Question 1

consumption expenditure is greater than disposable income.

Accepted Answer

A)  Saving is positive whenever 
B)  Dissaving occurs whenever 
C)  It is always the case that 
D)  None of the above answers is correct because it is impossible for consumption expenditure to be greater than disposable income. 
A)  Saving is positive whenever 
B)  Dissaving occurs whenever 
C)  It is always the case that 
D)  None of the above answers is correct because it is impossible for consumption expenditure to be greater than disposable income.

Question 2

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

Accepted Answer

A)  decrease to more than 0.8. 
B)  decrease to less than 0.8. 
C)  increase. 
D)  remain steady. 
A)  decrease to more than 0.8. 
B)  decrease to less than 0.8. 
C)  increase. 
D)  remain steady.

Question 3

Mauritius, an island off the coast of Africa, competes with other countries producing goods with low- skilled labor. In 2006, it was reported that ..."its clothing factories have been exposed to fronta competition from China, India and other Asian mass producers." As a result, "the main export indu has seen a 30 per cent reduction in volume ..."
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Suppose real GDP is $14 billion, exports total $2 billion and the multiplier is 4. If exports decline by
$600,000,000, real GDP in Mauritius will

Accepted Answer

A)  increase by $4 billion. 
B)  decrease by $8 billion. 
C)  decrease by $2.4 billion. 
D)  increase by $2.4 billion 
A)  increase by $4 billion. 
B)  decrease by $8 billion. 
C)  decrease by $2.4 billion. 
D)  increase by $2.4 billion

Question 4

-Based upon the above table, saving equals $100 billion when disposable income equals

Accepted Answer

A)  $800 billion. 
B)  $1200 billion. 
C)  $1000 billion. 
D)  some amount but we need more information to calculate the amount. 
A)  $800 billion. 
B)  $1200 billion. 
C)  $1000 billion. 
D)  some amount but we need more information to calculate the amount.

Question 5

The smaller the slope of the AE curve, _ .

Accepted Answer

A)  the smaller is slope of the saving function 
B)  the smaller is the value of the multiplier 
C)  the greater is the value of the multiplier 
D)  the steeper is the consumption function 
A)  the smaller is slope of the saving function 
B)  the smaller is the value of the multiplier 
C)  the greater is the value of the multiplier 
D)  the steeper is the consumption function

Question 6

The presence of income taxes and imports make the slope of the aggregate expenditure curve

Accepted Answer

A)  steeper than it would be without income taxes and exports. 
B)  the same as it would be without income taxes and exports. 
C)  flatter than it would be without income taxes and exports. 
D)  probably different than it would be without income taxes and exports but income taxes make it steeper while imports make it flatter. 
A)  steeper than it would be without income taxes and exports. 
B)  the same as it would be without income taxes and exports. 
C)  flatter than it would be without income taxes and exports. 
D)  probably different than it would be without income taxes and exports but income taxes make it steeper while imports make it flatter.

Question 7

Why does the multiplier differ between the long run and the short run?

Accepted Answer

In the short run, an increase in, say in

Question 8

The saving function shows a _ relationship between .

Accepted Answer

A)  negative; real GDP and saving 
B)  negative; disposable income and consumption expenditure 
C)  positive; disposable income and saving 
D)  positive; disposable income and dissaving 
A)  negative; real GDP and saving 
B)  negative; disposable income and consumption expenditure 
C)  positive; disposable income and saving 
D)  positive; disposable income and dissaving

Question 9

The wealth effect of an increase in the price level results from a

Accepted Answer

A)  change in the price of current goods relative to future goods. 
B)  change in the price of foreign goods relative to domestic goods. 
C)  change in the purchasing power of wealth. 
D)  Both answers B and C are correct. 
A)  change in the price of current goods relative to future goods. 
B)  change in the price of foreign goods relative to domestic goods. 
C)  change in the purchasing power of wealth. 
D)  Both answers B and C are correct.

Question 10

Given an MPC of 0.80, if there are no income taxes or imports and prices are constant, then when investment increases by $50 million, when prices are fixed equilibrium GDP would

Accepted Answer

A)  increase by $400 million. 
B)  increase by $50 million. 
C)  increase by $250 million. 
D)  To answer the question more information on income is needed. 
A)  increase by $400 million. 
B)  increase by $50 million. 
C)  increase by $250 million. 
D)  To answer the question more information on income is needed.

Question 11

If the MPC equals .75 and there are no income taxes or imports, then the multiplier for a change in autonomous expenditure equals

Accepted Answer

A)  1.75. 
B)  4. 
C)  .75. 
D)  4.75. 
A)  1.75. 
B)  4. 
C)  .75. 
D)  4.75.

Question 12

-Based upon the above table, the MPC for the consumption function is

Accepted Answer

A)  increasing as income rises. 
B)  equal to 1.0 at $600 billion. 
C)  constant at 0.25. 
D)  constant at 0.75. 
A)  increasing as income rises. 
B)  equal to 1.0 at $600 billion. 
C)  constant at 0.25. 
D)  constant at 0.75.

Question 13

-In the above figure the economy is initially at point A on aggregate expenditure curve AE0. Suppose firms expect profits to increase and decide to increase investment. As a result

Accepted Answer

A)  the AE curve shifts upward to a curve such as AE2. 
B)  there is a movement along AE1 to a point such as B. 
C)  the AE curve shifts downward to a curve such as AE1. 
D)  there is a movement along AE1 to a point such as C. 
A)  the AE curve shifts upward to a curve such as AE2. 
B)  there is a movement along AE1 to a point such as B. 
C)  the AE curve shifts downward to a curve such as AE1. 
D)  there is a movement along AE1 to a point such as C.

Question 14

Consumption expenditures equal disposable income

Accepted Answer

A)  when saving equals disposable income. 
B)  at every point on the consumption function. 
C)  at every point on the saving function. 
D)  at every point on the 45- degree line. 
A)  when saving equals disposable income. 
B)  at every point on the consumption function. 
C)  at every point on the saving function. 
D)  at every point on the 45- degree line.

Question 15

Aggregate expenditure equals

Accepted Answer

A)  G + X - M. 
B)  C + I + G + X. 
C)  C + I + G + X - M. 
D)  C + I + G. 
A)  G + X - M. 
B)  C + I + G + X. 
C)  C + I + G + X - M. 
D)  C + I + G.

Question 16

Equilibrium real GDP is $400 billion, the MPC = 0.9, and there are no income taxes or imports. Investment increases $40 billion. If the price level is constant, after the increase in investment, equilibrium real GDP will be

Accepted Answer

A)  $800 billion. 
B)  $360 billion. 
C)  $440 billion. 
D)  $600 billion. 
A)  $800 billion. 
B)  $360 billion. 
C)  $440 billion. 
D)  $600 billion.

Question 17

Suppose that the slope of the AE curve is 0.75. Then a $100 decrease in autonomous spending causes equilibrium expenditure to

Accepted Answer

A)  decrease by $400. 
B)  decrease by $750. 
C)  increase by $750. 
D)  increase by $400. 
A)  decrease by $400. 
B)  decrease by $750. 
C)  increase by $750. 
D)  increase by $400.

Question 18

If unplanned inventories fall, aggregate planned expenditure is real GDP and firms
Their production.

Accepted Answer

A)  less than; increase 
B)  greater than; decrease 
C)  less than; decrease 
D)  greater than; increase 
A)  less than; increase 
B)  greater than; decrease 
C)  less than; decrease 
D)  greater than; increase

Question 19

As real disposable income increases, consumption expenditure and saving .

Accepted Answer

A)  increases; increases 
B)  decreases; decreases 
C)  decreases; increases 
D)  increases; decreases 
A)  increases; increases 
B)  decreases; decreases 
C)  decreases; increases 
D)  increases; decreases

Question 20

A movement along the saving function occurs when

Accepted Answer

A)  wealth increases. 
B)  the real interest rate rises. 
C)  disposable income decreases. 
D)  None of the above answers is correct. 
A)  wealth increases. 
B)  the real interest rate rises. 
C)  disposable income decreases. 
D)  None of the above answers is correct.

consumption expenditure is greater than disposable income.

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

-Based upon the above table, saving equals $100 billion when disposable income equals

The smaller the slope of the AE curve, _ .

The presence of income taxes and imports make the slope of the aggregate expenditure curve

Why does the multiplier differ between the long run and the short run?

The saving function shows a _ relationship between .

The wealth effect of an increase in the price level results from a

Given an MPC of 0.80, if there are no income taxes or imports and prices are constant, then when investment increases by $50 million, when prices are fixed equilibrium GDP would

If the MPC equals .75 and there are no income taxes or imports, then the multiplier for a change in autonomous expenditure equals

-Based upon the above table, the MPC for the consumption function is

-In the above figure the economy is initially at point A on aggregate expenditure curve AE₀. Suppose firms expect profits to increase and decide to increase investment. As a result

Consumption expenditures equal disposable income

Aggregate expenditure equals

Equilibrium real GDP is $400 billion, the MPC = 0.9, and there are no income taxes or imports. Investment increases $40 billion. If the price level is constant, after the increase in investment, equilibrium real GDP will be

Suppose that the slope of the AE curve is 0.75. Then a $100 decrease in autonomous spending causes equilibrium expenditure to

If unplanned inventories fall, aggregate planned expenditure is real GDP and firms Their production.

As real disposable income increases, consumption expenditure and saving .

A movement along the saving function occurs when

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 11: Expenditure Multipliers: They Keynesian Model

consumption expenditure is greater than disposable income.

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

-Based upon the above table, saving equals $100 billion when disposable income equals

The smaller the slope of the AE curve, _ .

The presence of income taxes and imports make the slope of the aggregate expenditure curve

Why does the multiplier differ between the long run and the short run?

The saving function shows a _ relationship between .

The wealth effect of an increase in the price level results from a

Given an MPC of 0.80, if there are no income taxes or imports and prices are constant, then when investment increases by $50 million, when prices are fixed equilibrium GDP would

If the MPC equals .75 and there are no income taxes or imports, then the multiplier for a change in autonomous expenditure equals

-Based upon the above table, the MPC for the consumption function is

-In the above figure the economy is initially at point A on aggregate expenditure curve AE0. Suppose firms expect profits to increase and decide to increase investment. As a result

Consumption expenditures equal disposable income

Aggregate expenditure equals

Equilibrium real GDP is $400 billion, the MPC = 0.9, and there are no income taxes or imports. Investment increases $40 billion. If the price level is constant, after the increase in investment, equilibrium real GDP will be

Suppose that the slope of the AE curve is 0.75. Then a $100 decrease in autonomous spending causes equilibrium expenditure to

If unplanned inventories fall, aggregate planned expenditure is real GDP and firms Their production.

As real disposable income increases, consumption expenditure and saving .

A movement along the saving function occurs when

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

-In the above figure the economy is initially at point A on aggregate expenditure curve AE₀. Suppose firms expect profits to increase and decide to increase investment. As a result