Question 1

If prices are fixed, when aggregate planned expenditure exceeds real GDP, then

Accepted Answer

A)  inventories increase, signaling firms to decrease production and decrease real GDP. 
B)  inventories decrease, signaling firms to increase production and increase real GDP. 
C)  profits fall, signaling firms to decrease production and decrease real GDP. 
D)  None of the above answers are correct. 
A)  inventories increase, signaling firms to decrease production and decrease real GDP. 
B)  inventories decrease, signaling firms to increase production and increase real GDP. 
C)  profits fall, signaling firms to decrease production and decrease real GDP. 
D)  None of the above answers are correct.

Question 2

-In the above figure, if the level of real GDP is $11 trillion,

Accepted Answer

A)  inventories are equal to the levels planned by firms. 
B)  planned expenditures are zero. 
C)  inventories are below the levels planned by firms. 
D)  inventories are above the levels planned by firms. 
A)  inventories are equal to the levels planned by firms. 
B)  planned expenditures are zero. 
C)  inventories are below the levels planned by firms. 
D)  inventories are above the levels planned by firms.

Question 3

1 - MPC equals

Accepted Answer

A)  autonomous consumption. 
B)  induced consumption. 
C)  the marginal propensity to save. 
D)  the net national product. 
A)  autonomous consumption. 
B)  induced consumption. 
C)  the marginal propensity to save. 
D)  the net national product.

Question 4

-In the above figure, autonomous consumption equals

Accepted Answer

A)  $4 trillion. 
B)  -$4 trillion. 
C)  $12 trillion. 
D)  0. 
A)  $4 trillion. 
B)  -$4 trillion. 
C)  $12 trillion. 
D)  0.

Question 5

A movement along the saving function occurs when

Accepted Answer

A)  disposable income decreases. 
B)  wealth increases. 
C)  the real interest rate rises. 
D)  None of the above answers is correct. 
A)  disposable income decreases. 
B)  wealth increases. 
C)  the real interest rate rises. 
D)  None of the above answers is correct.

Question 6

$$\begin{array} { | l | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Real } \
\text { GDP }
\end{array} & C & I & G & X - M \
\hline 2500 & 1430 & 540 & 400 & 90 \
\hline 2400 & 1360 & 540 & 400 & 100 \
\hline 2300 & 1290 & 540 & 400 & 110 \
\hline 2200 & 1220 & 540 & 400 & 120 \
\hline 2100 & 1150 & 540 & 400 & 130 \
\hline
\end{array}$$
-In the above table, C is consumption expenditure, I is investment, G is government expenditure, and X - M is net exports. All entries are in dollars. The equilibrium level of real GDP is

Accepted Answer

A)  $2,400. 
B)  $2,300. 
C)  $2,500. 
D)  $2,200. 
A)  $2,400. 
B)  $2,300. 
C)  $2,500. 
D)  $2,200.

Question 7

The multiplier is 5.0 and autonomous expenditure increases by $30 billion. If potential real GDP is unaffected, in the long run, equilibrium real GDP will

Accepted Answer

A)  not change. 
B)  increase by more than $50 billion. 
C)  increase by $50 billion. 
D)  increase by less than $50 billion. 
A)  not change. 
B)  increase by more than $50 billion. 
C)  increase by $50 billion. 
D)  increase by less than $50 billion.

Question 8

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 9

$$\begin{array} { | l | l | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Real } \
\text { GDP }
\end{array} & C & I & G & X & M \
\hline 100 & 75 & 25 & 95 & 10 & 1 \
\hline 200 & 150 & 25 & 95 & 10 & 2 \
\hline 300 & 225 & 25 & 95 & 10 & 3 \
\hline 400 & 300 & 25 & 95 & 10 & 4 \
\hline 500 & 375 & 25 & 95 & 10 & 5 \
\hline 600 & 450 & 25 & 95 & 10 & 6 \
\hline 700 & 525 & 25 & 95 & 10 & 7 \
\hline 800 & 600 & 25 & 95 & 10 & 8 \
\hline 900 & 675 & 25 & 95 & 10 & 9 \
\hline 1000 & 750 & 25 & 95 & 10 & 10 \
\hline
\end{array}$$
-In the above table, C is consumption expenditure, I is investment, G is government expenditure, X is exports, and M is imports. All entries are in dollars. What is the level of aggregate planned expenditure when real GDP is equal to $900 billion?

Accepted Answer

A)  $796 
B)  $1,714 
C)  $675 
D)  $814 
A)  $796 
B)  $1,714 
C)  $675 
D)  $814

Question 10

If planned expenditures equal $13 trillion when real GDP is $13.5 trillion, then

Accepted Answer

A)  there will be excess demand for most goods. 
B)  actual investment will exceed planned investment. 
C)  inventories will decrease by $0.5 trillion. 
D)  the economy must have a trade surplus to sell the excess goods and services. 
A)  there will be excess demand for most goods. 
B)  actual investment will exceed planned investment. 
C)  inventories will decrease by $0.5 trillion. 
D)  the economy must have a trade surplus to sell the excess goods and services.

Question 11

All else being constant, autonomous expenditure

Accepted Answer

A)  is assumed to be zero. 
B)  does not change with changes in real GDP. 
C)  increases as real GDP decreases. 
D)  increases as real GDP increases. 
A)  is assumed to be zero. 
B)  does not change with changes in real GDP. 
C)  increases as real GDP decreases. 
D)  increases as real GDP increases.

Question 12

In the very short term, in the Keynesian model, which of the following is fixed and does not change when GDP changes?

Accepted Answer

A)  planned investment 
B)  planned imports 
C)  planned consumption 
D)  All of the above answers are correct 
A)  planned investment 
B)  planned imports 
C)  planned consumption 
D)  All of the above answers are correct

Question 13

The graph of the aggregate expenditure curve has_________ on the y-axis and _________on the
X- axis.

Accepted Answer

A)  aggregate planned expenditure; real GDP 
B)  aggregate actual expenditure; real GDP 
C)  household expenditures; real GDP 
D)  real GDP; aggregate planned expenditure 
A)  aggregate planned expenditure; real GDP 
B)  aggregate actual expenditure; real GDP 
C)  household expenditures; real GDP 
D)  real GDP; aggregate planned expenditure

Question 14

If firmsʹ inventories are less than they planned, aggregate planned expenditure is___________ real GDP and firms___________ their production.

Accepted Answer

A)  less than; increase 
B)  greater than; increase 
C)  less than; decrease 
D)  greater than; decrease 
A)  less than; increase 
B)  greater than; increase 
C)  less than; decrease 
D)  greater than; decrease

Question 15

List and explain factors that determine the size of the multiplier in the aggregate expenditure model when prices are constant.

Accepted Answer

The size of the multiplier depends on th

Question 16

The slope of the consumption function is

Accepted Answer

A)  less than the slope of the 45-degree line but not equal to zero. 
B)  equal to zero. 
C)  greater than the slope of the 45-degree line. 
D)  equal to the slope of the 45-degree line. 
A)  less than the slope of the 45-degree line but not equal to zero. 
B)  equal to zero. 
C)  greater than the slope of the 45-degree line. 
D)  equal to the slope of the 45-degree line.

Question 17

The marginal propensity to save MPS) is equal to the

Accepted Answer

A)  slope of the 45 degree. 
B)  difference between consumption and income. 
C)  slope of the savings function. 
D)  reciprocal value of the MPC. 
A)  slope of the 45 degree. 
B)  difference between consumption and income. 
C)  slope of the savings function. 
D)  reciprocal value of the MPC.

Question 18

A change in imports caused by rising U.S. incomes is

Accepted Answer

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

Question 19

If the multiplier is 3.33 and there are no imports or income taxes, then 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 20

Autonomous consumption

Accepted Answer

A)  increases with income. 
B)  decreases with income. 
C)  is independent of income and must be equal to zero. 
D)  is independent of income. 
A)  increases with income. 
B)  decreases with income. 
C)  is independent of income and must be equal to zero. 
D)  is independent of income.

If prices are fixed, when aggregate planned expenditure exceeds real GDP, then

-In the above figure, if the level of real GDP is $11 trillion,

1 - MPC equals

-In the above figure, autonomous consumption equals

A movement along the saving function occurs when

The multiplier is 5.0 and autonomous expenditure increases by $30 billion. If potential real GDP is unaffected, in the long run, equilibrium real GDP will

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

If planned expenditures equal $13 trillion when real GDP is $13.5 trillion, then

All else being constant, autonomous expenditure

In the very short term, in the Keynesian model, which of the following is fixed and does not change when GDP changes?

The graph of the aggregate expenditure curve has_ on the y-axis and _on the X- axis.

If firmsʹ inventories are less than they planned, aggregate planned expenditure is_ real GDP and firms_ their production.

List and explain factors that determine the size of the multiplier in the aggregate expenditure model when prices are constant.

The slope of the consumption function is

The marginal propensity to save MPS) is equal to the

A change in imports caused by rising U.S. incomes is

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

Autonomous consumption

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

Review

Filters

Exam 11: Expenditure Multipliers: the Keynesian Model

If prices are fixed, when aggregate planned expenditure exceeds real GDP, then

-In the above figure, if the level of real GDP is $11 trillion,

1 - MPC equals

-In the above figure, autonomous consumption equals

A movement along the saving function occurs when

The multiplier is 5.0 and autonomous expenditure increases by $30 billion. If potential real GDP is unaffected, in the long run, equilibrium real GDP will

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

If planned expenditures equal $13 trillion when real GDP is $13.5 trillion, then

All else being constant, autonomous expenditure

In the very short term, in the Keynesian model, which of the following is fixed and does not change when GDP changes?

The graph of the aggregate expenditure curve has_________ on the y-axis and _________on the X- axis.

If firmsʹ inventories are less than they planned, aggregate planned expenditure is___________ real GDP and firms___________ their production.

List and explain factors that determine the size of the multiplier in the aggregate expenditure model when prices are constant.

The slope of the consumption function is

The marginal propensity to save MPS) is equal to the

A change in imports caused by rising U.S. incomes is

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

Autonomous consumption

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

Review

Filters

The graph of the aggregate expenditure curve has_ on the y-axis and _on the X- axis.

If firmsʹ inventories are less than they planned, aggregate planned expenditure is_ real GDP and firms_ their production.