Question 1

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

Accepted Answer

A)  GDP will rise. 
B)  GDP will fall. 
C)  Wages will rise. 
D)  Inventories will fall.

Question 2

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Accepted Answer

A)  consumer confidence 
B)  the natural rate of unemployment 
C)  the inflation rate 
D)  the length of a business cycle

Question 3

If aggregate expenditure is more than GDP, then inventories fall and GDP rises.

Accepted Answer

A) True 
 B)False

Question 4

Economists think that the marginal propensity to consume for the U.S. economy is somewhere around 0.9. Based on our simple multiplier formula, this would imply that the multiplier for the United States should be around 10. However, economists agree that the spending multiplier is closer to 2. What might explain this supposed anomaly?

Accepted Answer

The answer of Economists think that the marginal propensity to...

Question 5

________ is defined as the value of a household's assets minus the value of its liabilities.

Accepted Answer

A)  Household income 
B)  Household wealth 
C)  Personal household consumption 
D)  Planned household investment

Question 6

Given the equations for C, I, G, and NX below, what is the marginal propensity to consume? C = 1,000 + 0.8Y
I = 1,500
G=1,250
NX = 100

Accepted Answer

A)  0.2 
B)  0.8 
C)  1.8 
D)  10

Exam 23: Aggregate Expenditure and Output in the Short Run

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

A decrease in ________ can put your job at risk if aggregate expenditures fall.

If aggregate expenditure is more than GDP, then inventories fall and GDP rises.

________ is defined as the value of a household's assets minus the value of its liabilities.

Given the equations for C, I, G, and NX below, what is the marginal propensity to consume? C = 1,000 + 0.8Y I = 1,500 G=1,250 NX = 100