Exam 11: Expenditure Multipliers: They Keynesian Model

"When the price level increases, aggregate planned expenditure increases and equilibrium expenditure increases." Is the preceding statement correct or incorrect? Briefly explain your answer.

What is the relationship between U.S. real GDP and U.S. imports?

If the multiplier is 4 and there are no imports or income taxes, the marginal propensity to consume is

A decrease in autonomous consumption will

If aggregate planned expenditure exceeds GDP,

The slope of the AE curve is .80. What is the multiplier? Everything else the same, by how much does equilibriu aggregate expenditure increase if a) exports increase from $1.75 trillion to $2.25 trillion. b) government expenditure on goods and services decrease from $2.0 trillion to $1.8 trillion. c) investment increases from $1.2 trillion to $2.3 trillion.

The marginal propensity to save

"If aggregate planned expenditure exceeds real GDP, then aggregate expenditure and real GDP will increase." Explain whether the previous sentence is correct or incorrect.

Explain the relationships between real GDP, aggregate expenditures, induced expenditures, and unplanned investment.

-In the above table, there are no taxes and no imports or exports. The value of the multiplier for this economy is

The slope of the aggregate expenditure curve increases when the marginal propensity to consume Or the marginal propensity to import _.

Consumption expenditure decreases when decreases.

-In the above figure, if real GDP is greater than $300 billion, inventories will be

-In the figure above, negative saving occurs

At $10,000 of disposable income, Audrey's consumption expenditure was $11,000. At $20,000 of disposable income, Audrey's consumption expenditure was $19,000. What is Audrey's marginal propensity to consume?

What is unplanned investment? How does it occur?

In a diagram with the consumption function, the shows all points where disposable income equals consumption expenditures.

When there is unplanned inventory investment, aggregate planned expenditure is real GDP and actual investment is planned investment.

-In the above figure, equilibrium expenditure along AE₁ is

Because of changes in the , the long- run effect of a $10 increase in investment on real GDP equals _ .