Question 1

The fraction of a change in disposable income that is saved is the

Accepted Answer

A) marginal tax rate. 
B) marginal propensity to dispose. 
C) marginal propensity to save. 
D) saving function. 
E) marginal propensity to consume. 
A) marginal tax rate. 
B) marginal propensity to dispose. 
C) marginal propensity to save. 
D) saving function. 
E) marginal propensity to consume.

Question 2

Use the figure below to answer the following questions.
   Figure 11.1.1
This figure describes the relationship between consumption expenditure and disposable income for an economy.
-Refer to Figure 11.1.1.When disposable income is $500 billion, saving is equal to

Accepted Answer

A) $20 billion. 
B) consumption expenditure. 
C) zero. 
D) $40 billion. 
E) disposable income. 
A) $20 billion. 
B) consumption expenditure. 
C) zero. 
D) $40 billion. 
E) disposable income.

Question 3

If there is an unplanned increase in inventories, aggregate planned expenditure is

Accepted Answer

A) greater than real GDP and firms decrease production. 
B) less than real GDP and firms increase production. 
C) less than real GDP and firms decrease production. 
D) greater than real GDP and firms increase production. 
E) less than real GDP and firms decrease investment. 
A) greater than real GDP and firms decrease production. 
B) less than real GDP and firms increase production. 
C) less than real GDP and firms decrease production. 
D) greater than real GDP and firms increase production. 
E) less than real GDP and firms decrease investment.

Question 4

Suppose there is an increase in exports.Assuming the price level is held constant, which one of the following best describes the sequence of changes in the economy?

Accepted Answer

A) Induced expenditure increases, real GDP increases, autonomous expenditure increases, real GDP increases more, autonomous expenditure increases again, etc. 
B) Induced expenditure increases, real GDP increases, autonomous expenditure increases, and the price level increases, lowering autonomous expenditure and real GDP increases by a smaller amount. 
C) Induced expenditure increases, autonomous expenditure increases, real GDP increases, and consumption increases. 
D) Autonomous expenditure increases, real GDP increases, induced expenditure increases, real GDP increases more, induced expenditure increases again, and the process continues until equilibrium expenditure is reached. 
E) Autonomous expenditure increases, induced expenditure increases, real GDP increases, and the price level rises. 
A) Induced expenditure increases, real GDP increases, autonomous expenditure increases, real GDP increases more, autonomous expenditure increases again, etc. 
B) Induced expenditure increases, real GDP increases, autonomous expenditure increases, and the price level increases, lowering autonomous expenditure and real GDP increases by a smaller amount. 
C) Induced expenditure increases, autonomous expenditure increases, real GDP increases, and consumption increases. 
D) Autonomous expenditure increases, real GDP increases, induced expenditure increases, real GDP increases more, induced expenditure increases again, and the process continues until equilibrium expenditure is reached. 
E) Autonomous expenditure increases, induced expenditure increases, real GDP increases, and the price level rises.

Question 5

Use the table below to answer the following questions.
Table 11.3.1
The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld.
  
-Refer to Table 11.3.1.If investment increases by $25 billion, the real GDP becomes

Accepted Answer

A) $525 billion. 
B) $725 billion. 
C) $675 billion. 
D) $600 billion. 
E) $625 billion. 
A) $525 billion. 
B) $725 billion. 
C) $675 billion. 
D) $600 billion. 
E) $625 billion.

Question 6

Use the information below to answer the following questions.
Fact 11.3.1
An economy has a fixed price level, no imports, and no income taxes.MPC is 0.5 and real GDP is $200 billion.Businesses incr investment by $2 billion.
-Consider Fact 11.3.1.The multiplier is

Accepted Answer

A) 2.0. 
B) 0.8. 
C) 0.5. 
D) 2.5. 
E) 0.75 
A) 2.0. 
B) 0.8. 
C) 0.5. 
D) 2.5. 
E) 0.75

Question 7

The components of aggregate expenditure that are influenced by real GDP are

Accepted Answer

A) consumption expenditure and imports. 
B) consumption expenditure, investment, and imports. 
C) wages, transfer payments, and government expenditure. 
D) consumption expenditure, government expenditure, investment, and imports. 
E) investment, exports, and imports. 
A) consumption expenditure and imports. 
B) consumption expenditure, investment, and imports. 
C) wages, transfer payments, and government expenditure. 
D) consumption expenditure, government expenditure, investment, and imports. 
E) investment, exports, and imports.

Question 8

In an economy, autonomous spending is $20 trillion and the slope of the AE curve is 0.8.The equation of the AE curve is

Accepted Answer

A) AE = 20 - 0.8Y. 
B) AE = 20 + 0.8Y. 
C) AE = 0.2Y- 20. 
D) AE = 0.8Y - 20. 
E) AE = 20 + 0.2Y. 
A) AE = 20 - 0.8Y. 
B) AE = 20 + 0.8Y. 
C) AE = 0.2Y- 20. 
D) AE = 0.8Y - 20. 
E) AE = 20 + 0.2Y.

Question 9

The sum of the marginal propensity to save and the marginal propensity to consume

Accepted Answer

A) always equals 0. 
B) never equals 1. 
C) is greater than zero but less than 1. 
D) always equals 1. 
E) sometimes equals 1. 
A) always equals 0. 
B) never equals 1. 
C) is greater than zero but less than 1. 
D) always equals 1. 
E) sometimes equals 1.

Question 10

Use the table below to answer the following questions.
Table 11.3.1
The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld.
  
-Refer to Table 11.3.1.What is the slope of the AE curve?

Accepted Answer

A) 0.6 
B) 1 
C) 1.3 
D) 0.8 
E) 0.75 
A) 0.6 
B) 1 
C) 1.3 
D) 0.8 
E) 0.75

Question 11

The formula for the multiplier in an open economy is

Accepted Answer

A) 1/1 + marginal propensity to import). 
B) 1/1 - slope of the AE curve). 
C) 1/1 - marginal propensity to import). 
D) 1/1 - MP
C) . 
E) 1/1 + slope of the AE curve). 
A) 1/1 + marginal propensity to import). 
B) 1/1 - slope of the AE curve). 
C) 1/1 - marginal propensity to import). 
D) 1/1 - MP
C) . 
E) 1/1 + slope of the AE curve).

Question 12

Use the figure below to answer the following questions.
   Figure 11.2.2
The economy depicted does not engage in international trade and has no government.Planned aggregate expenditure AE) is equal to the sum of consumption expenditure C) and investment I).
-Refer to Figure 11.2.2.When real GDP is $300 billion, real GDP

Accepted Answer

A) exceeds aggregate planned expenditure by $50 billion, and firms increase production. 
B) is the same as aggregate planned expenditure, and firms do not change production. 
C) is less than aggregate planned expenditure by $25 billion, and firms decrease production. 
D) exceeds aggregate planned expenditure by $25 billion, and firms increase production. 
E) exceeds aggregate planned expenditure by $25 billion, and firms decrease production. 
A) exceeds aggregate planned expenditure by $50 billion, and firms increase production. 
B) is the same as aggregate planned expenditure, and firms do not change production. 
C) is less than aggregate planned expenditure by $25 billion, and firms decrease production. 
D) exceeds aggregate planned expenditure by $25 billion, and firms increase production. 
E) exceeds aggregate planned expenditure by $25 billion, and firms decrease production.

Question 13

Use the table below to answer the following questions.
Table 11.3.1
The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld.
  
-Refer to Table 11.3.1.The equilibrium level of real GDP is

Accepted Answer

A) $600 billion. 
B) $550 billion. 
C) $525 billion. 
D) $450 billion. 
E) $500 billion. 
A) $600 billion. 
B) $550 billion. 
C) $525 billion. 
D) $450 billion. 
E) $500 billion.

Question 14

When firms plan to restock their inventories, equilibrium expenditure_______ and real GDP_______.

Accepted Answer

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

Question 15

Use the information below to answer the following questions.
Fact 11.1.1
In an economy, when disposable income increases from $400 billion to $500 billion, consumption expenditure increases from billion to $540 billion.
-Consider Fact 11.1.1.When disposable income increases from $400 billion to $500 billion, saving

Accepted Answer

A) decreases by an unknown amount. 
B) decreases by $60 billion. 
C) increases by $60 billion. 
D) increases by $40 billion. 
E) increases by an unknown amount. 
A) decreases by an unknown amount. 
B) decreases by $60 billion. 
C) increases by $60 billion. 
D) increases by $40 billion. 
E) increases by an unknown amount.

Question 16

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.The marginal propensity to consume is

Accepted Answer

A) 0.75. 
B) increasing as YD increases. 
C) equal to 1 when YD equals $600. 
D) 0.25. 
E) 1.33. 
A) 0.75. 
B) increasing as YD increases. 
C) equal to 1 when YD equals $600. 
D) 0.25. 
E) 1.33.

Question 17

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 Yc, then aggregate planned expenditure is

Accepted Answer

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

Question 18

The multiplier shows that as _______ expenditure changes, real GDP changes by _______ amount.

Accepted Answer

A) induced; a smaller 
B) autonomous; an even larger 
C) induced; the same 
D) induced; an even larger 
E) autonomous; the same 
A) induced; a smaller 
B) autonomous; an even larger 
C) induced; the same 
D) induced; an even larger 
E) autonomous; the same

Question 19

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 Ya, then aggregate planned expenditure

Accepted Answer

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

Question 20

An economy has a fixed price level, no imports, and no income taxes.MPC is 0.5 and real GDP is $300 billion.Businesses increase investment by $10 billion.The new level of real GDP is

Accepted Answer

A) $305 billion. 
B) $5 billion. 
C) $320 billion. 
D) $20 billion. 
E) $300 billion. 
A) $305 billion. 
B) $5 billion. 
C) $320 billion. 
D) $20 billion. 
E) $300 billion.

The fraction of a change in disposable income that is saved is the

Use the figure below to answer the following questions. Figure 11.1.1 This figure describes the relationship between consumption expenditure and disposable income for an economy. -Refer to Figure 11.1.1.When disposable income is $500 billion, saving is equal to

If there is an unplanned increase in inventories, aggregate planned expenditure is

Suppose there is an increase in exports.Assuming the price level is held constant, which one of the following best describes the sequence of changes in the economy?

Use the table below to answer the following questions. Table 11.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 11.3.1.If investment increases by $25 billion, the real GDP becomes

Use the information below to answer the following questions. Fact 11.3.1 An economy has a fixed price level, no imports, and no income taxes.MPC is 0.5 and real GDP is $200 billion.Businesses incr investment by $2 billion. -Consider Fact 11.3.1.The multiplier is

The components of aggregate expenditure that are influenced by real GDP are

In an economy, autonomous spending is $20 trillion and the slope of the AE curve is 0.8.The equation of the AE curve is

The sum of the marginal propensity to save and the marginal propensity to consume

Use the table below to answer the following questions. Table 11.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 11.3.1.What is the slope of the AE curve?

The formula for the multiplier in an open economy is

Use the table below to answer the following questions. Table 11.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 11.3.1.The equilibrium level of real GDP is

When firms plan to restock their inventories, equilibrium expenditure_ and real GDP_.

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.The marginal propensity to consume is

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_c, then aggregate planned expenditure is

The multiplier shows that as _ expenditure changes, real GDP changes by _ amount.

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_a, then aggregate planned expenditure

An economy has a fixed price level, no imports, and no income taxes.MPC is 0.5 and real GDP is $300 billion.Businesses increase investment by $10 billion.The new level of real GDP 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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 11: Expenditure Multipliers

The fraction of a change in disposable income that is saved is the

Use the figure below to answer the following questions. Figure 11.1.1 This figure describes the relationship between consumption expenditure and disposable income for an economy. -Refer to Figure 11.1.1.When disposable income is $500 billion, saving is equal to

If there is an unplanned increase in inventories, aggregate planned expenditure is

Suppose there is an increase in exports.Assuming the price level is held constant, which one of the following best describes the sequence of changes in the economy?

Use the table below to answer the following questions. Table 11.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 11.3.1.If investment increases by $25 billion, the real GDP becomes

Use the information below to answer the following questions. Fact 11.3.1 An economy has a fixed price level, no imports, and no income taxes.MPC is 0.5 and real GDP is $200 billion.Businesses incr investment by $2 billion. -Consider Fact 11.3.1.The multiplier is

The components of aggregate expenditure that are influenced by real GDP are

In an economy, autonomous spending is $20 trillion and the slope of the AE curve is 0.8.The equation of the AE curve is

The sum of the marginal propensity to save and the marginal propensity to consume

Use the table below to answer the following questions. Table 11.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 11.3.1.What is the slope of the AE curve?

The formula for the multiplier in an open economy is

Use the table below to answer the following questions. Table 11.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 11.3.1.The equilibrium level of real GDP is

When firms plan to restock their inventories, equilibrium expenditure_______ and real GDP_______.

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.The marginal propensity to consume is

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 Yc, then aggregate planned expenditure is

The multiplier shows that as _______ expenditure changes, real GDP changes by _______ amount.

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 Ya, then aggregate planned expenditure

An economy has a fixed price level, no imports, and no income taxes.MPC is 0.5 and real GDP is $300 billion.Businesses increase investment by $10 billion.The new level of real GDP 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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

When firms plan to restock their inventories, equilibrium expenditure_ and real GDP_.

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_c, then aggregate planned expenditure is

The multiplier shows that as _ expenditure changes, real GDP changes by _ amount.

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_a, then aggregate planned expenditure