Question 1

Movements along the consumption function are called

Accepted Answer

A)  autonomous consumption. 
B)  leakage consumption. 
C)  induced consumption. 
D)  injected consumption. 
A)  autonomous consumption. 
B)  leakage consumption. 
C)  induced consumption. 
D)  injected consumption.

Question 2

If the MPC is .67,then the oversimplified multiplier is

Accepted Answer

A)  7.60. 
B)  6.70. 
C)  3.00. 
D)  33. 
A)  7.60. 
B)  6.70. 
C)  3.00. 
D)  33.

Question 3

An expenditure schedule that lies below the full employment level of GDP will cause

Accepted Answer

A)  rising prices. 
B)  increasing output. 
C)  falling inventories. 
D)  falling prices. 
A)  rising prices. 
B)  increasing output. 
C)  falling inventories. 
D)  falling prices.

Question 4

The U.S.fiscal stimulus in 2009 did not increase GDP substantially because

Accepted Answer

A)  the Federal Reserve was decreasing interest rates and real world estimates for the multiplier might be less than one. 
B)  the Federal Reserve was increasing interest rates and real world estimates for the multiplier might be less than one. 
C)  state governments were decreasing spending and real world estimates for the multiplier might be less than one. 
D)  state governments were increasing spending and real world estimates for the multiplier might be less than one. 
A)  the Federal Reserve was decreasing interest rates and real world estimates for the multiplier might be less than one. 
B)  the Federal Reserve was increasing interest rates and real world estimates for the multiplier might be less than one. 
C)  state governments were decreasing spending and real world estimates for the multiplier might be less than one. 
D)  state governments were increasing spending and real world estimates for the multiplier might be less than one.

Question 5

An expenditure schedule shows the relationship between GDP and total output.

Accepted Answer

A) True 
 B)False

Question 6

In the standard 45-degree line expenditure model,the C + I line and the C line are parallel because,

Accepted Answer

A)  all I is assumed to be autonomous. 
B)  all I is assumed to be induced. 
C)  consumption depends on disposable income. 
D)  I rises with GDP at the same rate as C. 
A)  all I is assumed to be autonomous. 
B)  all I is assumed to be induced. 
C)  consumption depends on disposable income. 
D)  I rises with GDP at the same rate as C.

Question 7

At the equilibrium level of income it must be true that total

Accepted Answer

A)  income equals total spending. 
B)  product equals total output. 
C)  output equals total inventory. 
D)  income equals total saving. 
A)  income equals total spending. 
B)  product equals total output. 
C)  output equals total inventory. 
D)  income equals total saving.

Question 8

If the unemployed were hired,they would have the monies to purchase goods which would otherwise be unsold.​

Accepted Answer

A) True 
 B)False

Question 9

Differentiate between an induced increase in consumption and an autonomous increase in consumption.How are they represented on a graph?

Accepted Answer

An induced increase in consumption is an

Question 10

If total spending is greater than current output,GDP will rise.

Accepted Answer

A) True 
 B)False

Question 11

The economic impact of a change in spending,working through the multiplier,takes effect

Accepted Answer

A)  immediately. 
B)  very quickly,with a small number of rounds of spending. 
C)  after a very long period of time. 
D)  after multiple rounds of spending occur. 
A)  immediately. 
B)  very quickly,with a small number of rounds of spending. 
C)  after a very long period of time. 
D)  after multiple rounds of spending occur.

Question 12

A major reason for the existence of inflationary and deflationary gaps is that

Accepted Answer

A)  corporations do most of the nation's saving. 
B)  saving and investing are done by people with no social conscience. 
C)  consumers do most of the nation's saving. 
D)  saving and investing are done by different groups. 
A)  corporations do most of the nation's saving. 
B)  saving and investing are done by people with no social conscience. 
C)  consumers do most of the nation's saving. 
D)  saving and investing are done by different groups.

Question 13

In the basic 45-degree line model,what is the effect of an increase in the price level?

Accepted Answer

A)  There will be movement to the left on the expenditure line. 
B)  There will be movement to the right on the expenditure line. 
C)  The expenditure line will shift downward. 
D)  The expenditure line will shift upward. 
A)  There will be movement to the left on the expenditure line. 
B)  There will be movement to the right on the expenditure line. 
C)  The expenditure line will shift downward. 
D)  The expenditure line will shift upward.

Question 14

If the U.S.economy is experiencing falling price levels,the

Accepted Answer

A)  expenditure schedule will shift downward. 
B)  expenditure schedule will shift upward. 
C)  slope of the expenditure schedule increases. 
D)  slope of the expenditure schedule decreases. 
A)  expenditure schedule will shift downward. 
B)  expenditure schedule will shift upward. 
C)  slope of the expenditure schedule increases. 
D)  slope of the expenditure schedule decreases.

Question 15

If total spending is less than the value of total output,firms

Accepted Answer

A)  may decide to cut prices. 
B)  may increase production levels. 
C)  will tend to raise prices. 
D)  will notice inventories falling. 
A)  may decide to cut prices. 
B)  may increase production levels. 
C)  will tend to raise prices. 
D)  will notice inventories falling.

Question 16

Investment spending

Accepted Answer

A)  cannot be stimulated by decreasing the interest rate. 
B)  is often the cause of business fluctuations in the United States. 
C)  is a remarkably stable function of the level of real GDP. 
D)  is the primary solution to recessions and inflations,according to John Maynard Keynes. 
A)  cannot be stimulated by decreasing the interest rate. 
B)  is often the cause of business fluctuations in the United States. 
C)  is a remarkably stable function of the level of real GDP. 
D)  is the primary solution to recessions and inflations,according to John Maynard Keynes.

Question 17

Total expenditures can be written as C + I + G + (X − IM).

Accepted Answer

A) True 
 B)False

Question 18

A recessionary gap exists when the equilibrium level of GDP

Accepted Answer

A)  falls short of potential GDP. 
B)  equals potential GDP. 
C)  exceeds potential GDP. 
D)  causes inventory levels to fall. 
A)  falls short of potential GDP. 
B)  equals potential GDP. 
C)  exceeds potential GDP. 
D)  causes inventory levels to fall.

Question 19

Where does equilibrium occur in an income expenditure diagram? What would be the effect if production is at either on the left or right side of the equilibrium point?

Accepted Answer

Equilibrium occurs at appoint at which t

Question 20

Using the saving-investment approach,which of the following describes an equilibrium condition of GDP?

Accepted Answer

A)  I = X − IM 
B)  S = X − IM 
C)  I = S + (X − IM) 
D)  S = I + (X − IM) 
A)  I = X − IM 
B)  S = X − IM 
C)  I = S + (X − IM) 
D)  S = I + (X − IM)

Movements along the consumption function are called

If the MPC is .67,then the oversimplified multiplier is

An expenditure schedule that lies below the full employment level of GDP will cause

The U.S.fiscal stimulus in 2009 did not increase GDP substantially because

An expenditure schedule shows the relationship between GDP and total output.

In the standard 45-degree line expenditure model,the C + I line and the C line are parallel because,

At the equilibrium level of income it must be true that total

If the unemployed were hired,they would have the monies to purchase goods which would otherwise be unsold.

Differentiate between an induced increase in consumption and an autonomous increase in consumption.How are they represented on a graph?

If total spending is greater than current output,GDP will rise.

The economic impact of a change in spending,working through the multiplier,takes effect

A major reason for the existence of inflationary and deflationary gaps is that

In the basic 45-degree line model,what is the effect of an increase in the price level?

If the U.S.economy is experiencing falling price levels,the

If total spending is less than the value of total output,firms

Investment spending

Total expenditures can be written as C + I + G + (X − IM).

A recessionary gap exists when the equilibrium level of GDP

Where does equilibrium occur in an income expenditure diagram? What would be the effect if production is at either on the left or right side of the equilibrium point?

Using the saving-investment approach,which of the following describes an equilibrium condition of GDP?

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 9: Demand Side Equilibrium Unemployment Or Inflation

Movements along the consumption function are called

If the MPC is .67,then the oversimplified multiplier is

An expenditure schedule that lies below the full employment level of GDP will cause

The U.S.fiscal stimulus in 2009 did not increase GDP substantially because

An expenditure schedule shows the relationship between GDP and total output.

In the standard 45-degree line expenditure model,the C + I line and the C line are parallel because,

At the equilibrium level of income it must be true that total

If the unemployed were hired,they would have the monies to purchase goods which would otherwise be unsold.​

Differentiate between an induced increase in consumption and an autonomous increase in consumption.How are they represented on a graph?

If total spending is greater than current output,GDP will rise.

The economic impact of a change in spending,working through the multiplier,takes effect

A major reason for the existence of inflationary and deflationary gaps is that

In the basic 45-degree line model,what is the effect of an increase in the price level?

If the U.S.economy is experiencing falling price levels,the

If total spending is less than the value of total output,firms

Investment spending

Total expenditures can be written as C + I + G + (X − IM).

A recessionary gap exists when the equilibrium level of GDP

Where does equilibrium occur in an income expenditure diagram? What would be the effect if production is at either on the left or right side of the equilibrium point?

Using the saving-investment approach,which of the following describes an equilibrium condition of GDP?

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

If the unemployed were hired,they would have the monies to purchase goods which would otherwise be unsold.