Question 1

Discuss the leading causes of the Great Depression.Use the 45-degree line diagram to show how they caused a decline in GDP.

Accepted Answer

Several events lowered aggregate expendi

Question 2

If the multiplier is 10,the marginal propensity to consume must be 0.1.

Accepted Answer

A) True 
 B)False

Question 3

At macroeconomic equilibrium,

Accepted Answer

A) total investment equals total inventories. 
B) total spending equals total production. 
C) total consumption equals total production. 
D) total taxes equal total transfers. 
A) total investment equals total inventories. 
B) total spending equals total production. 
C) total consumption equals total production. 
D) total taxes equal total transfers.

Question 4

If inventories decline by more than analysts predict they will decline,this implies that

Accepted Answer

A) actual investment spending was greater than planned investment spending. 
B) actual investment spending was less than planned investment spending. 
C) actual investment spending was equal to than planned investment spending. 
D) there is no relationship between actual investment spending and planned investment spending. 
A) actual investment spending was greater than planned investment spending. 
B) actual investment spending was less than planned investment spending. 
C) actual investment spending was equal to than planned investment spending. 
D) there is no relationship between actual investment spending and planned investment spending.

Question 5

What are the five main determinants of consumption spending? Which of these is the most important?

Accepted Answer

The five main determinants of consumptio

Question 6

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

Accepted Answer

A) True 
 B)False

Question 7

The multiplier is calculated as the

Accepted Answer

A) change in real GDP/ change in autonomous expenditure. 
B) change in autonomous expenditure/ change in real GDP. 
C) change in nominal GDP/ change in autonomous expenditure. 
D) change in real GDP/ change in induced spending. 
A) change in real GDP/ change in autonomous expenditure. 
B) change in autonomous expenditure/ change in real GDP. 
C) change in nominal GDP/ change in autonomous expenditure. 
D) change in real GDP/ change in induced spending.

Question 8

Inventories refer to

Accepted Answer

A) goods which have been presold before they are produced. 
B) goods that have been produced but not yet sold. 
C) goods that have been planned but not yet produced. 
D) goods that have been produced and sold in the same year. 
A) goods which have been presold before they are produced. 
B) goods that have been produced but not yet sold. 
C) goods that have been planned but not yet produced. 
D) goods that have been produced and sold in the same year.

Question 9

On the 45-degree line diagram,for points that lie above the 45-degree line,

Accepted Answer

A) planned aggregate expenditure is greater than GDP. 
B) planned aggregate expenditure is less than GDP. 
C) planned aggregate expenditure is equal to GDP. 
D) planned aggregate expenditure is less than aggregate income. 
A) planned aggregate expenditure is greater than GDP. 
B) planned aggregate expenditure is less than GDP. 
C) planned aggregate expenditure is equal to GDP. 
D) planned aggregate expenditure is less than aggregate income.

Question 10

Refer to the Article Summary.The increase in consumer spending discussed in the article summary was due in part to increases in employment and lower energy prices,which lead to an increase in disposable income.The increase in consumption resulting from the increase in disposable income 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 11

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

Accepted Answer

A) the MPC is 0.5. 
B) the MPC is 0.75. 
C) the MPC is 0.8. 
D) the MPC is 0.9. 
A) the MPC is 0.5. 
B) the MPC is 0.75. 
C) the MPC is 0.8. 
D) the MPC is 0.9.

Question 12

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

Accepted Answer

A) 0.l 
B) 0.9 
C) 6.1 
D) 10 
A) 0.l 
B) 0.9 
C) 6.1 
D) 10

Question 13

Figure 12-1  
-Refer to Figure 12-1.According to the figure above,at what point is aggregate expenditure less than GDP?

Accepted Answer

A) J 
B) K 
C) L 
D) none of the above 
A) J 
B) K 
C) L 
D) none of the above

Question 14

The consumption function describes the relationship between

Accepted Answer

A) consumption spending and national income. 
B) consumption spending and aggregate income. 
C) consumption spending and disposable income. 
D) consumption spending and personal income. 
A) consumption spending and national income. 
B) consumption spending and aggregate income. 
C) consumption spending and disposable income. 
D) consumption spending and personal income.

Question 15

Consumption spending is $16 million,planned investment spending is $4 million,unplanned investment spending is $2 million,government purchases are $6 million,and net export spending is $1 million.What is aggregate expenditure?

Accepted Answer

A) $22 million 
B) $26 million 
C) $27 million 
D) $29 million 
A) $22 million 
B) $26 million 
C) $27 million 
D) $29 million

Question 16

A general formula for the multiplier is

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
A)    . 
B)    . 
C)    . 
D)    .

Question 17

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect U.S.net exports?

Accepted Answer

If inflation in the United States is low

Question 18

What impact does a decrease in the price level in the United States have on net exports and why?

Accepted Answer

A) A decrease in the price level increases net exports because lower prices increase the value of the dollar. 
B) A decrease in the price level increases net exports by reducing the relative cost of American goods. 
C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. 
D) A decrease in the price level reduces net exports because lower prices increase American spending on imports. 
A) A decrease in the price level increases net exports because lower prices increase the value of the dollar. 
B) A decrease in the price level increases net exports by reducing the relative cost of American goods. 
C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. 
D) A decrease in the price level reduces net exports because lower prices increase American spending on imports.

Question 19

Table 12-11
  
-Refer to Table 12-11.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP.

Accepted Answer

The macroeconomic equilibrium is determi

Question 20

If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years,then

Accepted Answer

A) investment spending will fall. 
B) investment spending will rise. 
C) investment spending will remain unaffected. 
D) investment spending will rise and then fall. 
A) investment spending will fall. 
B) investment spending will rise. 
C) investment spending will remain unaffected. 
D) investment spending will rise and then fall.

Discuss the leading causes of the Great Depression.Use the 45-degree line diagram to show how they caused a decline in GDP.

If the multiplier is 10,the marginal propensity to consume must be 0.1.

At macroeconomic equilibrium,

If inventories decline by more than analysts predict they will decline,this implies that

What are the five main determinants of consumption spending? Which of these is the most important?

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

The multiplier is calculated as the

Inventories refer to

On the 45-degree line diagram,for points that lie above the 45-degree line,

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

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

Figure 12-1 -Refer to Figure 12-1.According to the figure above,at what point is aggregate expenditure less than GDP?

The consumption function describes the relationship between

Consumption spending is $16 million,planned investment spending is $4 million,unplanned investment spending is $2 million,government purchases are $6 million,and net export spending is $1 million.What is aggregate expenditure?

A general formula for the multiplier is

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect U.S.net exports?

What impact does a decrease in the price level in the United States have on net exports and why?

Table 12-11 -Refer to Table 12-11.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP.

If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years,then

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

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Exam 12: Aggregate Expenditure and Output in the Short Run

Discuss the leading causes of the Great Depression.Use the 45-degree line diagram to show how they caused a decline in GDP.

If the multiplier is 10,the marginal propensity to consume must be 0.1.

At macroeconomic equilibrium,

If inventories decline by more than analysts predict they will decline,this implies that

What are the five main determinants of consumption spending? Which of these is the most important?

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

The multiplier is calculated as the

Inventories refer to

On the 45-degree line diagram,for points that lie above the 45-degree line,

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

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

Figure 12-1 -Refer to Figure 12-1.According to the figure above,at what point is aggregate expenditure less than GDP?

The consumption function describes the relationship between

Consumption spending is $16 million,planned investment spending is $4 million,unplanned investment spending is $2 million,government purchases are $6 million,and net export spending is $1 million.What is aggregate expenditure?

A general formula for the multiplier is

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation.How will this affect U.S.net exports?

What impact does a decrease in the price level in the United States have on net exports and why?

Table 12-11 -Refer to Table 12-11.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP.

If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years,then

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