Question 1

During a(n)________ many firms experience reduced profits,which reduces ________ and investment spending.

Accepted Answer

A)  expansion; business confidence 
B)  recession; cash flow 
C)  expansion; cash flow 
D)  recession; government spending

Question 2

________ consumption is consumption that depends upon the level of GDP and ________ consumption is consumption that does not depend upon the level of GDP.

Accepted Answer

A)  Autonomous; induced 
B)  Induced; autonomous 
C)  Voluntary; autonomous 
D)  Autonomous; voluntary

Question 3

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.

Question 4

Which of the following is true?

Accepted Answer

A)  National income = Consumption + Savings - Taxes 
B)  National income = Consumption - Savings - Taxes 
C)  National income = Consumption + Savings + Taxes 
D)  National income = Consumption - Savings + Taxes

Question 5

In a small economy in 2011,aggregate expenditure was $850 million while GDP that year was $800 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?

Accepted Answer

A)  Aggregate expenditure is always less than GDP in developed countries. 
B)  Firm investment in inventories was less than anticipated in 2011. 
C)  Firm investment in inventories was greater than anticipated in 2011. 
D)  Aggregate expenditure is always less than GDP in developing countries.

Question 6

Macroeconomic equilibrium occurs when

Accepted Answer

A)  aggregate expenditure = GDP. 
B)  aggregate expenditure = C+ I + G + net transfers. 
C)  aggregate income = planned inventories. 
D)  aggregate expenditure = planned inventories.

Question 7

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million. If GDP during that same time period is equal to $23 million,what unplanned changes in inventories occurred?

Accepted Answer

A)  There was an unplanned increase in inventories equal to $2 million. 
B)  There was no unplanned change in inventories. 
C)  There was an unplanned decrease in inventories equal to $2 million. 
D)  There was an unplanned decrease in inventories equal to $19 million.

Question 8

At macroeconomic equilibrium,total ________ equals total ________.

Accepted Answer

A)  spending; production 
B)  investment; inventories 
C)  consumption; production 
D)  taxes; transfers

Question 9

A rising price level decreases consumption by decreasing the real value of household wealth.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

If planned aggregate expenditure is greater than total production,

Accepted Answer

A)  actual inventories will equal planned inventories. 
B)  firms will experience an unplanned decrease in inventories. 
C)  GDP will decrease. 
D)  the economy is in equilibrium.

Question 12

Firms in a small economy anticipated that inventories would grow over the past year by $750,000,and over that year,inventories grew by exactly $750,000. This implies that

Accepted Answer

A)  aggregate expenditure and GDP were equal 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 was greater than GDP that year.

Question 13

If planned aggregate expenditure equals GDP,the economy is in macroeconomic equilibrium.

Accepted Answer

A) True 
 B)False

Question 14

Figure 23-1
 
-Refer to Figure 23-1.At point J in the figure above,which of the following is true?

Accepted Answer

A)  Aggregate expenditure is less than GDP. 
B)  The economy has achieved macroeconomic equilibrium. 
C)  Actual inventories are less than planned inventories. 
D)  GDP will be decreasing.

Exam 12: Aggregate Expenditure and Output in the Short Run

During a(n) many firms experience reduced profits,which reduces and investment spending.

consumption is consumption that depends upon the level of GDP and consumption is consumption that does not depend upon the level of GDP.

The marginal propensity to consume is defined as

Which of the following is true?

In a small economy in 2011,aggregate expenditure was $850 million while GDP that year was $800 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?

Macroeconomic equilibrium occurs when

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million. If GDP during that same time period is equal to $23 million,what unplanned changes in inventories occurred?

At macroeconomic equilibrium,total equals total .

A rising price level decreases consumption by decreasing the real value of household wealth.

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

If planned aggregate expenditure is greater than total production,

Firms in a small economy anticipated that inventories would grow over the past year by $750,000,and over that year,inventories grew by exactly $750,000. This implies that

If planned aggregate expenditure equals GDP,the economy is in macroeconomic equilibrium.

Figure 23-1 -Refer to Figure 23-1.At point J in the figure above,which of the following is true?

Exam 12: Aggregate Expenditure and Output in the Short Run

During a(n) ________ many firms experience reduced profits,which reduces ________ and investment spending.

________ consumption is consumption that depends upon the level of GDP and ________ consumption is consumption that does not depend upon the level of GDP.

The marginal propensity to consume is defined as

Which of the following is true?

In a small economy in 2011,aggregate expenditure was $850 million while GDP that year was $800 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?

Macroeconomic equilibrium occurs when

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million. If GDP during that same time period is equal to $23 million,what unplanned changes in inventories occurred?

At macroeconomic equilibrium,total ________ equals total ________.

A rising price level decreases consumption by decreasing the real value of household wealth.

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

If planned aggregate expenditure is greater than total production,

Firms in a small economy anticipated that inventories would grow over the past year by $750,000,and over that year,inventories grew by exactly $750,000. This implies that

If planned aggregate expenditure equals GDP,the economy is in macroeconomic equilibrium.

Figure 23-1 -Refer to Figure 23-1.At point J in the figure above,which of the following is true?

During a(n) many firms experience reduced profits,which reduces and investment spending.

consumption is consumption that depends upon the level of GDP and consumption is consumption that does not depend upon the level of GDP.

At macroeconomic equilibrium,total equals total .