Question 1

During the Great Depression,economists first began studying the relationship between

Accepted Answer

A) changes in GDP and changes in interest rates. 
B) changes in aggregate expenditures and changes in GDP. 
C) changes in nominal GDP and changes in real GDP. 
D) changes in stock prices and changes in price controls. 
A) changes in GDP and changes in interest rates. 
B) changes in aggregate expenditures and changes in GDP. 
C) changes in nominal GDP and changes in real GDP. 
D) changes in stock prices and changes in price controls.

Question 2

Table 12-14
  
-Refer to Table 12-14.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 $4,000 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?

Accepted Answer

a.Equilibrium real GDP is determined whe

Question 3

How does a decrease in government spending affect the aggregate expenditure line?

Accepted Answer

A) It shifts the aggregate expenditure line upward. 
B) It shifts the aggregate expenditure line downward. 
C) It increases the slope of the aggregate expenditure line. 
D) It decreases the slope of the aggregate expenditure line. 
A) It shifts the aggregate expenditure line upward. 
B) It shifts the aggregate expenditure line downward. 
C) It increases the slope of the aggregate expenditure line. 
D) It decreases the slope of the aggregate expenditure line.

Question 4

A decrease in the real interest rate will

Accepted Answer

A) cause consumers to spend less and save more. 
B) most likely increase consumer's purchases of durable goods. 
C) most likely increase the reward to savings. 
D) most likely increase the cost of borrowing. 
A) cause consumers to spend less and save more. 
B) most likely increase consumer's purchases of durable goods. 
C) most likely increase the reward to savings. 
D) most likely increase the cost of borrowing.

Question 5

U.S.net export spending falls when

Accepted Answer

A) the price level in the United States falls relative to the price level in other countries. 
B) the growth rate of U.S.GDP is faster than the growth rate of GDP in other countries. 
C) the value of the U.S.dollar decreases relative to other currencies. 
D) the inflation rate is lower in the United States relative to other countries. 
A) the price level in the United States falls relative to the price level in other countries. 
B) the growth rate of U.S.GDP is faster than the growth rate of GDP in other countries. 
C) the value of the U.S.dollar decreases relative to other currencies. 
D) the inflation rate is lower in the United States relative to other countries.

Question 6

The marginal propensity to consume is defined as

Accepted Answer

A) consumption divided by disposable income. 
B) disposable income divided by consumption. 
C) the change in consumption divided by the change in disposable income. 
D) the change in disposable income divided by the change in consumption. 
A) consumption divided by disposable income. 
B) disposable income divided by consumption. 
C) the change in consumption divided by the change in disposable income. 
D) the change in disposable income divided by the change in consumption.

Question 7

At each of the three points in the following graph,indicate whether planned aggregate expenditure is greater than,equal to,or less than GDP?

Accepted Answer

At point J,planned aggregate e

Question 8

If planned aggregate expenditure is below potential GDP and planned aggregate expenditure equals GDP,then

Accepted Answer

A) actual inventory investment will be less than planned inventory investment. 
B) actual inventory investment will be greater than planned inventory investment. 
C) the economy is in a recession. 
D) the economy is at full employment. 
A) actual inventory investment will be less than planned inventory investment. 
B) actual inventory investment will be greater than planned inventory investment. 
C) the economy is in a recession. 
D) the economy is at full employment.

Question 9

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.

Accepted Answer

A) True 
 B)False

Question 10

An increase in aggregate expenditure has what result on equilibrium GDP?

Accepted Answer

A) Equilibrium GDP rises. 
B) Equilibrium GDP is not affected by an increase in aggregate expenditure. 
C) Equilibrium GDP falls. 
D) Equilibrium GDP may rise or fall depending on the size of the increase in aggregate expenditure relative to the initial level of GDP. 
A) Equilibrium GDP rises. 
B) Equilibrium GDP is not affected by an increase in aggregate expenditure. 
C) Equilibrium GDP falls. 
D) Equilibrium GDP may rise or fall depending on the size of the increase in aggregate expenditure relative to the initial level of GDP.

Question 11

Figure 12-3  
-Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP2 to GDP1.If the MPC is 0.8,then what is the change in GDP?

Accepted Answer

A) -$4 million 
B) -$5 million 
C) -$25 million 
D) -$40 million 
A) -$4 million 
B) -$5 million 
C) -$25 million 
D) -$40 million

Question 12

If the marginal propensity to consume is 0.6,the marginal propensity to save is

Accepted Answer

A) 0.4. 
B) 0.6. 
C) 1. 
D) 1.5. 
A) 0.4. 
B) 0.6. 
C) 1. 
D) 1.5.

Question 13

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) 0.2 
B) 0.8 
C) 5.8 
D) 7.25 
A) 0.2 
B) 0.8 
C) 5.8 
D) 7.25

Question 15

If the marginal propensity to consume is 0.75,the marginal propensity to save is

Accepted Answer

A) 0.25. 
B) 0.5. 
C) 1. 
D) 3. 
A) 0.25. 
B) 0.5. 
C) 1. 
D) 3.

Question 16

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Accepted Answer

A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million 
A) $15 million 
B) $23 million 
C) $25 million 
D) $27 million

Question 17

As a result of slow economic growth following the recession of 2007-2009,companies including Intel and Worthington Industries cut production and employment in 2015 as a result of the sluggish growth in the total amount of spending in the economy.The total amount of spending in the economy is known as

Accepted Answer

A) deficit spending. 
B) planned investment spending. 
C) aggregate expenditure. 
D) equilibrium spending. 
A) deficit spending. 
B) planned investment spending. 
C) aggregate expenditure. 
D) equilibrium spending.

Question 18

Ceteris paribus,how does a recession in the United States affect U.S.net exports?

Accepted Answer

As GDP decreases in the United States du

Question 19

An unplanned increase in inventories results from

Accepted Answer

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

Question 20

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400

Accepted Answer

A) -0.1 
B) 0.1 
C) 0.9 
D) 2000 
A) -0.1 
B) 0.1 
C) 0.9 
D) 2000

During the Great Depression,economists first began studying the relationship between

How does a decrease in government spending affect the aggregate expenditure line?

A decrease in the real interest rate will

U.S.net export spending falls when

The marginal propensity to consume is defined as

At each of the three points in the following graph,indicate whether planned aggregate expenditure is greater than,equal to,or less than GDP?

If planned aggregate expenditure is below potential GDP and planned aggregate expenditure equals GDP,then

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.

An increase in aggregate expenditure has what result on equilibrium GDP?

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP2 to GDP1.If the MPC is 0.8,then what is the change in GDP?

If the marginal propensity to consume is 0.6,the marginal propensity to save is

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

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

If the marginal propensity to consume is 0.75,the marginal propensity to save is

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Ceteris paribus,how does a recession in the United States affect U.S.net exports?

An unplanned increase in inventories results from

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

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

During the Great Depression,economists first began studying the relationship between

How does a decrease in government spending affect the aggregate expenditure line?

A decrease in the real interest rate will

U.S.net export spending falls when

The marginal propensity to consume is defined as

At each of the three points in the following graph,indicate whether planned aggregate expenditure is greater than,equal to,or less than GDP?

If planned aggregate expenditure is below potential GDP and planned aggregate expenditure equals GDP,then

If aggregate expenditure is less than GDP,then inventories rise and GDP falls.

An increase in aggregate expenditure has what result on equilibrium GDP?

Figure 12-3 -Refer to Figure 12-3.Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP2 to GDP1.If the MPC is 0.8,then what is the change in GDP?

If the marginal propensity to consume is 0.6,the marginal propensity to save is

The marginal propensity to consume measures the average amount of wealth that a consumer spends in a given period of time.

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

If the marginal propensity to consume is 0.75,the marginal propensity to save is

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is $2 million,government purchases are $10 million,and net export spending is $2 million.What is aggregate expenditure?

Ceteris paribus,how does a recession in the United States affect U.S.net exports?

An unplanned increase in inventories results from

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

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