Question 1

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

Question 2

The difference between GDP and net taxes is

Accepted Answer

A)  personal income. 
B)  actual investment spending. 
C)  disposable income. 
D)  unplanned investment spending.

Question 3

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

Accepted Answer

A)  short-run; real GDP 
B)  short-run; inflation 
C)  long-run; real GDP 
D)  long-run; inflation

Question 4

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.

Question 5

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC).Show that MPC + MPS = 1.
Table 23-4

Accepted Answer

The answer of Given Table 23-4 below,fill in the values...

Question 6

Figure 23-2
 
-Refer to Figure 23-2.If the U.S.economy is currently at point K,which of the following could cause it to move to point N?

Accepted Answer

A)  The price level in the United States rises relative to the price level in other countries. 
B)  Congress passes investment tax incentives. 
C)  The interest rate rises. 
D)  Household wealth declines.

Question 7

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 GDP?

Accepted Answer

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

Question 8

Consumption spending is $22 million,planned investment spending is $7 million,actual investment spending is $7 million,government purchases are $9 million,and net export spending is $3 million.Based on this information,which of the following is true?

Accepted Answer

A)  There was an unplanned change in inventories. 
B)  Aggregate expenditure is equal to GDP. 
C)  Aggregate expenditure is greater than GDP. 
D)  Aggregate expenditure is less than GDP.

Question 9

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

Accepted Answer

A)  aggregate expenditure that year was equal to GDP that year. 
B)  there was an unplanned increase in inventories that year. 
C)  there was an unplanned decrease in inventories that year. 
D)  aggregate expenditure that year was greater than GDP that year.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The marginal propensity to save is defined as

Accepted Answer

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

Question 12

An increase in the price level results in a(n)________ in household consumption spending and a(n)________ in investment spending.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  decrease; decrease 
D)  decrease; increase

Question 13

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

Accepted Answer

A)  0.1 
B)  0.9 
C)  9 
D)  10

Question 14

What impact does a lower price level have on interest rates,wealth,and investment spending?

Accepted Answer

The answer of What impact does a lower price level...

Question 15

If the multiplier is 5,the marginal propensity to consume must be 0.8.

Accepted Answer

A) True 
 B)False

Question 16

Planned aggregate expenditure is equal to

Accepted Answer

A)  consumption spending only. 
B)  consumption spending plus planned investment spending. 
C)  planned investment spending only. 
D)  consumption spending plus planned investment spending plus government purchases plus net exports.

Question 17

Given Table 23-3 below,fill in the values for saving.Assume taxes = $800.
Table 23-3

Accepted Answer

The answer of Given Table 23-3 below,fill in the values...

Question 18

If inflation in the United States is higher than inflation in other countries,what will be the effect on net exports for the United States?

Accepted Answer

A)  Net exports will rise as U.S. exports increase. 
B)  Net exports will rise as U.S. imports decrease. 
C)  Net exports will decrease as U.S. exports decrease. 
D)  Net exports will decrease as U.S. imports decrease.

Question 19

The ratio of the increase in ________ to the increase in ________ is called the multiplier.

Accepted Answer

A)  equilibrium nominal GDP; autonomous expenditure 
B)  equilibrium real GDP; autonomous expenditure 
C)  autonomous expenditure; equilibrium real GDP 
D)  induced expenditure; equilibrium real GDP

Question 20

If aggregate expenditure is less than GDP,how will the economy reach macroeconomic equilibrium?

Accepted Answer

A)  Inventories will decline, and GDP and employment will decline. 
B)  Inventories will rise, and GDP and employment will decline. 
C)  Inventories will decline, and GDP and employment will rise. 
D)  Inventories will rise, and GDP and employment will rise.

Exam 12: Aggregate Expenditure and Output in the Short Run

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?

The difference between GDP and net taxes is

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

The multiplier is calculated as the

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC).Show that MPC + MPS = 1. Table 23-4

Figure 23-2 -Refer to Figure 23-2.If the U.S.economy is currently at point K,which of the following could cause it to move to point N?

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 GDP?

Consumption spending is $22 million,planned investment spending is $7 million,actual investment spending is $7 million,government purchases are $9 million,and net export spending is $3 million.Based on this information,which of the following is true?

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

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

The marginal propensity to save is defined as

An increase in the price level results in a(n) in household consumption spending and a(n) in investment spending.

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

What impact does a lower price level have on interest rates,wealth,and investment spending?

If the multiplier is 5,the marginal propensity to consume must be 0.8.

Planned aggregate expenditure is equal to

Given Table 23-3 below,fill in the values for saving.Assume taxes = $800. Table 23-3

If inflation in the United States is higher than inflation in other countries,what will be the effect on net exports for the United States?

The ratio of the increase in to the increase in is called the multiplier.

If aggregate expenditure is less than GDP,how will the economy reach macroeconomic equilibrium?

Exam 12: Aggregate Expenditure and Output in the Short Run

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?

The difference between GDP and net taxes is

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

The multiplier is calculated as the

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC).Show that MPC + MPS = 1. Table 23-4

Figure 23-2 -Refer to Figure 23-2.If the U.S.economy is currently at point K,which of the following could cause it to move to point N?

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 GDP?

Consumption spending is $22 million,planned investment spending is $7 million,actual investment spending is $7 million,government purchases are $9 million,and net export spending is $3 million.Based on this information,which of the following is true?

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year,inventories did grow by exactly $500,000.This implies that

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

The marginal propensity to save is defined as

An increase in the price level results in a(n) ________ in household consumption spending and a(n) ________ in investment spending.

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

What impact does a lower price level have on interest rates,wealth,and investment spending?

If the multiplier is 5,the marginal propensity to consume must be 0.8.

Planned aggregate expenditure is equal to

Given Table 23-3 below,fill in the values for saving.Assume taxes = $800. Table 23-3

If inflation in the United States is higher than inflation in other countries,what will be the effect on net exports for the United States?

The ratio of the increase in ________ to the increase in ________ is called the multiplier.

If aggregate expenditure is less than GDP,how will the economy reach macroeconomic equilibrium?

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

An increase in the price level results in a(n) in household consumption spending and a(n) in investment spending.

The ratio of the increase in to the increase in is called the multiplier.