Question 1

If there are no taxes or imports and MPC = 0.5, the multiplier equals

Accepted Answer

A)  5.0. 
B)  6.0. 
C)  2.0. 
D)  0.5. 
A)  5.0. 
B)  6.0. 
C)  2.0. 
D)  0.5.

Question 2

If the MPC = 0.9, then ignoring any multiplier effect, an increase in disposable income causes consumption expenditure to

Accepted Answer

A)  rise by more than the full increase in income. 
B)  rise by the full increase in income. 
C)  fall, as increases in income will increase saving. 
D)  rise by less than the full increase in income. 
A)  rise by more than the full increase in income. 
B)  rise by the full increase in income. 
C)  fall, as increases in income will increase saving. 
D)  rise by less than the full increase in income.

Question 3

Suppose the MPC = 0.90 and there are no taxes or imports. What dos the multiplier equal? If the initial equilibrium aggregate expenditure is $12 trillion, what will be the effect on aggregate expenditure of a $100 billion increase in investment?

Accepted Answer

The multiplier equals 1/(1 - MPC), so th

Question 4

If the MPC equals 0.75, then

Accepted Answer

A)  for every $100 increase in disposable income, saving increases by $75. 
B)  consumption expenditure is always more than disposable income. 
C)  for every $100 increase in consumption expenditure, disposable income increases by $75. 
D)  for every $100 increase in disposable income, saving increases by $25. 
A)  for every $100 increase in disposable income, saving increases by $75. 
B)  consumption expenditure is always more than disposable income. 
C)  for every $100 increase in consumption expenditure, disposable income increases by $75. 
D)  for every $100 increase in disposable income, saving increases by $25.

Question 5

A country reports that it has an unplanned inventory increase of $1.0 trillion. Discuss how the economy adjusts until it reaches an unplanned inventory change of $0.0 trillion.

Accepted Answer

When unplanned inventory changes are pos

Question 6

If the multiplier is 4.0 and investment decreases by $2.5 billion, the AD curve

Accepted Answer

A)  shifts leftward by more than $30 billion. 
B)  shifts leftward by $10 billion. 
C)  shifts rightward by less than $10 billion. 
D)  shifts rightward by $10 billion. 
A)  shifts leftward by more than $30 billion. 
B)  shifts leftward by $10 billion. 
C)  shifts rightward by less than $10 billion. 
D)  shifts rightward by $10 billion.

Question 7

If firms' inventories are increasing above their target level, then

Accepted Answer

A)  actual consumption expenditure is greater than planned consumption expenditure. 
B)  actual investment exceeds planned investment. 
C)  real GDP will increase. 
D)  real GDP will not change in the foreseeable future. 
A)  actual consumption expenditure is greater than planned consumption expenditure. 
B)  actual investment exceeds planned investment. 
C)  real GDP will increase. 
D)  real GDP will not change in the foreseeable future.

Question 8

"Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure on goods and services, and exports minus imports." Is the previous statement correct or incorrect?

Accepted Answer

The statement accura

Question 9

At a level of disposable income of $0, consumption expenditure is $5000. Saving equals

Accepted Answer

A)  $2500. 
B)  0. 
C)  - $5000. 
D)  an amount that cannot be determined with the information available. 
A)  $2500. 
B)  0. 
C)  - $5000. 
D)  an amount that cannot be determined with the information available.

Question 10

If the value of the multiplier is 3.33 and there are no imports or income taxes, then the value of the

Accepted Answer

A)  MPS is 0.3. 
B)  MPC is 0.7. 
C)  Both of the above answers are correct. 
D)  None of the above answers are correct. 
A)  MPS is 0.3. 
B)  MPC is 0.7. 
C)  Both of the above answers are correct. 
D)  None of the above answers are correct.

Question 11

-In the above table, there are no taxes and no imports or exports. The total level of expenditure in the economy when real GDP is $7,000 is

Accepted Answer

A)  0.75. 
B)  $6,500. 
C)  $13,500. 
D)  $7,000. 
A)  0.75. 
B)  $6,500. 
C)  $13,500. 
D)  $7,000.

Question 12

An increase in disposable income shifts

Accepted Answer

A)  both the consumption and savings functions downward. 
B)  both the consumption and savings functions upward. 
C)  neither the consumption function or the savings function because it leads to a movement along both the consumption and savings function. 
D)  the consumption function upward and leads to a movement along the savings function. 
A)  both the consumption and savings functions downward. 
B)  both the consumption and savings functions upward. 
C)  neither the consumption function or the savings function because it leads to a movement along both the consumption and savings function. 
D)  the consumption function upward and leads to a movement along the savings function.

Question 13

Induced expenditure includes .

Accepted Answer

A)  all autonomous expenditure 
B)  induced consumption expenditure and imports 
C)  induced consumption expenditure and exports 
D)  induced consumption and government expenditure 
A)  all autonomous expenditure 
B)  induced consumption expenditure and imports 
C)  induced consumption expenditure and exports 
D)  induced consumption and government expenditure

Question 14

Disposable income is equal to

Accepted Answer

A)  aggregate income minus taxes plus government expenditures on goods and services. 
B)  consumption expenditure minus taxes plus transfer payments. 
C)  aggregate income minus taxes plus transfer payments. 
D)  aggregate income plus transfer payments. 
A)  aggregate income minus taxes plus government expenditures on goods and services. 
B)  consumption expenditure minus taxes plus transfer payments. 
C)  aggregate income minus taxes plus transfer payments. 
D)  aggregate income plus transfer payments.

Question 15

In general, the flatter the aggregate expenditure curve, the

Accepted Answer

A)  greater the autonomous expenditure. 
B)  smaller the multiplier. 
C)  larger the multiplier. 
D)  larger the marginal propensity to consume. 
A)  greater the autonomous expenditure. 
B)  smaller the multiplier. 
C)  larger the multiplier. 
D)  larger the marginal propensity to consume.

Question 16

A movement along the consumption function is the result of changes in disposable income.

Accepted Answer

A) True 
 B)False

Question 17

Where the consumption function crosses the 45° line

Accepted Answer

A)  saving is positive. 
B)  saving is negative. 
C)  consumption expenditure equals disposable income. 
D)  consumption expenditure equals saving. 
A)  saving is positive. 
B)  saving is negative. 
C)  consumption expenditure equals disposable income. 
D)  consumption expenditure equals saving.

Question 18

The consumption function relates the consumption expenditure decisions of households to

Accepted Answer

A)  investment decisions of firms. 
B)  the level of disposable income. 
C)  saving decisions of households. 
D)  the nominal interest rate. 
A)  investment decisions of firms. 
B)  the level of disposable income. 
C)  saving decisions of households. 
D)  the nominal interest rate.

Question 19

Expenditure that does NOT depend on real GDP is called

Accepted Answer

A)  autonomous expenditure. 
B)  equilibrium expenditure. 
C)  spurious expenditure. 
D)  induced expenditure. 
A)  autonomous expenditure. 
B)  equilibrium expenditure. 
C)  spurious expenditure. 
D)  induced expenditure.

Question 20

-In the figure above, the marginal propensity to consume is

Accepted Answer

A)  0.67. 
B)  3.00. 
C)  1.00. 
D)  0.25. 
A)  0.67. 
B)  3.00. 
C)  1.00. 
D)  0.25.

If there are no taxes or imports and MPC = 0.5, the multiplier equals

If the MPC = 0.9, then ignoring any multiplier effect, an increase in disposable income causes consumption expenditure to

Suppose the MPC = 0.90 and there are no taxes or imports. What dos the multiplier equal? If the initial equilibrium aggregate expenditure is $12 trillion, what will be the effect on aggregate expenditure of a $100 billion increase in investment?

If the MPC equals 0.75, then

A country reports that it has an unplanned inventory increase of $1.0 trillion. Discuss how the economy adjusts until it reaches an unplanned inventory change of $0.0 trillion.

If the multiplier is 4.0 and investment decreases by $2.5 billion, the AD curve

If firms' inventories are increasing above their target level, then

"Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure on goods and services, and exports minus imports." Is the previous statement correct or incorrect?

At a level of disposable income of $0, consumption expenditure is $5000. Saving equals

If the value of the multiplier is 3.33 and there are no imports or income taxes, then the value of the

-In the above table, there are no taxes and no imports or exports. The total level of expenditure in the economy when real GDP is $7,000 is

An increase in disposable income shifts

Induced expenditure includes .

Disposable income is equal to

In general, the flatter the aggregate expenditure curve, the

A movement along the consumption function is the result of changes in disposable income.

Where the consumption function crosses the 45° line

The consumption function relates the consumption expenditure decisions of households to

Expenditure that does NOT depend on real GDP is called

-In the figure above, the marginal propensity to consume is

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

If there are no taxes or imports and MPC = 0.5, the multiplier equals

If the MPC = 0.9, then ignoring any multiplier effect, an increase in disposable income causes consumption expenditure to

Suppose the MPC = 0.90 and there are no taxes or imports. What dos the multiplier equal? If the initial equilibrium aggregate expenditure is $12 trillion, what will be the effect on aggregate expenditure of a $100 billion increase in investment?

If the MPC equals 0.75, then

A country reports that it has an unplanned inventory increase of $1.0 trillion. Discuss how the economy adjusts until it reaches an unplanned inventory change of $0.0 trillion.

If the multiplier is 4.0 and investment decreases by $2.5 billion, the AD curve

If firms' inventories are increasing above their target level, then

"Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure on goods and services, and exports minus imports." Is the previous statement correct or incorrect?

At a level of disposable income of $0, consumption expenditure is $5000. Saving equals

If the value of the multiplier is 3.33 and there are no imports or income taxes, then the value of the

-In the above table, there are no taxes and no imports or exports. The total level of expenditure in the economy when real GDP is $7,000 is

An increase in disposable income shifts

Induced expenditure includes .

Disposable income is equal to

In general, the flatter the aggregate expenditure curve, the

A movement along the consumption function is the result of changes in disposable income.

Where the consumption function crosses the 45° line

The consumption function relates the consumption expenditure decisions of households to

Expenditure that does NOT depend on real GDP is called

-In the figure above, the marginal propensity to consume is

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