Exam 12: Aggregate Expenditure and Output in the Short Run

The five most important variables that determine the level of ________ are disposable income,wealth,expected future income,price level,and interest rate.

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

________ is defined as national income + transfers - taxes.

An increase in the price level in the United States will reduce exports and increase imports.

Table 12-12 -Refer to Table 12-12.Using the table above,answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If potential GDP is $7,000 billion,is the economy at full employment? If not,what is the condition of the economy? d.If the economy is not at full employment,by how much should government spending increase so that the economy can move to the full employment level of GDP?

An increase in the price level in the United States will reduce imports and increase exports.

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

If consumption is defined as C = 2,400 + 0.9Y,then the marginal propensity to consume is 0.9.

A decrease in the price level in the United States will have what effect on the aggregate expenditure line?

If the consumption function is defined as C = 7,250 + 0.8Y,what is the marginal propensity to save?

If an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP,then

The aggregate expenditure model focuses on the ________ relationship between real spending and ________.

A general formula for the multiplier is

If consumption is defined as C = 2,000 + 0.8Y,then the marginal propensity to save is 0.8.

________ describes the relationship between consumption spending and disposable income.

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

An increase in the price level in the United States will shift the aggregate expenditure line upward.

Which of the following is a reason why increases in the price level result in a decline in aggregate expenditure?

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

The aggregate expenditure model focuses on the short-run relationship between ________ and ________.