Exam 11: Expenditure Multipliers: They Keynesian Model

If the MPC is .9 and there are no income taxes or imports, the multiplier for a change in autonomous expenditure equals

In 2007, investment in France increased by 7 billion euros. Which of following occurs? i. an upward shift in the AE curve. ii. a leftward shift in the AD curve. iii. an increase in the price level and real GDP in the short run. iv. an increase in the price level and no change in real GDP in the long run.

"If the income tax rate is high enough, the multiplier can be negative." Is the previous statement correct or incorrect?

The marginal propensity to consume measures how much

A decrease in autonomous expenditure shifts the AE curve

Which of the following is INCORRECT?

Read the two statements below and indicate if they are true or false. I. Autonomous expenditures change when GDP changes. II. Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure, and net exports.

When the economy is in equilibrium,

"The global financial crisis has had a considerable impact on China's export growth, which will cont show weakness with recession in the U.S. and Europe," said a report by JP Morgan & Co. Money.cnn.com, 11/11/20 If Chinese exports continue to decline, the AE curve will shift , the price level will the long run and real GDP will in the long run.

The consumption function shows a

In a simple economy in which prices are constant and with no income taxes or imports, the slope of the AE curve is 0.8. In order to increase real GDP by $500 billion, then

When disposal income is $5.0 trillion, consumption expenditure is $4.5 trillion. When disposal income is $6.0 trillion, consumption expenditure is $5.0 trillion. What is the marginal propensity to consume?

The presence of income taxes and imports cause the multiplier to

Suppose the equilibrium level of expenditure is $600. If real GDP is $500, then inventories are Their target levels and real GDP will .

-The above table gives information for the nation of North Hampton. There are no imports to or exports from Nor Hampton. a) Find aggregate planned expenditure for each level of real GDP. b) What is the equilibrium level of real GDP?

consumption is consumption that will occur _ the level of GDP and disposable income.

For a household, the marginal propensity to save plus the marginal propensity to consume

When inventories fall below their target levels, then firms

Suppose disposable income increases from $7 trillion to $8 trillion. At the same time, consumption expenditure increases from $6.8 trillion to . Thus the MPC must equal .

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 represents a change in expenditure and will cause _ .