Question 1

A general formula for the multiplier is

Accepted Answer

A)    .
B)    .
C)    .
D)    .E) C) and D)
F) None of the above

Question 2

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 millionE) None of the above
F) B) and C)

Question 3

The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run,assuming ________ is constant.

Accepted Answer

A)  total production; total income; real GDP
B)  total spending; real GDP; total income
C)  total spending; real GDP; the price level
D)  total income; real GDP; the price levelE) B) and C)
F) C) and D)

Question 4

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

Accepted Answer

A)  Autonomous
B)  Induced
C)  Voluntary
D)  DisposableE) None of the above
F) B) and C)

Question 5

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

Accepted Answer

A) True 
 B)False

Question 6

Consumption spending will ________ when disposable income ________.

Accepted Answer

A)  increase; increases
B)  increase; decreases
C)  decrease; increases
D)  change unpredictably; decreasesE) All of the above
F) None of the above

Question 7

Autonomous expenditure times the multiplier equals

Accepted Answer

A)  autonomous saving.
B)  autonomous consumption.
C)  equilibrium GDP.
D)  planned autonomous investment.E) A) and B)
F) None of the above

Question 8

Table 12-14
 
-Refer to Table 12-14.Using the table above,answer the following questions.The numbers in the table are in billions of dollars.
a.What is the equilibrium level of real GDP?
b.What is the MPC?
c.If potential GDP is $4,000 billion,is the economy at full employment? If not,what is the condition of the economy?
d.If the economy is not at full employment,by how much should government spending increase so that the economy can move to the full employment level of GDP?

Accepted Answer

a.Equilibrium real GDP is determined whe...

Question 9

Which of the following correctly describes how an increase in the price level affects consumption spending?

Accepted Answer

A)  An increase in the price level raises real wealth,which causes consumption to increase.
B)  An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate,which causes consumption to increase.
C)  An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate,which causes consumption to increase.
D)  An increase in the price level lowers real wealth,which causes consumption to decrease.E) A) and B)
F) All of the above

Question 10

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400

Accepted Answer

A)  -0.1
B)  0.1
C)  0.9
D)  2000E) A) and D)
F) A) and C)

Question 11

All of the following are true statements about the multiplier except

Accepted Answer

A)  the multiplier rises as the MPC rises.
B)  the smaller the MPS,the larger the multiplier.
C)  the multiplier is a value between zero and one.
D)  the multiplier effect occurs when autonomous expenditure changes.E) A) and C)
F) None of the above

Question 12

If firms find that consumers are purchasing less than expected,which of the following would you expect?

Accepted Answer

A)  Aggregate expenditure will likely be greater than GDP.
B)  Aggregate expenditure will likely be less than GDP.
C)  The economy will adjust to macroeconomic equilibrium as inventories rise,and production and employment rise.
D)  The economy will adjust to macroeconomic equilibrium as inventories fall,and production and employment rise.E) B) and C)
F) A) and B)

Question 13

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 + TaxesE) None of the above
F) All of the above

Question 14

If the MPC is 0.5,then a $10 million increase in disposable income will increase consumption by

Accepted Answer

A)  $2 million.
B)  $5 million.
C)  $15 million
D)  $50 million.E) B) and C)
F) All of the above

Question 15

Table 12-3
 
-Refer to Table 12-3.Given the consumption schedule in the table above,the marginal propensity to save is

Accepted Answer

A)  0.1.
B)  0.4.
C)  0.7.
D)  0.9.E) A) and D)
F) All of the above

Question 16

________ is defined as national income + transfers - taxes.

Accepted Answer

A)  Gross private domestic investment
B)  GDP
C)  Personal income
D)  Disposable incomeE) B) and D)
F) All of the above

Question 17

Figure 12-2 
-Refer to Figure 12-2.Suppose that the level of GDP associated with point K is potential GDP.If the U.S.economy is currently at point N,

Accepted Answer

A)  firms are operating below capacity.
B)  the economy is at full employment.
C)  the economy is in an expansion.
D)  the level of unemployment is above the natural rate.E) A) and D)
F) B) and C)

Question 18

Given Table 12-5 below,fill in the values for saving.Assume there are no taxes.
Table 12-5

Accepted Answer

When taxes are zero,saving is ...

Question 19

C = 3,600 + (MPC)Y
I = 1,200
G = 1,400
NX = -200
If the equilibrium level of GDP is $30,000,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Accepted Answer

Y = C + I + G + NX. 30,000 = 3...

Question 20

On the 45-degree line diagram,for points that lie above the 45-degree line,

Accepted Answer

A)  planned aggregate expenditure is greater than GDP.
B)  planned aggregate expenditure is less than GDP.
C)  planned aggregate expenditure is equal to GDP.
D)  planned aggregate expenditure is less than aggregate income.E) A) and B)
F) A) and C)

Exam 12: Aggregate Expenditure and Output in the Short Run

If the MPC is 0.5,then a $10 million increase in disposable income will increase consumption by

Correct Answer
verified

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

Correct Answer
verified

Correct Answer
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a.Equilibrium real GDP is determined whe...
View Answer

On the 45-degree line diagram,for points that lie above the 45-degree line,

Correct Answer
verified

Which of the following correctly describes how an increase in the price level affects consumption spending?

Correct Answer
verified

A general formula for the multiplier is

Correct Answer
verified

All of the following are true statements about the multiplier except

Correct Answer
verified

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

Correct Answer
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Figure 12-2 -Refer to Figure 12-2.Suppose that the level of GDP associated with point K is potential GDP.If the U.S.economy is currently at point N,

Correct Answer
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Given Table 12-5 below,fill in the values for saving.Assume there are no taxes. Table 12-5

Correct Answer
verified
When taxes are zero,saving is ...
View Answer

Consumption spending will when disposable income .

Correct Answer
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If firms find that consumers are purchasing less than expected,which of the following would you expect?

Correct Answer
verified

________ is defined as national income + transfers - taxes.

Correct Answer
verified

Autonomous expenditure times the multiplier equals

Correct Answer
verified

Table 12-3 -Refer to Table 12-3.Given the consumption schedule in the table above,the marginal propensity to save is

Correct Answer
verified

C = 3,600 + (MPC)Y I = 1,200 G = 1,400 NX = -200 If the equilibrium level of GDP is $30,000,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Correct Answer
verified
Y = C + I + G + NX. 30,000 = 3...
View Answer

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

Correct Answer
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Which of the following is true?

Correct Answer
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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?

Correct Answer
verified

The aggregate expenditure model focuses on the relationship between and in the short run,assuming is constant.

Correct Answer
verified

Exam 12: Aggregate Expenditure and Output in the Short Run

If the MPC is 0.5,then a $10 million increase in disposable income will increase consumption by

Correct AnswerverifiedShow Answer

For all points above the 45-degree line,planned aggregate expenditure will be less than GDP.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Equilibrium real GDP is determined whe...View AnswerShow Answer

On the 45-degree line diagram,for points that lie above the 45-degree line,

Correct AnswerverifiedShow Answer

Which of the following correctly describes how an increase in the price level affects consumption spending?

Correct AnswerverifiedShow Answer

A general formula for the multiplier is

Correct AnswerverifiedShow Answer

All of the following are true statements about the multiplier except

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

Correct AnswerverifiedShow Answer

Figure 12-2 -Refer to Figure 12-2.Suppose that the level of GDP associated with point K is potential GDP.If the U.S.economy is currently at point N,

Correct AnswerverifiedShow Answer

Given Table 12-5 below,fill in the values for saving.Assume there are no taxes. Table 12-5

Correct AnswerverifiedWhen taxes are zero,saving is ...View AnswerShow Answer

Consumption spending will ________ when disposable income ________.

Correct AnswerverifiedShow Answer

If firms find that consumers are purchasing less than expected,which of the following would you expect?

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________ is defined as national income + transfers - taxes.

Correct AnswerverifiedShow Answer

Autonomous expenditure times the multiplier equals

Correct AnswerverifiedShow Answer

Table 12-3 -Refer to Table 12-3.Given the consumption schedule in the table above,the marginal propensity to save is

Correct AnswerverifiedShow Answer

C = 3,600 + (MPC)Y I = 1,200 G = 1,400 NX = -200 If the equilibrium level of GDP is $30,000,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Correct AnswerverifiedY = C + I + G + NX. 30,000 = 3...View AnswerShow Answer

Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

Correct AnswerverifiedShow Answer

Which of the following is true?

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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?

Correct AnswerverifiedShow Answer

The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run,assuming ________ is constant.

Correct AnswerverifiedShow Answer

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a.Equilibrium real GDP is determined whe...
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When taxes are zero,saving is ...
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Consumption spending will when disposable income .

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Y = C + I + G + NX. 30,000 = 3...
View Answer

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The aggregate expenditure model focuses on the relationship between and in the short run,assuming is constant.

Correct Answer
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