Question 1

Consumption expenditure minus imports, which varies with real GDP, is

Accepted Answer

A) induced expenditure. 
B) unplanned consumption. 
C) autonomous expenditure. 
D) aggregate expenditure. 
E) planned consumption. 
A) induced expenditure. 
B) unplanned consumption. 
C) autonomous expenditure. 
D) aggregate expenditure. 
E) planned consumption.

Question 2

The multiplier can take on any value

Accepted Answer

A) only greater than 1. 
B) only between zero and 1. 
C) only between 1 and 2. 
D) greater than zero. 
E) only between - 1 and 1. 
A) only greater than 1. 
B) only between zero and 1. 
C) only between 1 and 2. 
D) greater than zero. 
E) only between - 1 and 1.

Question 3

Suppose the multiplier is 2 and the short- run aggregate supply curve is positively sloped.Investment increases by $10 billion.In the short run, equilibrium real GDP

Accepted Answer

A) does not change. 
B) increases by less than $20 billion. 
C) increases by more than $20 billion. 
D) decreases by less than $20 billion. 
E) increases by $20 billion. 
A) does not change. 
B) increases by less than $20 billion. 
C) increases by more than $20 billion. 
D) decreases by less than $20 billion. 
E) increases by $20 billion.

Question 4

As real GDP increases,

Accepted Answer

A) imports increase. 
B) planned investment increases. 
C) imports decrease. 
D) autonomous consumption increases. 
E) exports increase. 
A) imports increase. 
B) planned investment increases. 
C) imports decrease. 
D) autonomous consumption increases. 
E) exports increase.

Question 5

Use the figure below to answer the following questions.
   Figure 11.5.2
-Refer to Figure 11.5.2.The equation of the consumption function is

Accepted Answer

A) C = 200 + 0.25YD. 
B) C = 200 + 200YD. 
C) C = 200 + 0.75YD. 
D) C = 200 + 0.8YD. 
E) C = 200 + 800YD. 
A) C = 200 + 0.25YD. 
B) C = 200 + 200YD. 
C) C = 200 + 0.75YD. 
D) C = 200 + 0.8YD. 
E) C = 200 + 800YD.

Question 6

Everything else remaining the same, an increase in the marginal propensity to consume _______ the slope of the AE curve and _______ equilibrium expenditure.

Accepted Answer

A) decreases; decreases 
B) increases; increases 
C) increases; decreases 
D) decreases; increases 
E) does not change; does not change 
A) decreases; decreases 
B) increases; increases 
C) increases; decreases 
D) decreases; increases 
E) does not change; does not change

Question 7

Use the table below to answer the following questions.
Table 11.1.3
  
-In Table 11.1.3, at which of the following values of disposable income is there positive saving?

Accepted Answer

A) $200 
B) all values over $300 
C) $100 
D) zero 
E) all values under $300 
A) $200 
B) all values over $300 
C) $100 
D) zero 
E) all values under $300

Question 8

Use the figure below to answer the following questions.
   Figure 11.2.1
There are no exports or imports in this economy.
-Refer to Figure 11.2.1.When real GDP is equal to Yb, then aggregate planned expenditure is

Accepted Answer

A) less than real GDP, and real GDP decreases. 
B) greater than real GDP, and real GDP increases. 
C) equal to real GDP, and real GDP neither increases nor decreases. 
D) greater than real GDP, and real GDP decreases. 
E) less than real GDP, and real GDP increases. 
A) less than real GDP, and real GDP decreases. 
B) greater than real GDP, and real GDP increases. 
C) equal to real GDP, and real GDP neither increases nor decreases. 
D) greater than real GDP, and real GDP decreases. 
E) less than real GDP, and real GDP increases.

Question 9

The marginal propensity to consume is the

Accepted Answer

A) fraction of a change in disposable income that is spent on consumption. 
B) fraction of the first dollar of disposable income received that is consumed. 
C) fraction of the first dollar of disposable income received that is saved. 
D) total amount of consumption divided by the total amount of disposable income. 
E) fraction of the last dollar of disposable income received that is saved. 
A) fraction of a change in disposable income that is spent on consumption. 
B) fraction of the first dollar of disposable income received that is consumed. 
C) fraction of the first dollar of disposable income received that is saved. 
D) total amount of consumption divided by the total amount of disposable income. 
E) fraction of the last dollar of disposable income received that is saved.

Question 10

If the saving function is S = - 25 + 0.4YD, then autonomous consumption is

Accepted Answer

A) 0.6. 
B) 25. 
C) 10. 
D) - 25. 
E) 15. 
A) 0.6. 
B) 25. 
C) 10. 
D) - 25. 
E) 15.

Question 11

Which one of the following variables has an induced component?

Accepted Answer

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

Question 12

Use the figure below to answer the following questions.
   Figure 11.2.3
There are no taxes in this economy.
-In Figure 11.2.3, the marginal propensity to consume, assuming no income taxes, is

Accepted Answer

A) 1.0. 
B) 0.3. 
C) 0.9. 
D) 0.6. 
E) 0.93. 
A) 1.0. 
B) 0.3. 
C) 0.9. 
D) 0.6. 
E) 0.93.

Question 13

Use the figure below to answer the following questions.
   Figure 11.3.1
The economy shown in the graph does not engage in international trade and has no government.Planned aggregate expenditure equals the sum of consumption expenditure C) and investment I).
-Refer to Figure 11.3.1.At equilibrium induced expenditure equals

Accepted Answer

A) $50 billion. 
B) $100 billion. 
C) $25 billion. 
D) $200 billion. 
E) $150 billion. 
A) $50 billion. 
B) $100 billion. 
C) $25 billion. 
D) $200 billion. 
E) $150 billion.

Question 14

The marginal propensity to consume

Accepted Answer

A) is greater than 1 but less than 2. 
B) is negative if dissaving is present. 
C) is greater than 1 if dissaving is present. 
D) is between zero and 1. 
E) is between 1/2 and 1. 
A) is greater than 1 but less than 2. 
B) is negative if dissaving is present. 
C) is greater than 1 if dissaving is present. 
D) is between zero and 1. 
E) is between 1/2 and 1.

Question 15

Use the table below to answer the following questions.
Table 11.1.1
The following table shows the relationship between consumption expenditure C) and disposable income YD) for a hypothetical economy.  
-Refer to Table 11.1.1.Based on the information in the table, if YD is zero, then

Accepted Answer

A) consumption is zero. 
B) saving is zero. 
C) consumption is $100. 
D) consumption is $150. 
E) consumption is - $150. 
A) consumption is zero. 
B) saving is zero. 
C) consumption is $100. 
D) consumption is $150. 
E) consumption is - $150.

Question 16

Use the figure below to answer the following questions.
   Figure 11.3.1
The economy shown in the graph does not engage in international trade and has no government.Planned aggregate expenditure equals the sum of consumption expenditure C) and investment I).
-Refer to Figure 11.3.1.If investment increases by $25 billion, then real GDP increases by

Accepted Answer

A) $50 billion. 
B) $25 billion. 
C) $125 billion. 
D) $75 billion. 
E) $100 billion. 
A) $50 billion. 
B) $25 billion. 
C) $125 billion. 
D) $75 billion. 
E) $100 billion.

Question 17

Use the figure below to answer the following question.
   Figure 11.3.2
-In Figure 11.3.2, the multiplier is

Accepted Answer

A) 10. 
B) 1.00. 
C) 0.25. 
D) 2.50. 
E) 1.60. 
A) 10. 
B) 1.00. 
C) 0.25. 
D) 2.50. 
E) 1.60.

Question 18

The marginal propensity to import is calculated as

Accepted Answer

A) imports divided by real GDP. 
B) the change in imports divided by real GDP. 
C) imports divided by the change in real GDP. 
D) 1- MPC. 
E) the change in imports divided by the change in real GDP. 
A) imports divided by real GDP. 
B) the change in imports divided by real GDP. 
C) imports divided by the change in real GDP. 
D) 1- MPC. 
E) the change in imports divided by the change in real GDP.

Question 19

Use the information below to answer the following questions.
Fact 11.5.1
An economy has a consumption function of C = 10 + 0.8Y, investment equal to 6, government expenditure equal to 10, exports equal to 10, and an import function of M = 0.1Y.
-Refer to Fact 11.5.1.What is the equation for the aggregate expenditure curve for this economy?

Accepted Answer

A) AE = 26 + 0.8Y 
B) AE = 16 + 0.7Y 
C) AE = 36 + 0.7Y 
D) AE = 36 - 0.7Y 
E) AE = 36 + 0.9Y 
A) AE = 26 + 0.8Y 
B) AE = 16 + 0.7Y 
C) AE = 36 + 0.7Y 
D) AE = 36 - 0.7Y 
E) AE = 36 + 0.9Y

Question 20

Use the information below to answer the following questions.
Fact 11.5.2
An economy has a consumption function of C = 15 + 0.7Y , investment equal to 8, government expenditure equal to 12, exports equal to 20, and an import function of M = 0.2Y.
-Refer to Fact 11.5.2.What is the multiplier for this economy?

Accepted Answer

A) 1 
B) 10 
C) 3.33 
D) 2 
E) 0.5 
A) 1 
B) 10 
C) 3.33 
D) 2 
E) 0.5

Consumption expenditure minus imports, which varies with real GDP, is

The multiplier can take on any value

Suppose the multiplier is 2 and the short- run aggregate supply curve is positively sloped.Investment increases by $10 billion.In the short run, equilibrium real GDP

As real GDP increases,

Use the figure below to answer the following questions. Figure 11.5.2 -Refer to Figure 11.5.2.The equation of the consumption function is

Everything else remaining the same, an increase in the marginal propensity to consume _ the slope of the AE curve and _ equilibrium expenditure.

Use the table below to answer the following questions. Table 11.1.3 -In Table 11.1.3, at which of the following values of disposable income is there positive saving?

Use the figure below to answer the following questions. Figure 11.2.1 There are no exports or imports in this economy. -Refer to Figure 11.2.1.When real GDP is equal to Y_b, then aggregate planned expenditure is

The marginal propensity to consume is the

If the saving function is S = - 25 + 0.4YD, then autonomous consumption is

Which one of the following variables has an induced component?

Use the figure below to answer the following questions. Figure 11.2.3 There are no taxes in this economy. -In Figure 11.2.3, the marginal propensity to consume, assuming no income taxes, is

The marginal propensity to consume

Use the table below to answer the following questions. Table 11.1.1 The following table shows the relationship between consumption expenditure C) and disposable income YD) for a hypothetical economy. -Refer to Table 11.1.1.Based on the information in the table, if YD is zero, then

Use the figure below to answer the following question. Figure 11.3.2 -In Figure 11.3.2, the multiplier is

The marginal propensity to import is calculated as

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 11: Expenditure Multipliers

Consumption expenditure minus imports, which varies with real GDP, is

The multiplier can take on any value

Suppose the multiplier is 2 and the short- run aggregate supply curve is positively sloped.Investment increases by $10 billion.In the short run, equilibrium real GDP

As real GDP increases,

Use the figure below to answer the following questions. Figure 11.5.2 -Refer to Figure 11.5.2.The equation of the consumption function is

Everything else remaining the same, an increase in the marginal propensity to consume _______ the slope of the AE curve and _______ equilibrium expenditure.

Use the table below to answer the following questions. Table 11.1.3 -In Table 11.1.3, at which of the following values of disposable income is there positive saving?

Use the figure below to answer the following questions. Figure 11.2.1 There are no exports or imports in this economy. -Refer to Figure 11.2.1.When real GDP is equal to Yb, then aggregate planned expenditure is

The marginal propensity to consume is the

If the saving function is S = - 25 + 0.4YD, then autonomous consumption is

Which one of the following variables has an induced component?

Use the figure below to answer the following questions. Figure 11.2.3 There are no taxes in this economy. -In Figure 11.2.3, the marginal propensity to consume, assuming no income taxes, is

The marginal propensity to consume

Use the table below to answer the following questions. Table 11.1.1 The following table shows the relationship between consumption expenditure C) and disposable income YD) for a hypothetical economy. -Refer to Table 11.1.1.Based on the information in the table, if YD is zero, then

Use the figure below to answer the following question. Figure 11.3.2 -In Figure 11.3.2, the multiplier is

The marginal propensity to import is calculated as

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Everything else remaining the same, an increase in the marginal propensity to consume _ the slope of the AE curve and _ equilibrium expenditure.

Use the figure below to answer the following questions. Figure 11.2.1 There are no exports or imports in this economy. -Refer to Figure 11.2.1.When real GDP is equal to Y_b, then aggregate planned expenditure is