Exam 11: Expenditure Multipliers: They Keynesian Model

What is the relationship between the aggregate expenditure curve and the aggregate demand curve? Explain the relationship.

The short- run multiplier is equal to 3, real GDP equals potential GDP of $8,000, and the price level is equal to 100. Suppose that government expenditures decrease by $200. The long- run effect of the decrease in government expenditures on real GDP is to change real GDP by

-In the figure above, autonomous consumption is

-In the above figure, if real GDP equals $12 trillion, there would be

-In the above figure, an increase in autonomous expenditure is depicted by the movement from point E to

If real disposable income increases by $1500, consumption expenditures will

The curve that relates the level of total planned expenditure to the level of real GDP is the

Suppose real GDP increases from $9 trillion to $10 trillion. As a result, consumption expenditure increases from $9 trillion to $9.75 trillion. This result implies the MPS equals

Any change in the price level will result in a

Since 1968, U.S. consumption function has generally shifted because of _.

Explain what happens to equilibrium expenditure if autonomous expenditure increases by $100 million.

-In the above table, there are no taxes and no imports or exports. The change in unplanned inventories when real GDP is $7,000 is

The consumption function is the relationship between consumption expenditure and _, other things remaining the same.

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 "... factories have been exposed to ... competition China, India and other Asian mass producers." As a result, "the main export industry has seen a 30 cent reduction in volume ..." w.ft.com, 3/13/200 The decrease in exports will cause and the price level will _ .

Which of the following will NOT shift the consumption function upward?

The consumption function shows how much

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

Actual expenditure might differ from planned expenditure because

In light of the economic crisis in 2008, Barack Obama has been advised by some economists to lower income taxes. This change would

The components of aggregate expenditure include I. imports. II. consumption. III. government transfer payments.