Exam 11: Expenditure Multipliers: They Keynesian Model

Because of the multiplier, a one- time change in expenditure will

The marginal propensity to save is

If the consumption function is below the 45- degree line, then at these levels of disposable income

The marginal propensity to save is .

-According to the data in the above table, at what level of disposable income is savings negative?

If investment increases by $150 and, in response, equilibrium expenditure rises by $600,

Intertemporal substitution means changes in purchases

Imports and income taxes make the multiplier larger than it would otherwise be.

Dissaving

Autonomous consumption is equal to

When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increase from $6.5 trillion to $6.9 trillion. The MPS is equal to

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, X is exports, and M is imports. All entries are in dollars. What is the unplanned inventory change when GDP is equal to $400?

Suppose that in 2010, firms discover that their inventories are falling below their target levels. Which of the following statements is correct?

In the short run, the multiplier typically is less than 1.

Components of aggregate expenditure include saving, consumption expenditure, investment and government expenditure.

The short- run impact changes in autonomous spending have on real GDP and the price level depends on aggregate supply.

-The data in the above table indicate that the slope of the AE curve is

-In the above figure, consumption and disposable income are equal at

Suppose the economy has no income taxes or imports. The MPC equals 0.8. What does the expenditure model predict will be the change in real GDP if investment increases by $200 billion?

-In the above figure, point d represents planned expenditures real GDP.