Exam 11: Aggregate Expenditure

An inflationary output gap is defined to be when the current level of output is:

Using Figure 3 above the distance between what 2 lines illustrate an inflationary expenditure gap?

The effect of government spending or tax cuts on national income is measured by the:

If the government wishes to increase GDP by $1,200b, and the MPC is 0.75, it should:

When we compare PAE and actual output (Y) if PAE is greater than Y we expect that:

Net Exports are defined to be:

When PAE < Y the economic response for inventories should be:

The tastes for foreign goods and services generally has a ______ relationship with aggregate expenditure.

In Figure 1 above if the economy were at Y1 then we would expect there to be:

Which component of consumption has a negative or indirect relationship with consumption?

The simplified spending multiplier is calculated as:

If the government wishes to increase GDP by $1,000b, and the MPC is 0.6, it should increase its spending by:

If the expected profitability of a business activity increased we might expect investment spending to:

If the MPC = 0.9 and a household obtains $20,000 more dollars then how much would the household spend of the additional $20,000?

The Keynesian equilibrium is defined to be when:

When PAE decreases then the economy will move towards:

If the domestic income of a nation's citizens increase thus causing consumption spending to increase, then we generally expect net export spending to:

Which of the following is not a primary determinant of consumption spending?

The marginal propensity to consume (MPC) is defined to be:

Using Figure 2 above, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE1 might be: