when the U.S.economy is in a recession and ________ when the U.S.economy is expanding.

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Aggregate expenditure includes consumption spending,planned investment spending,government purchases,and net exports.

The difference between GDP and disposable income is

Which of the following leads to a decrease in real GDP?

Equilibrium GDP is equal to

The multiplier is calculated as the change in ________ divided by the change in ________.

Increases in the price level will

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

If planned aggregate expenditure is less than total production,

Figure 12-1 -Refer to Figure 12-1.At point J in the figure above,which of the following is true?

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

If the marginal propensity to save is 0.25,then a $10,000 decrease in disposable income will

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

If the marginal propensity to save is 0.4,the multiplier is 2.5.

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

Net exports usually when the U.S.economy is in a recession and when the U.S.economy is expanding.

The multiplier is calculated as the change in divided by the change in .

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