Question 1

Aggregate planned expenditure

Accepted Answer

A)  equals actual aggregate expenditure at the equilibrium level of real GDP. 
B)  is always greater than actual aggregate expenditure. 
C)  always equals actual aggregate expenditure. 
D)  is always less than actual aggregate expenditure. 
A)  equals actual aggregate expenditure at the equilibrium level of real GDP. 
B)  is always greater than actual aggregate expenditure. 
C)  always equals actual aggregate expenditure. 
D)  is always less than actual aggregate expenditure.

Question 2

The value of the marginal propensity to consume is

Accepted Answer

A)  between 1 and 10. 
B)  between 0 and 1. 
C)  between - 1 and +1. 
D)  between 1 percent and 10 percent. 
A)  between 1 and 10. 
B)  between 0 and 1. 
C)  between - 1 and +1. 
D)  between 1 percent and 10 percent.

Question 3

-The value of the multiplier in the economy illustrated in the figure above is

Accepted Answer

A)  10.0. 
B)  2.0. 
C)  2.5. 
D)  4.0. 
A)  10.0. 
B)  2.0. 
C)  2.5. 
D)  4.0.

Question 4

A fall in the price level shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

Accepted Answer

A) True 
 B)False

Question 5

How do imports and income taxes affect the multiplier? Why do they have this effect?

Accepted Answer

Income taxes and imports shrin

Question 6

Does aggregate planned expenditure always equal real GDP?

Accepted Answer

No, aggregate planned expenditure does n

Question 7

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, and NX is net exports. All entries are in dollars. The slope of the aggregate expenditure function is

Accepted Answer

A)  0.60. 
B)  0.70. 
C)  - 0.10. 
D)  0.10. 
A)  0.60. 
B)  0.70. 
C)  - 0.10. 
D)  0.10.

Question 8

When planned aggregate expenditure is greater than real GDP, inventories decrease.

Accepted Answer

A) True 
 B)False

Question 9

When U.S. real GDP increases, then quantity of U.S. imports

Accepted Answer

A)  decreases. 
B)  remains constant. 
C)  increases. 
D)  at first decreases and then increases. 
A)  decreases. 
B)  remains constant. 
C)  increases. 
D)  at first decreases and then increases.

Question 10

Which of the following does NOT occur as the economy moves from an expansion to a recession?

Accepted Answer

A)  Incomes fall during recessions as firms cut production in response to unplanned increases in inventories. 
B)  The multiplier process reinforces any decrease in spending and pushes the economy into recession. 
C)  The change in planned spending exceeds the change in real GDP. 
D)  An initial decrease in autonomous spending is the trigger that creates the business cycle turning point. 
A)  Incomes fall during recessions as firms cut production in response to unplanned increases in inventories. 
B)  The multiplier process reinforces any decrease in spending and pushes the economy into recession. 
C)  The change in planned spending exceeds the change in real GDP. 
D)  An initial decrease in autonomous spending is the trigger that creates the business cycle turning point.

Question 11

As disposable income increases, consumption expenditures

Accepted Answer

A)  increase by a smaller amount. 
B)  remain constant. 
C)  increase by a larger amount. 
D)  increase by the same amount. 
A)  increase by a smaller amount. 
B)  remain constant. 
C)  increase by a larger amount. 
D)  increase by the same amount.

Question 12

What is the marginal propensity to consume? Can the marginal propensity to consume be greater than 1?

Accepted Answer

The marginal propensity to consume is th

Question 13

A shift in the aggregate expenditure curve as a result of an increase in the price level results in a

Accepted Answer

A)  movement up along the aggregate demand curve. 
B)  movement down along the aggregate demand curve. 
C)  leftward shift in the aggregate demand curve. 
D)  rightward shift in the aggregate demand curve. 
A)  movement up along the aggregate demand curve. 
B)  movement down along the aggregate demand curve. 
C)  leftward shift in the aggregate demand curve. 
D)  rightward shift in the aggregate demand curve.

Question 14

The marginal propensity to consume refers to

Accepted Answer

A)  the additional consumption expenditure that occurs out of an additional dollar of investment. 
B)  the additional saving that occurs out of an additional dollar of disposable income. 
C)  total consumption expenditure divided by total disposable income. 
D)  the additional consumption expenditure that occurs out of an additional dollar of disposable income. 
A)  the additional consumption expenditure that occurs out of an additional dollar of investment. 
B)  the additional saving that occurs out of an additional dollar of disposable income. 
C)  total consumption expenditure divided by total disposable income. 
D)  the additional consumption expenditure that occurs out of an additional dollar of disposable income.

Question 15

Components of induced expenditure include government expenditure, investment and consumption expenditure.

Accepted Answer

A) True 
 B)False

Question 16

One reason the aggregate expenditure curve slopes upward is because increases when real GDP increases.

Accepted Answer

A)  government expenditures on goods and services 
B)  investment 
C)  exports 
D)  consumption expenditure 
A)  government expenditures on goods and services 
B)  investment 
C)  exports 
D)  consumption expenditure

Question 17

The autonomous components of aggregate expenditures are consumption, savings, and investment.

Accepted Answer

A) True 
 B)False

Question 18

If the price level is constant and the slope of the AE curve is 0.75, a decrease in investment of $100 leads to a decrease in real GDP of

Accepted Answer

A)  $25. 
B)  $100. 
C)  $800. 
D)  $400. 
A)  $25. 
B)  $100. 
C)  $800. 
D)  $400.

Question 19

The multiplier is larger if the

Accepted Answer

A)  marginal propensity to import is larger. 
B)  marginal propensity to save is larger. 
C)  income tax rate is higher. 
D)  marginal propensity to consume is larger. 
A)  marginal propensity to import is larger. 
B)  marginal propensity to save is larger. 
C)  income tax rate is higher. 
D)  marginal propensity to consume is larger.

Question 20

Describe the relationship between aggregate planned expenditure, real GDP, and unplanned inventory changes.

Accepted Answer

When aggregate planned expenditure excee

Aggregate planned expenditure

The value of the marginal propensity to consume is

-The value of the multiplier in the economy illustrated in the figure above is

A fall in the price level shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

How do imports and income taxes affect the multiplier? Why do they have this effect?

Does aggregate planned expenditure always equal real GDP?

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, and NX is net exports. All entries are in dollars. The slope of the aggregate expenditure function is

When planned aggregate expenditure is greater than real GDP, inventories decrease.

When U.S. real GDP increases, then quantity of U.S. imports

Which of the following does NOT occur as the economy moves from an expansion to a recession?

As disposable income increases, consumption expenditures

What is the marginal propensity to consume? Can the marginal propensity to consume be greater than 1?

A shift in the aggregate expenditure curve as a result of an increase in the price level results in a

The marginal propensity to consume refers to

Components of induced expenditure include government expenditure, investment and consumption expenditure.

One reason the aggregate expenditure curve slopes upward is because increases when real GDP increases.

The autonomous components of aggregate expenditures are consumption, savings, and investment.

If the price level is constant and the slope of the AE curve is 0.75, a decrease in investment of $100 leads to a decrease in real GDP of

The multiplier is larger if the

Describe the relationship between aggregate planned expenditure, real GDP, and unplanned inventory changes.

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

Aggregate planned expenditure

The value of the marginal propensity to consume is

-The value of the multiplier in the economy illustrated in the figure above is

A fall in the price level shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

How do imports and income taxes affect the multiplier? Why do they have this effect?

Does aggregate planned expenditure always equal real GDP?

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, and NX is net exports. All entries are in dollars. The slope of the aggregate expenditure function is

When planned aggregate expenditure is greater than real GDP, inventories decrease.

When U.S. real GDP increases, then quantity of U.S. imports

Which of the following does NOT occur as the economy moves from an expansion to a recession?

As disposable income increases, consumption expenditures

What is the marginal propensity to consume? Can the marginal propensity to consume be greater than 1?

A shift in the aggregate expenditure curve as a result of an increase in the price level results in a

The marginal propensity to consume refers to

Components of induced expenditure include government expenditure, investment and consumption expenditure.

One reason the aggregate expenditure curve slopes upward is because increases when real GDP increases.

The autonomous components of aggregate expenditures are consumption, savings, and investment.

If the price level is constant and the slope of the AE curve is 0.75, a decrease in investment of $100 leads to a decrease in real GDP of

The multiplier is larger if the

Describe the relationship between aggregate planned expenditure, real GDP, and unplanned inventory changes.

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