Question 1

-The figure above illustrates an economy's consumption function. What is autonomous consumption in this economy?

Accepted Answer

A)  $2 million 
B)  $0 
C)  $3 million 
D)  None of the above answers is correct. 
A)  $2 million 
B)  $0 
C)  $3 million 
D)  None of the above answers is correct.

Question 2

The positive relationship between consumption expenditure and disposable income is shown by a movement along the consumption function.

Accepted Answer

A) True 
 B)False

Question 3

The marginal propensity to save (MPS) is equal to the

Accepted Answer

A)  reciprocal value of the MPC. 
B)  difference between consumption and income. 
C)  slope of the savings function. 
D)  slope of the 45 degree. 
A)  reciprocal value of the MPC. 
B)  difference between consumption and income. 
C)  slope of the savings function. 
D)  slope of the 45 degree.

Question 4

If the change in autonomous investment equals $1 trillion and the change in real GDP equals $4 trillion, the multiplier equals 1/4.

Accepted Answer

A) True 
 B)False

Question 5

Discuss the link between real GDP and imports.

Accepted Answer

Imports are one of two components that a

Question 6

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

Accepted Answer

A)  $5,000. 
B)  any level because investment always equals government expenditures. 
C)  $3,000. 
D)  no level because consumption expenditure is always less than real GDP. 
A)  $5,000. 
B)  any level because investment always equals government expenditures. 
C)  $3,000. 
D)  no level because consumption expenditure is always less than real GDP.

Question 7

"Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase." Explain whether the previous sentence is correct or incorrect.

Accepted Answer

The sentence is incorrect along two dime

Question 8

If real GDP exceeds aggregate planned expenditure, what happens to firm's unplanned inventories?

Accepted Answer

If real GDP exceeds aggregate planned ex

Question 9

-In the above figure, autonomous expenditure along AE1 equals

Accepted Answer

A)  $8 trillion. 
B)  $4 trillion. 
C)  $2 trillion. 
D)  an amount not given in the above answers. 
A)  $8 trillion. 
B)  $4 trillion. 
C)  $2 trillion. 
D)  an amount not given in the above answers.

Question 10

The expenditure multiplier equals

Accepted Answer

A)  MPC - MPS where MPC is the marginal propensity to consume and MPS is the marginal propensity to consume. 
B)  APC - APS where APC is the average propensity to consume and APS is the average propensity to save. 
C)  1/(slope of AE curve). 
D)  1/(1 - slope of AE curve). 
A)  MPC - MPS where MPC is the marginal propensity to consume and MPS is the marginal propensity to consume. 
B)  APC - APS where APC is the average propensity to consume and APS is the average propensity to save. 
C)  1/(slope of AE curve). 
D)  1/(1 - slope of AE curve).

Question 11

An economy has no imports and no taxes. The marginal propensity to save is 0.1. A increase in autonomous expenditure increases equilibrium expenditure by $60 billion and the multiplier is _ .

Accepted Answer

A)  $6 billion; 10 
B)  $60 billion; 5 
C)  $60 billion; 10 
D)  $12 billion; 5 
A)  $6 billion; 10 
B)  $60 billion; 5 
C)  $60 billion; 10 
D)  $12 billion; 5

Question 12

In the short run, with fixed prices and no imports and no income taxes, an increase in investment of
$100 billion

Accepted Answer

A)  decreases real GDP because of the decrease in induced expenditures. 
B)  increases real GDP by less than $100 billion. 
C)  increases real GDP by more than $100 billion. 
D)  increases real GDP by $100 billion. 
A)  decreases real GDP because of the decrease in induced expenditures. 
B)  increases real GDP by less than $100 billion. 
C)  increases real GDP by more than $100 billion. 
D)  increases real GDP by $100 billion.

Question 13

In the above figure the economy is initially at point A on aggregate expenditure curve AE0. Suppose investment decreases. As a result

Accepted Answer

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

Question 14

In the above figure, if the level of real GDP is $13 trillion,

Accepted Answer

A)  planned expenditures are zero. 
B)  inventories are equal to the levels planned by firms. 
C)  inventories are below the levels planned by firms. 
D)  inventories are above the levels planned by firms. 
A)  planned expenditures are zero. 
B)  inventories are equal to the levels planned by firms. 
C)  inventories are below the levels planned by firms. 
D)  inventories are above the levels planned by firms.

Question 15

An increase in the price level decreases planned expenditures because

Accepted Answer

A)  real wealth increases, decreasing expenditure. 
B)  domestic prices rise relative to foreign prices, increasing net exports. 
C)  the real interest rate rises, increasing expenditure. 
D)  current prices rise relative to future prices, decreasing expenditure. 
A)  real wealth increases, decreasing expenditure. 
B)  domestic prices rise relative to foreign prices, increasing net exports. 
C)  the real interest rate rises, increasing expenditure. 
D)  current prices rise relative to future prices, decreasing expenditure.

Question 16

-The figure above illustrates an economy's consumption function. What is the marginal propensity to consume in this economy?

Accepted Answer

A)  0.33 
B)  0.67 
C)  0.75 
D)  1.00 
A)  0.33 
B)  0.67 
C)  0.75 
D)  1.00

Question 17

"A country's multiplier is constant over time." Explain whether the previous statement is correct or incorrect.

Accepted Answer

The statement is incorrect. Th

Question 18

-The above table has data on the consumption function in the nation of Mojo.
a) What is the amount of autonomous consumption expenditure?
b) What is the marginal propensity to consume?

Accepted Answer

a) Autonomous consumption expenditure eq

Question 19

What is the marginal propensity to consume?

Accepted Answer

A)  one minus the fraction of total disposable income that is saved. 
B)  the percentage of income that is not saved. 
C)  the percentage of income that is consumed. 
D)  the ratio of the change in consumption expenditure to the change in disposable income. 
A)  one minus the fraction of total disposable income that is saved. 
B)  the percentage of income that is not saved. 
C)  the percentage of income that is consumed. 
D)  the ratio of the change in consumption expenditure to the change in disposable income.

Question 20

When real GDP exceeds aggregate planned expenditures,

Accepted Answer

A)  a higher level of equilibrium income will prevail. 
B)  the circular flow will increase. 
C)  GDP will decrease. 
D)  actual inventories decrease below their target. 
A)  a higher level of equilibrium income will prevail. 
B)  the circular flow will increase. 
C)  GDP will decrease. 
D)  actual inventories decrease below their target.

-The figure above illustrates an economy's consumption function. What is autonomous consumption in this economy?

The positive relationship between consumption expenditure and disposable income is shown by a movement along the consumption function.

The marginal propensity to save (MPS) is equal to the

If the change in autonomous investment equals $1 trillion and the change in real GDP equals $4 trillion, the multiplier equals 1/4.

Discuss the link between real GDP and imports.

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

"Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase." Explain whether the previous sentence is correct or incorrect.

If real GDP exceeds aggregate planned expenditure, what happens to firm's unplanned inventories?

-In the above figure, autonomous expenditure along AE₁equals

The expenditure multiplier equals

An economy has no imports and no taxes. The marginal propensity to save is 0.1. A increase in autonomous expenditure increases equilibrium expenditure by $60 billion and the multiplier is _ .

In the short run, with fixed prices and no imports and no income taxes, an increase in investment of $100 billion

In the above figure the economy is initially at point A on aggregate expenditure curve AE₀. Suppose investment decreases. As a result

In the above figure, if the level of real GDP is $13 trillion,

An increase in the price level decreases planned expenditures because

-The figure above illustrates an economy's consumption function. What is the marginal propensity to consume in this economy?

"A country's multiplier is constant over time." Explain whether the previous statement is correct or incorrect.

-The above table has data on the consumption function in the nation of Mojo. a) What is the amount of autonomous consumption expenditure? b) What is the marginal propensity to consume?

What is the marginal propensity to consume?

When real GDP exceeds aggregate planned expenditures,

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

-The figure above illustrates an economy's consumption function. What is autonomous consumption in this economy?

The positive relationship between consumption expenditure and disposable income is shown by a movement along the consumption function.

The marginal propensity to save (MPS) is equal to the

If the change in autonomous investment equals $1 trillion and the change in real GDP equals $4 trillion, the multiplier equals 1/4.

Discuss the link between real GDP and imports.

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

"Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase." Explain whether the previous sentence is correct or incorrect.

If real GDP exceeds aggregate planned expenditure, what happens to firm's unplanned inventories?

-In the above figure, autonomous expenditure along AE1 equals

The expenditure multiplier equals

An economy has no imports and no taxes. The marginal propensity to save is 0.1. A increase in autonomous expenditure increases equilibrium expenditure by $60 billion and the multiplier is _ .

In the short run, with fixed prices and no imports and no income taxes, an increase in investment of $100 billion

In the above figure the economy is initially at point A on aggregate expenditure curve AE0. Suppose investment decreases. As a result

In the above figure, if the level of real GDP is $13 trillion,

An increase in the price level decreases planned expenditures because

-The figure above illustrates an economy's consumption function. What is the marginal propensity to consume in this economy?

"A country's multiplier is constant over time." Explain whether the previous statement is correct or incorrect.

-The above table has data on the consumption function in the nation of Mojo. a) What is the amount of autonomous consumption expenditure? b) What is the marginal propensity to consume?

What is the marginal propensity to consume?

When real GDP exceeds aggregate planned expenditures,

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, autonomous expenditure along AE₁equals

In the above figure the economy is initially at point A on aggregate expenditure curve AE₀. Suppose investment decreases. As a result