Question 1

Refer to the information provided in Table 8.7 below to answer the questions that follow.
Table 8.7 
-Refer to Table 8.7. Planned saving equals planned investment at an aggregate output level

Accepted Answer

A)   of $1,000 billion.
B)   of $800 billion.
C)   of $600 billion.
D)   that cannot be determined from this information.E) A) and B)
F) A) and C)

Question 2

Aggregate output will decrease if there is a(n)

Accepted Answer

A)   increase in saving.
B)   unplanned rise in inventories.
C)   unplanned fall in inventories.
D)   decrease in consumption.E) B) and D)
F) A) and B)

Question 3

Refer to the information provided in Figure 8.5 below to answer the questions that follow.  Figure 8.5
-Refer to Figure 8.5. Aggregate saving is -100 billion when aggregate income is ________ billion.

Accepted Answer

A)   -$50
B)   $400
C)   $800
D)   $900E) A) and B)
F) A) and D)

Question 4

Refer to the information provided in Table 8.9 below to answer the questions that follow.
Table 8.9 
-Refer to Table 8.9. Planned saving equals planned investment at an aggregate output level of

Accepted Answer

A)   $500 billion.
B)   $400 billion.
C)   $300 billion.
D)   $200 billion.E) A) and D)
F) A) and C)

Question 5

[Yd - C] equals

Accepted Answer

A)   spending.
B)   the MPC.
C)   saving.
D)   the MPS.E) All of the above
F) C) and D)

Question 6

If the MPS is 0.05, the MPC is

Accepted Answer

A)   -0.05.
B)   0.95.
C)   1.05.
D)   2.25.E) None of the above
F) A) and B)

Question 7

Without the government or the foreign sector in the income-expenditure model, consumption equals

Accepted Answer

A)   planned aggregate expenditures plus actual investment.
B)   planned aggregate expenditures minus inventory adjustment.
C)   planned aggregate expenditures plus planned investment.
D)   planned aggregate expenditures minus planned investment.E) All of the above
F) A) and B)

Question 8

If consumption is $60,000 when income is $80,000, and consumption increases to $68,000 when income increases to $90,000, the MPC is

Accepted Answer

A)   0.2.
B)   0.4.
C)   0.6.
D)   0.8.E) A) and C)
F) C) and D)

Question 9

Refer to the information provided in Figure 8.5 below to answer the questions that follow.  Figure 8.5
-Refer to Figure 8.5. If aggregate income is $400 billion, aggregate saving is ________ billion.

Accepted Answer

A)   -$300
B)   -$100
C)   $0
D)   $500E) A) and C)
F) A) and B)

Question 10

Firms hold planned inventories in anticipation of sales.

Accepted Answer

A) True 
 B)False

Question 11

If unplanned inventory investment is negative, then

Accepted Answer

A)   planned investment must be zero.
B)   planned aggregate spending must be greater than aggregate output.
C)   planned aggregate spending must be less than aggregate output.
D)   planned aggregate spending must equal aggregate output.E) A) and B)
F) All of the above

Question 12

In practice, the actual size of the multiplier is about

Accepted Answer

A)   1.
B)   1.4.
C)   2.
D)   4.E) B) and D)
F) A) and C)

Question 13

If Inventory investment is higher than firms planned,

Accepted Answer

A)   actual and planned investment are equal.
B)   actual investment is less than planned investment.
C)   actual investment is greater than planned investment.
D)   actual investment must be negative.E) All of the above
F) B) and C)

Question 14

If the MPS is 0.60, MPC

Accepted Answer

A)   is 1.60.
B)   is 0.40.
C)   is 0.30.
D)   cannot be determined by the given information.E) A) and B)
F) A) and C)

Question 15

Refer to the information provided in Figure 8.2 below to answer the questions that follow. 1. C)  Y2. D)  Y2 - Y1." class="answers-bank-image d-inline" rel="preload" > Figure 8.2
-Refer to Figure 8.2. Jerry's saving equals zero at income level

Accepted Answer

A)   zero.
B)   Y1.
C)   Y2.
D)   Y2 - Y1.E) B) and C)
F) None of the above

Question 16

Refer to the information provided in Figure 8.2 below to answer the questions that follow. 1. A)  consumption; saving B)  saving; zero C)  consumption; investment D)  consumption; zero" class="answers-bank-image d-inline" rel="preload" > Figure 8.2
-Refer to Figure 8.2. Jerry's ________ equals ________ at income level Y1.

Accepted Answer

A)   consumption; saving
B)   saving; zero
C)   consumption; investment
D)   consumption; zeroE) None of the above
F) B) and D)

Question 17

Refer to the information provided in Table 8.9 below to answer the questions that follow.
Table 8.9 
-Refer to Table 8.9. If aggregate output equals ________, there will be a $20 billion unplanned decrease in inventories.

Accepted Answer

A)   $100 billion
B)   $200 billion
C)   $300 billion
D)   $400 billionE) A) and B)
F) A) and C)

Question 18

If C = 200 + 0.5Y and I = 100, then the equilibrium level of income is

Accepted Answer

A)   175.
B)   300.
C)   400.
D)   600.E) A) and C)
F) B) and C)

Question 19

When the economy is in equilibrium, savings equals planned investment.

Accepted Answer

A) True 
 B)False

Question 20

A multiplier of 1 means the MPS is equal to 1.

Accepted Answer

A) True 
 B)False

Exam 8: Aggregate Expenditure and Equilibrium Output

Without the government or the foreign sector in the income-expenditure model, consumption equals

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Refer to the information provided in Figure 8.5 below to answer the questions that follow. Figure 8.5 -Refer to Figure 8.5. Aggregate saving is -100 billion when aggregate income is ________ billion.

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If the MPS is 0.05, the MPC is

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If unplanned inventory investment is negative, then

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Firms hold planned inventories in anticipation of sales.

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If the MPS is 0.60, MPC

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Refer to the information provided in Table 8.7 below to answer the questions that follow. Table 8.7 -Refer to Table 8.7. Planned saving equals planned investment at an aggregate output level

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Refer to the information provided in Table 8.9 below to answer the questions that follow. Table 8.9 -Refer to Table 8.9. Planned saving equals planned investment at an aggregate output level of

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's saving equals zero at income level

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If consumption is $60,000 when income is $80,000, and consumption increases to $68,000 when income increases to $90,000, the MPC is

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Aggregate output will decrease if there is a(n)

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If Inventory investment is higher than firms planned,

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Refer to the information provided in Table 8.9 below to answer the questions that follow. Table 8.9 -Refer to Table 8.9. If aggregate output equals ________, there will be a $20 billion unplanned decrease in inventories.

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A multiplier of 1 means the MPS is equal to 1.

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In practice, the actual size of the multiplier is about

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If C = 200 + 0.5Y and I = 100, then the equilibrium level of income is

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[Yd - C] equals

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When the economy is in equilibrium, savings equals planned investment.

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Refer to the information provided in Figure 8.5 below to answer the questions that follow. Figure 8.5 -Refer to Figure 8.5. If aggregate income is $400 billion, aggregate saving is ________ billion.

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's ________ equals ________ at income level Y1.

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[Y_d - C] equals

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's equals at income level Y₁.

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