Exam 11: Expenditure Multipliers: They Keynesian Model

In an article regarding Bangladesh's economy, the author suggests that the government ..."[g]ive do tax breaks on investment dollars. Give a tax break to R&D [research and development]. Give a tax b on donations to educational institutions. " HYPERLINK "http://www.groundreport.com/" www.groundreport.com, March 24, 20 The increase in investment is considered and will generate a larger increase in .

Suppose that saving equals $0 when disposable income equals $1 trillion. Along the saving function, occurs to the left of $1 trillion and occurs to the right of $1 trillion.

The MPC is equal to

When prices are fixed and there are no imports or income taxes, the value of the multiplier is

Which of the following statements is FALSE?

At equilibrium expenditure, unplanned changes in inventory

An increase in the value of the multiplier can be caused by

Suppose that firms find that their inventories are less than planned. In this case, what is the initial relationship between aggregate planned expenditure and real GDP? Using the aggregate expenditure model, what adjustments, if any, take place?

If prices are fixed, an increase in aggregate expenditures results in an increase in equilibrium GDP that

-In the above table, savings equal zero when disposable income equals

Actual aggregate expenditures does not always equal real GDP.

The consumption function relates consumption expenditure to

Planned saving equals

In a simple economy in which prices are constant and with no income taxes or imports, the marginal propensity to save is 0.2. If exports increase $50, what impact will that have on aggregate expenditure?

If the MPC increases from 0.75 to 0.80 and there are no income taxes or imports,

Please explain the relationship between consumption, disposable income and saving.

Which of the following is NOT an autonomous expenditure in the aggregate expenditures model?

When disposable income equals consumption expenditure, then

The Keynesian model of aggregate expenditure describes the economy in

Explain the relationship between real GDP and aggregate planned expenditure, AE. What change to inventories takes place when the two are not equal?