Question 1

In a small economy in 2011,aggregate expenditure was $800 million while GDP that year was $850 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 2

If planned aggregate expenditure is less 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 3

If firms sell exactly what they expected to sell,all of the following will be true except

Accepted Answer

A)  aggregate expenditure will be greater than GDP. 
B)  there is no unplanned change in inventories. 
C)  inventories will not change, and GDP and employment will remain stable. 
D)  aggregate expenditure will be equal to GDP.

Question 4

Figure 23-3 
-Refer to Figure 23-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2.If the MPC is 0.9,then what is the change in GDP?

Accepted Answer

A)  $9 million 
B)  $10 million 
C)  $90 million 
D)  $100 million

Question 5

What is the difference between aggregate expenditure and consumption spending?

Accepted Answer

The answer of What is the difference between aggregate expenditure...

Question 6

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400

Accepted Answer

A)  $4,333 
B)  $7,100 
C)  $8,778 
D)  $79,000

Question 7

C = 4,000 + 0.5Y
I = 1,500
G=2,250
NX = -150
Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

Accepted Answer

The answer of C = 4,000 + 0.5Y
I = 1,500
G=2,250
NX...

Question 8

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 9

The slope of the consumption function is equal to

Accepted Answer

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

Question 10

Inventories refer to

Accepted Answer

A)  goods which have been presold before they are produced. 
B)  goods that have been produced but not yet sold. 
C)  goods that have been planned but not yet produced. 
D)  goods that have been produced and sold in the same year.

Question 11

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

Accepted Answer

A)  0.l 
B)  0.9 
C)  6.1 
D)  10

Question 12

All of the following are components of aggregate expenditure except

Accepted Answer

A)  consumption spending. 
B)  net export spending. 
C)  actual investment spending. 
D)  government spending.

Question 13

Which of the following will decrease aggregate expenditure in the United States?

Accepted Answer

A)  a decrease in the value of the dollar 
B)  a decrease in the price level 
C)  a decrease in interest rates 
D)  a decrease in government purchases

Question 14

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

Accepted Answer

A) True 
 B)False

Question 15

The key idea of the aggregate expenditure model is that in any particular year,the level of GDP is determined mainly by

Accepted Answer

A)  investment spending. 
B)  export spending. 
C)  government spending. 
D)  the level of aggregate expenditure.

Question 16

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 17

As a result of slow economic growth in 2011,many companies including Cisco Systems,Lockheed Martin,and Cracker Barrel Old Country Store cut production and employment 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.

Question 18

Use a 45-degree diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

Accepted Answer

The answer of Use a 45-degree diagram to illustrate macroeconomic...

Question 19

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 20

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

Exam 23: Aggregate Expenditure and Output in the Short Run

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

If planned aggregate expenditure is less than total production,

If firms sell exactly what they expected to sell,all of the following will be true except

Figure 23-3 -Refer to Figure 23-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP₁ to GDP₂.If the MPC is 0.9,then what is the change in GDP?

What is the difference between aggregate expenditure and consumption spending?

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

C = 4,000 + 0.5Y I = 1,500 G=2,250 NX = -150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

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

The slope of the consumption function is equal to

Inventories refer to

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

All of the following are components of aggregate expenditure except

Which of the following will decrease aggregate expenditure in the United States?

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

The key idea of the aggregate expenditure model is that in any particular year,the level of GDP is determined mainly by

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

Use a 45-degree diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

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?

Exam 23: Aggregate Expenditure and Output in the Short Run

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

If planned aggregate expenditure is less than total production,

If firms sell exactly what they expected to sell,all of the following will be true except

Figure 23-3 -Refer to Figure 23-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2.If the MPC is 0.9,then what is the change in GDP?

What is the difference between aggregate expenditure and consumption spending?

Given the equations for C,I,G,and NX below,what is the equilibrium level of GDP? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

C = 4,000 + 0.5Y I = 1,500 G=2,250 NX = -150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

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

The slope of the consumption function is equal to

Inventories refer to

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

All of the following are components of aggregate expenditure except

Which of the following will decrease aggregate expenditure in the United States?

Aggregate expenditure includes consumption spending,unplanned investment spending,government purchases,and net exports.

The key idea of the aggregate expenditure model is that in any particular year,the level of GDP is determined mainly by

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

Use a 45-degree diagram to illustrate macroeconomic equilibrium.Make sure your diagram shows the aggregate expenditure function.Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

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?

Figure 23-3 -Refer to Figure 23-3.Suppose that investment spending increases by $10 million,shifting up the aggregate expenditure line and GDP increases from GDP₁ to GDP₂.If the MPC is 0.9,then what is the change in GDP?

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