Exam 12: Aggregate Expenditure and Output in the Short Run

You review a salesman's income over a 5-year period.You note it fluctuates tremendously from year to year,yet his consumption of goods and services remains consistently at the same level,year after year.Does this mean that income is not a determinant of consumption,or could something else explain his behavior?

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

Why is the aggregate demand curve downward sloping while the aggregate expenditure line is upward sloping?

An increase in the price level ________ real wealth,which causes consumption to ________.

Disposable income is defined as

Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure?

If firms find that consumers are purchasing less than expected,which of the following would you expect?

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 firms find that consumers are purchasing more than expected,which of the following would you expect?

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Firms in a small economy anticipated that inventories would grow over the past year by $500,000.Over that year,inventories actually grew by only $400,000.This implies that

If the marginal propensity to save is 0.35,the multiplier is 2.86.

All of the following are components of aggregate expenditure except

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

If the consumption function is defined as C = 5,500 + 0.9Y,what is the autonomous level of consumption expenditure?

When Jack's income increases by $1,000,he spends an additional $850 dollars.This implies that his marginal propensity to save is 0.85.

Suppose the United States experiences a long period of inflation relative to other countries.How will this affect U.S.net exports?

An decrease in the price level in the United States will shift the aggregate expenditure line downward.

Figure 12-4 -Refer to Figure 12-4.Potential GDP equals $500 billion.The economy is currently producing GDP1 which is equal to $450 billion.If the MPC is 0.8,then how much must autonomous spending change for the economy to move to potential GDP?