Question 1

-In the above figure, a change in autonomous consumption to $1 trillion with no change to the MPC
Would cause the consumption function to

Accepted Answer

A)  become flatter. 
B)  shift upward. 
C)  shift downward. 
D)  become steeper. 
A)  become flatter. 
B)  shift upward. 
C)  shift downward. 
D)  become steeper.

Question 2

An increase in disposable income

Accepted Answer

A)  shifts the saving function upward. 
B)  shifts the saving function downward. 
C)  results in a movement upward along the saving function. 
D)  results in a movement downward along the saving function. 
A)  shifts the saving function upward. 
B)  shifts the saving function downward. 
C)  results in a movement upward along the saving function. 
D)  results in a movement downward along the saving function.

Question 3

What is the difference between movements along the consumption function and shifts in the consumption function? What factor or factors lead to movements along the consumption function and what factor or factors lead to shifts in the consumption function?

Accepted Answer

The consumption function describes the r

Question 4

As disposable income increases, saving increases.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the equilibrium level of expenditure is $1,200. If real GDP is $1,400, then planned expenditures

Accepted Answer

A)  are equal to real GDP, and there will be no change in real GDP. 
B)  are less than real GDP, and real GDP will increase. 
C)  exceed real GDP, and real GDP will increase. 
D)  are less than real GDP, and real GDP will decrease. 
A)  are equal to real GDP, and there will be no change in real GDP. 
B)  are less than real GDP, and real GDP will increase. 
C)  exceed real GDP, and real GDP will increase. 
D)  are less than real GDP, and real GDP will decrease.

Question 6

"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 short run and real GDP will in the short run.

Accepted Answer

A)  downward; decrease; decrease 
B)  upward; decrease; decrease 
C)  downward; decrease; not change 
D)  upward; decrease; not change 
A)  downward; decrease; decrease 
B)  upward; decrease; decrease 
C)  downward; decrease; not change 
D)  upward; decrease; not change

Question 7

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

Accepted Answer

A)  at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment. 
B)  at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment. 
C)  at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment. 
D)  at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment. 
A)  at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment. 
B)  at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment. 
C)  at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment. 
D)  at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment.

Question 8

The relationship between aggregate planned expenditure and real GDP is called the

Accepted Answer

A)  consumption function. 
B)  dissaving function. 
C)  equilibrium function. 
D)  aggregate expenditure function. 
A)  consumption function. 
B)  dissaving function. 
C)  equilibrium function. 
D)  aggregate expenditure function.

Question 9

The sum of the components of aggregate expenditure that vary with real GDP is called

Accepted Answer

A)  autonomous expenditures. 
B)  induced expenditures. 
C)  the MPC. 
D)  autonomous consumption. 
A)  autonomous expenditures. 
B)  induced expenditures. 
C)  the MPC. 
D)  autonomous consumption.

Question 10

A consumption function shows a

Accepted Answer

A)  negative (inverse) relationship between consumption expenditure and saving. 
B)  positive (direct) relationship between consumption expenditure and price level. 
C)  positive (direct) relationship between consumption expenditure and disposable income. 
D)  negative (inverse) relationship between consumption expenditure and disposable income. 
A)  negative (inverse) relationship between consumption expenditure and saving. 
B)  positive (direct) relationship between consumption expenditure and price level. 
C)  positive (direct) relationship between consumption expenditure and disposable income. 
D)  negative (inverse) relationship between consumption expenditure and disposable income.

Question 11

The multiplier is the ratio of the

Accepted Answer

A)  change in induced expenditures to the change in autonomous expenditures. 
B)  equilibrium level of real GDP to the change in induced expenditures. 
C)  change in real GDP to the change in autonomous expenditures. 
D)  change in autonomous expenditures to the change in real GDP. 
A)  change in induced expenditures to the change in autonomous expenditures. 
B)  equilibrium level of real GDP to the change in induced expenditures. 
C)  change in real GDP to the change in autonomous expenditures. 
D)  change in autonomous expenditures to the change in real GDP.

Question 12

If the price level is constant, a change in investment has a multiplied impact on real GDP.

Accepted Answer

A) True 
 B)False

Question 13

An increase in investment by U.S. firms that is intended to maintain U.S. competitiveness in world markets is in the United States.

Accepted Answer

A)  a decrease in autonomous expenditure 
B)  an increase in autonomous expenditure 
C)  a decrease in induced expenditure 
D)  an increase in induced expenditure 
A)  a decrease in autonomous expenditure 
B)  an increase in autonomous expenditure 
C)  a decrease in induced expenditure 
D)  an increase in induced expenditure

Question 14

-In the above figure, equilibrium expenditure along AE2 is

Accepted Answer

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

Question 15

Define induced expenditure and autonomous expenditure. Which expenditure items are induced expenditure and which are autonomous expenditure?

Accepted Answer

Induced expenditure is aggregate expendi

Question 16

In the above figure, AE0 is the aggregate planned expenditure curve and then investment increases by an additional $2 trillion. As a result, the new equilibrium GDP will be

Accepted Answer

A)  $8 trillion. 
B)  $4 trillion. 
C)  $2 trillion. 
D)  None of the above answers is correct. 
A)  $8 trillion. 
B)  $4 trillion. 
C)  $2 trillion. 
D)  None of the above answers is correct.

Question 17

Autonomous expenditure refers to

Accepted Answer

A)  aggregate expenditure that does not change when real GDP changes. 
B)  changes in short- run aggregate supply. 
C)  aggregate expenditure solely prompted by policy. 
D)  aggregate expenditure that varies because of changes in real GDP. 
A)  aggregate expenditure that does not change when real GDP changes. 
B)  changes in short- run aggregate supply. 
C)  aggregate expenditure solely prompted by policy. 
D)  aggregate expenditure that varies because of changes in real GDP.

Question 18

The slope of the saving function is equal to the

Accepted Answer

A)  marginal propensity to consume divided by the marginal propensity to save. 
B)  marginal propensity to save. 
C)  marginal propensity to consume. 
D)  marginal propensity to save divided by the marginal propensity to consume. 
A)  marginal propensity to consume divided by the marginal propensity to save. 
B)  marginal propensity to save. 
C)  marginal propensity to consume. 
D)  marginal propensity to save divided by the marginal propensity to consume.

Question 19

Which of the following are included in autonomous expenditure?

Accepted Answer

A)  government expenditures 
B)  autonomous consumption expenditure 
C)  investment 
D)  all of the above 
A)  government expenditures 
B)  autonomous consumption expenditure 
C)  investment 
D)  all of the above

Question 20

In the short run, a factor that leads to changes in U.S. imports is

Accepted Answer

A)  the real interest rate. 
B)  the level of income in foreign nations. 
C)  U.S. exports. 
D)  U.S. real GDP. 
A)  the real interest rate. 
B)  the level of income in foreign nations. 
C)  U.S. exports. 
D)  U.S. real GDP.

-In the above figure, a change in autonomous consumption to $1 trillion with no change to the MPC Would cause the consumption function to

An increase in disposable income

What is the difference between movements along the consumption function and shifts in the consumption function? What factor or factors lead to movements along the consumption function and what factor or factors lead to shifts in the consumption function?

As disposable income increases, saving increases.

Suppose the equilibrium level of expenditure is $1,200. If real GDP is $1,400, then planned expenditures

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

The relationship between aggregate planned expenditure and real GDP is called the

The sum of the components of aggregate expenditure that vary with real GDP is called

A consumption function shows a

The multiplier is the ratio of the

If the price level is constant, a change in investment has a multiplied impact on real GDP.

An increase in investment by U.S. firms that is intended to maintain U.S. competitiveness in world markets is in the United States.

-In the above figure, equilibrium expenditure along AE₂is

Define induced expenditure and autonomous expenditure. Which expenditure items are induced expenditure and which are autonomous expenditure?

In the above figure, AE₀is the aggregate planned expenditure curve and then investment increases by an additional $2 trillion. As a result, the new equilibrium GDP will be

Autonomous expenditure refers to

The slope of the saving function is equal to the

Which of the following are included in autonomous expenditure?

In the short run, a factor that leads to changes in U.S. imports 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

-In the above figure, a change in autonomous consumption to $1 trillion with no change to the MPC Would cause the consumption function to

An increase in disposable income

What is the difference between movements along the consumption function and shifts in the consumption function? What factor or factors lead to movements along the consumption function and what factor or factors lead to shifts in the consumption function?

As disposable income increases, saving increases.

Suppose the equilibrium level of expenditure is $1,200. If real GDP is $1,400, then planned expenditures

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

The relationship between aggregate planned expenditure and real GDP is called the

The sum of the components of aggregate expenditure that vary with real GDP is called

A consumption function shows a

The multiplier is the ratio of the

If the price level is constant, a change in investment has a multiplied impact on real GDP.

An increase in investment by U.S. firms that is intended to maintain U.S. competitiveness in world markets is in the United States.

-In the above figure, equilibrium expenditure along AE2 is

Define induced expenditure and autonomous expenditure. Which expenditure items are induced expenditure and which are autonomous expenditure?

In the above figure, AE0 is the aggregate planned expenditure curve and then investment increases by an additional $2 trillion. As a result, the new equilibrium GDP will be

Autonomous expenditure refers to

The slope of the saving function is equal to the

Which of the following are included in autonomous expenditure?

In the short run, a factor that leads to changes in U.S. imports 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

-In the above figure, equilibrium expenditure along AE₂is

In the above figure, AE₀is the aggregate planned expenditure curve and then investment increases by an additional $2 trillion. As a result, the new equilibrium GDP will be