Question 1

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

Question 2

A consumption function shows a

Accepted Answer

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

Question 3

Imports and income taxes make the multiplier larger than it would otherwise be.

Accepted Answer

A) True 
 B)False

Question 4

If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion, then the multiplier is __________.

Accepted Answer

A)  0.625 
B)  $225 billion 
C)  2 
D)  $75 billion 
A)  0.625 
B)  $225 billion 
C)  2 
D)  $75 billion

Question 5

The marginal propensity to consume refers to

Accepted Answer

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

Question 6

-In the above figure, point d represents planned expenditures___________ real GDP.

Accepted Answer

A)  equal to 
B)  less than 
C)  greater than 
D)  There is not enough information to answer the question. 
A)  equal to 
B)  less than 
C)  greater than 
D)  There is not enough information to answer the question.

Question 7

If the MPC is .9 and there are no income taxes or imports, the multiplier for a change in autonomous expenditure equals

Accepted Answer

A)  9.0. 
B)  100.0. 
C)  0.1. 
D)  10.0. 
A)  9.0. 
B)  100.0. 
C)  0.1. 
D)  10.0.

Question 8

-Suppose the price level is fixed. If investment increases by $1 trillion and the aggregate expenditure curve is shown in the figure above, in response equilibrium expenditure increases by_______________

Accepted Answer

A)  less than $1 trillion. 
B)  $3 trillion. 
C)  $1 trillion. 
D)  None of the above answers are correct. 
A)  less than $1 trillion. 
B)  $3 trillion. 
C)  $1 trillion. 
D)  None of the above answers are correct.

Question 9

Consumption expenditure decreases when _________decreases.

Accepted Answer

A)  saving 
B)  disposable income 
C)  the price level 
D)  the interest rate 
A)  saving 
B)  disposable income 
C)  the price level 
D)  the interest rate

Question 10

What is the relationship between the slope of the aggregate expenditure curve and the multiplier?

Accepted Answer

The multiplier equals¹. This re

Question 11

When autonomous expenditure decreases,___________.

Accepted Answer

A)  the AE curve shifts upward 
B)  the AE curve becomes less steep 
C)  the AE curve shifts downward 
D)  there is a movement down along the AE curve 
A)  the AE curve shifts upward 
B)  the AE curve becomes less steep 
C)  the AE curve shifts downward 
D)  there is a movement down along the AE curve

Question 12

The U.S. consumption function

Accepted Answer

A)  has a positive slope. 
B)  has shifted upward over time. 
C)  has a slope of about 0.9. 
D)  All of the above answers are correct. 
A)  has a positive slope. 
B)  has shifted upward over time. 
C)  has a slope of about 0.9. 
D)  All of the above answers are correct.

Question 13

The part of aggregate planned expenditure that does not vary with real GDP_________ .

Accepted Answer

A)  equals equilibrium expenditure 
B)  is induced expenditure 
C)  is autonomous expenditure 
D)  equals zero 
A)  equals equilibrium expenditure 
B)  is induced expenditure 
C)  is autonomous expenditure 
D)  equals zero

Question 14

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would

Accepted Answer

A)  increase. 
B)  stay the same but the AE curve would shift downwards. 
C)  decrease. 
D)  stay the same but the AE curve would shift upwards. 
A)  increase. 
B)  stay the same but the AE curve would shift downwards. 
C)  decrease. 
D)  stay the same but the AE curve would shift upwards.

Question 15

The multiplier is 2.5 and the SAS curve is upward sloping. Investment increases by $20 billion. In the short run, equilibrium real GDP will

Accepted Answer

A)  increase by $50 billion. 
B)  increase by less than $50 billion. 
C)  decrease by less than $50 billion. 
D)  decrease by $50 billion. 
A)  increase by $50 billion. 
B)  increase by less than $50 billion. 
C)  decrease by less than $50 billion. 
D)  decrease by $50 billion.

Question 16

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

Question 17

If investment increases by $300 and, in response, equilibrium aggregate expenditure increases by
$600, the multiplier is

Accepted Answer

A)  5. 
B)  2. 
C)  0.2. 
D)  0.5. 
A)  5. 
B)  2. 
C)  0.2. 
D)  0.5.

Question 18

The value of the marginal propensity to consume is

Accepted Answer

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

Question 19

The components of aggregate expenditure include
I. imports.
II. consumption.
III. government transfer payments.

Accepted Answer

A)  I, II and III 
B)  II only 
C)  I and II 
D)  II and III 
A)  I, II and III 
B)  II only 
C)  I and II 
D)  II and III

Question 20

Imports

Accepted Answer

A)  increase the size of the multiplier because imports are paid for by exports. 
B)  increase the size of the multiplier because imports make disposable income less than real GDP. 
C)  decrease the size of the multiplier because imports lead to an increase in taxes and government purchases. 
D)  decrease the size of the multiplier because spending on imports does not increase real GDP in the domestic nation. 
A)  increase the size of the multiplier because imports are paid for by exports. 
B)  increase the size of the multiplier because imports make disposable income less than real GDP. 
C)  decrease the size of the multiplier because imports lead to an increase in taxes and government purchases. 
D)  decrease the size of the multiplier because spending on imports does not increase real GDP in the domestic nation.

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

A consumption function shows a

Imports and income taxes make the multiplier larger than it would otherwise be.

If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion, then the multiplier is __________.

The marginal propensity to consume refers to

-In the above figure, point d represents planned expenditures___________ real GDP.

If the MPC is .9 and there are no income taxes or imports, the multiplier for a change in autonomous expenditure equals

-Suppose the price level is fixed. If investment increases by $1 trillion and the aggregate expenditure curve is shown in the figure above, in response equilibrium expenditure increases by_______________

Consumption expenditure decreases when _________decreases.

What is the relationship between the slope of the aggregate expenditure curve and the multiplier?

When autonomous expenditure decreases,___________.

The U.S. consumption function

The part of aggregate planned expenditure that does not vary with real GDP_________ .

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would

The multiplier is 2.5 and the SAS curve is upward sloping. Investment increases by $20 billion. In the short run, equilibrium real GDP will

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

If investment increases by $300 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is

The value of the marginal propensity to consume is

The components of aggregate expenditure include I. imports. II. consumption. III. government transfer payments.

Imports

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

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

A consumption function shows a

Imports and income taxes make the multiplier larger than it would otherwise be.

If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion, then the multiplier is __________.

The marginal propensity to consume refers to

-In the above figure, point d represents planned expenditures___________ real GDP.

If the MPC is .9 and there are no income taxes or imports, the multiplier for a change in autonomous expenditure equals

-Suppose the price level is fixed. If investment increases by $1 trillion and the aggregate expenditure curve is shown in the figure above, in response equilibrium expenditure increases by_______________

Consumption expenditure decreases when _________decreases.

What is the relationship between the slope of the aggregate expenditure curve and the multiplier?

When autonomous expenditure decreases,___________.

The U.S. consumption function

The part of aggregate planned expenditure that does not vary with real GDP_________ .

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would

The multiplier is 2.5 and the SAS curve is upward sloping. Investment increases by $20 billion. In the short run, equilibrium real GDP will

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

If investment increases by $300 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is

The value of the marginal propensity to consume is

The components of aggregate expenditure include I. imports. II. consumption. III. government transfer payments.

Imports

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