Question 1

-In the figure above, autonomous consumption is

Accepted Answer

A)  $4 trillion. 
B)  $6 trillion. 
C)  $2 trillion. 
D)  zero. 
A)  $4 trillion. 
B)  $6 trillion. 
C)  $2 trillion. 
D)  zero.

Question 2

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

Accepted Answer

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

Question 3

$$\begin{array} { | l | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Real } \
\text { GDP }
\end{array} & C & I & G & X - M \
\hline 2500 & 1430 & 540 & 400 & 90 \
\hline 2400 & 1360 & 540 & 400 & 100 \
\hline 2300 & 1290 & 540 & 400 & 110 \
\hline 2200 & 1220 & 540 & 400 & 120 \
\hline 2100 & 1150 & 540 & 400 & 130 \
\hline
\end{array}$$
-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 slope of the aggregate expenditure function is

Accepted Answer

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

Question 4

The slope of the aggregate expenditure curve is

Accepted Answer

A)  greater than 0 and less than 1. 
B)  0. 
C)  greater than 1. 
D)  1. 
A)  greater than 0 and less than 1. 
B)  0. 
C)  greater than 1. 
D)  1.

Question 5

The MPC is equal to

Accepted Answer

A)  △C / △S. 
B)  △S / △C. 
C)  △S / △YD. 
D)  △C / △YD. 
A)  △C / △S. 
B)  △S / △C. 
C)  △S / △YD. 
D)  △C / △YD.

Question 6

The multiplier measures the

Accepted Answer

A)  vertical shift in the aggregate demand curve from an increase in autonomous spending. 
B)  horizontal difference between two points on the same aggregate demand curve. 
C)  horizontal shift in the aggregate demand curve from an increase in autonomous spending. 
D)  vertical difference between two points on the same aggregate demand curve. 
A)  vertical shift in the aggregate demand curve from an increase in autonomous spending. 
B)  horizontal difference between two points on the same aggregate demand curve. 
C)  horizontal shift in the aggregate demand curve from an increase in autonomous spending. 
D)  vertical difference between two points on the same aggregate demand curve.

Question 7

For a household, the marginal propensity to save plus the marginal propensity to consume

Accepted Answer

A)  equals a number that is larger the larger the householdʹs disposable income. 
B)  equals 0. 
C)  equals 1. 
D)  equals a number that is smaller the larger the householdʹs disposable income. 
A)  equals a number that is larger the larger the householdʹs disposable income. 
B)  equals 0. 
C)  equals 1. 
D)  equals a number that is smaller the larger the householdʹs disposable income.

Question 8

In a simple economy in which prices are constant and with no income taxes or imports, the slope of the AE curve is 0.8. In order to increase real GDP by $500 billion, then

Accepted Answer

A)  saving needs to be reduced by $500 billion will lead to the increase of $500 billion. 
B)  an increase in investment of $200 billion will lead to the increase of $500 billion. 
C)  consumption expenditure needs to increase by $500 billion. 
D)  an increase in autonomous expenditure of $100 billion will lead to the increase of $500 billion. 
A)  saving needs to be reduced by $500 billion will lead to the increase of $500 billion. 
B)  an increase in investment of $200 billion will lead to the increase of $500 billion. 
C)  consumption expenditure needs to increase by $500 billion. 
D)  an increase in autonomous expenditure of $100 billion will lead to the increase of $500 billion.

Question 9

-In the above figure, the shift from AE0 to AE1 might have been caused by

Accepted Answer

A)  an increase in the price level. 
B)  an increase in the real interest rate. 
C)  an increase in government expenditures. 
D)  All of the above answers are correct. 
A)  an increase in the price level. 
B)  an increase in the real interest rate. 
C)  an increase in government expenditures. 
D)  All of the above answers are correct.

Question 10

Which of the following will NOT shift the consumption function upward?

Accepted Answer

A)  an increase in wealth 
B)  an increase in disposable income 
C)  a fall in the real interest rate 
D)  None of the above shift the consumption function upward. 
A)  an increase in wealth 
B)  an increase in disposable income 
C)  a fall in the real interest rate 
D)  None of the above shift the consumption function upward.

Question 11

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

Accepted Answer

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

Question 12

List the four components of aggregate expenditure. Explain the two -way link with real GDP.

Accepted Answer

The four components of aggregate expendi

Question 13

Suppose the economy has no income taxes or imports. How is the size of the expenditure multiplier related to the marginal propensity to consume? What is the multiplier if the MPC equals 0.25? If the MPC equals 0.50? If the MPC equals 0.90?

Accepted Answer

The answer of Suppose the economy has no income taxes...

Question 14

As disposable income increases, saving increases.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

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

Question 16

$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Disposable } \
\text { income } \
\text { (thousands of } \
\text { dollars) }
\end{array} & \begin{array} { l } 
\text { Consumption } \
\text { exp enditure } \
\text { (thousands of dollars) }
\end{array} \
\hline 200 & 225 \
\hline 300 & 300 \
\hline 400 & 375 \
\hline 500 & 450 \
\hline
\end{array}$$
-According to the data in the above table, what is the marginal propensity to consume?

Accepted Answer

A)  1. 
B)  100. 
C)  75. 
D)  0.75. 
A)  1. 
B)  100. 
C)  75. 
D)  0.75.

Question 17

The marginal propensity to consume is the_________

Accepted Answer

A)  amount saving increases when consumption expenditure decreases. 
B)  fraction of a change in consumption expenditure that is not saved. 
C)  fraction of a change in disposable income spent on consumption expenditure. 
D)  fraction of a change in saving spent on consumption expenditure. 
A)  amount saving increases when consumption expenditure decreases. 
B)  fraction of a change in consumption expenditure that is not saved. 
C)  fraction of a change in disposable income spent on consumption expenditure. 
D)  fraction of a change in saving spent on consumption expenditure.

Question 18

Because the short-run aggregate expenditure model assumes that the price level is _________, its predicted effect of changes in autonomous expenditure on equilibrium output is_________ than the prediction of the AD/SAS model.

Accepted Answer

A)  fixed; less 
B)  flexible; greater 
C)  fixed; greater 
D)  flexible; less 
A)  fixed; less 
B)  flexible; greater 
C)  fixed; greater 
D)  flexible; less

Question 19

-In the above figure, if real GDP is below $12 trillion, inventories will be

Accepted Answer

A)  below target levels, so firms increase production. 
B)  above target levels, so firms increase production. 
C)  above target levels, so firms decrease production. 
D)  below target levels, so firms decrease production. 
A)  below target levels, so firms increase production. 
B)  above target levels, so firms increase production. 
C)  above target levels, so firms decrease production. 
D)  below target levels, so firms decrease production.

Question 20

As real disposable income increases, consumption expenditure ___________and saving ___________.

Accepted Answer

A)  increases; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; increases 
A)  increases; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; increases

-In the figure above, autonomous consumption is

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

The slope of the aggregate expenditure curve is

The MPC is equal to

The multiplier measures the

For a household, the marginal propensity to save plus the marginal propensity to consume

In a simple economy in which prices are constant and with no income taxes or imports, the slope of the AE curve is 0.8. In order to increase real GDP by $500 billion, then

-In the above figure, the shift from AE₀to AE₁might have been caused by

Which of the following will NOT shift the consumption function upward?

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

List the four components of aggregate expenditure. Explain the two -way link with real GDP.

Suppose the economy has no income taxes or imports. How is the size of the expenditure multiplier related to the marginal propensity to consume? What is the multiplier if the MPC equals 0.25? If the MPC equals 0.50? If the MPC equals 0.90?

As disposable income increases, saving increases.

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

Disposable income (thousands of dollars) Consumption exp enditure (thousands of dollars) 200 225 300 300 400 375 500 450 -According to the data in the above table, what is the marginal propensity to consume?

The marginal propensity to consume is the_________

Because the short-run aggregate expenditure model assumes that the price level is _, its predicted effect of changes in autonomous expenditure on equilibrium output is_ than the prediction of the AD/SAS model.

-In the above figure, if real GDP is below $12 trillion, inventories will be

As real disposable income increases, consumption expenditure _and saving _.

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

-In the figure above, autonomous consumption is

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

The slope of the aggregate expenditure curve is

The MPC is equal to

The multiplier measures the

For a household, the marginal propensity to save plus the marginal propensity to consume

In a simple economy in which prices are constant and with no income taxes or imports, the slope of the AE curve is 0.8. In order to increase real GDP by $500 billion, then

-In the above figure, the shift from AE0 to AE1 might have been caused by

Which of the following will NOT shift the consumption function upward?

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

List the four components of aggregate expenditure. Explain the two -way link with real GDP.

Suppose the economy has no income taxes or imports. How is the size of the expenditure multiplier related to the marginal propensity to consume? What is the multiplier if the MPC equals 0.25? If the MPC equals 0.50? If the MPC equals 0.90?

As disposable income increases, saving increases.

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

Disposable income (thousands of dollars) Consumption exp enditure (thousands of dollars) 200 225 300 300 400 375 500 450 -According to the data in the above table, what is the marginal propensity to consume?

The marginal propensity to consume is the_________

Because the short-run aggregate expenditure model assumes that the price level is _________, its predicted effect of changes in autonomous expenditure on equilibrium output is_________ than the prediction of the AD/SAS model.

-In the above figure, if real GDP is below $12 trillion, inventories will be

As real disposable income increases, consumption expenditure ___________and saving ___________.

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

-In the above figure, the shift from AE₀to AE₁might have been caused by

Because the short-run aggregate expenditure model assumes that the price level is _, its predicted effect of changes in autonomous expenditure on equilibrium output is_ than the prediction of the AD/SAS model.

As real disposable income increases, consumption expenditure _and saving _.