Question 1

The aggregate demand curve

Accepted Answer

A)  slopes upward. 
B)  slopes downward. 
C)  is perfectly vertical. 
D)  is perfectly horizontal. 
A)  slopes upward. 
B)  slopes downward. 
C)  is perfectly vertical. 
D)  is perfectly horizontal.

Question 2

Which of the following occurs when party A would like to change his behavior if party B would change hers,and vice versa,and yet the two changes do not take place because the decisions of A and B are made independently?

Accepted Answer

A)  Moral hazard 
B)  Coordination failure 
C)  Leakage 
D)  Lemon problem 
A)  Moral hazard 
B)  Coordination failure 
C)  Leakage 
D)  Lemon problem

Question 3

Why does the aggregate demand curve slope downward?

Accepted Answer

The effect of higher prices on consumer

Question 4

If investment spending depends on GDP,this is called induced investment.

Accepted Answer

A) True 
 B)False

Question 5

As the multiplier process works through time,the size of the multiplier effect becomes

Accepted Answer

A)  larger. 
B)  smaller. 
C)  constant. 
D)  explosive. 
A)  larger. 
B)  smaller. 
C)  constant. 
D)  explosive.

Question 6

A rising price level should shift the expenditure schedule

Accepted Answer

A)  upward and decrease equilibrium real GDP. 
B)  downward and increase equilibrium real GDP. 
C)  downward and decrease equilibrium real GDP. 
D)  upward and increase equilibrium real GDP. 
A)  upward and decrease equilibrium real GDP. 
B)  downward and increase equilibrium real GDP. 
C)  downward and decrease equilibrium real GDP. 
D)  upward and increase equilibrium real GDP.

Question 7

Two variables that affect the slope of the aggregate demand curve are

Accepted Answer

A)  government purchases and real taxes. 
B)  tax rates and interest rates. 
C)  government purchases and interest rates. 
D)  exchange rates and income rates. 
A)  government purchases and real taxes. 
B)  tax rates and interest rates. 
C)  government purchases and interest rates. 
D)  exchange rates and income rates.

Question 8

The economic impact of the multiplier is ____,and then becomes ____.

Accepted Answer

A)  slow,faster 
B)  small,tiny 
C)  large,smaller 
D)  small,larger 
A)  slow,faster 
B)  small,tiny 
C)  large,smaller 
D)  small,larger

Question 9

Investment increases by $200 million and the value of MPC is 0.75.What would be the total increase in spending?

Accepted Answer

A)  $200 million 
B)  $266 million 
C)  $750 million 
D)  $800 million 
A)  $200 million 
B)  $266 million 
C)  $750 million 
D)  $800 million

Question 10

The oversimplified multiplier formula assumes that the

Accepted Answer

A)  level of consumption spending is fixed. 
B)  price level is fixed. 
C)  government spending is fixed. 
D)  net exports depend on income. 
A)  level of consumption spending is fixed. 
B)  price level is fixed. 
C)  government spending is fixed. 
D)  net exports depend on income.

Question 11

When demand for goods and services is high,firms are more likely to hire more workers.

Accepted Answer

A) True 
 B)False

Question 12

An expenditure schedule model with no government sector shows the relationship between

Accepted Answer

A)  C and national product. 
B)  C and disposable income. 
C)  C + I and national income. 
D)  GDP and disposable income. 
A)  C and national product. 
B)  C and disposable income. 
C)  C + I and national income. 
D)  GDP and disposable income.

Question 13

Businesses in the United States cut their investment projects by $30 billion.If the MPC is 2,what will be the impact on the national income (Y)?

Accepted Answer

A)  Y will fall by $15 billion. 
B)  Y will fall by $30 billion. 
C)  Y will fall by $60 billion. 
D)  Y will fall by $120 billion. 
A)  Y will fall by $15 billion. 
B)  Y will fall by $30 billion. 
C)  Y will fall by $60 billion. 
D)  Y will fall by $120 billion.

Question 14

Investment spending might be larger when GDP is higher.Such added investment as GDP rises is called

Accepted Answer

A)  mutual investment. 
B)  induced investment. 
C)  positive investment. 
D)  net investment. 
A)  mutual investment. 
B)  induced investment. 
C)  positive investment. 
D)  net investment.

Question 15

When the expenditure level is above the full employment level of GDP,a possible consequence is

Accepted Answer

A)  falling prices. 
B)  rising prices. 
C)  falling disposable income. 
D)  high levels of unemployment. 
A)  falling prices. 
B)  rising prices. 
C)  falling disposable income. 
D)  high levels of unemployment.

Question 16

The actual multiplier for the U.S.economy is estimated to be

Accepted Answer

A)  about 10. 
B)  approximately 5. 
C)  between 3 and 4. 
D)  less than 2. 
A)  about 10. 
B)  approximately 5. 
C)  between 3 and 4. 
D)  less than 2.

Question 17

John Maynard Keynes concluded that investment spending is determined by

Accepted Answer

A)  business confidence. 
B)  economic expectations. 
C)  psychological perceptions about the economy. 
D)  All of the above are correct. 
A)  business confidence. 
B)  economic expectations. 
C)  psychological perceptions about the economy. 
D)  All of the above are correct.

Question 18

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP,the multiplier is

Accepted Answer

A)  20. 
B)  50. 
C)  1.50. 
D)  5.00. 
A)  20. 
B)  50. 
C)  1.50. 
D)  5.00.

Question 19

An increase in the U.S.price level (foreign prices held constant)will cause a leftward shift in the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 20

If the government increases defense spending by $1 billion and the MPC is 0.8,how much additional spending will occur in the third "round" of spending?

Accepted Answer

A)  $640 million 
B)  $800 million 
C)  $1 billion 
D)  $1.8 billion 
A)  $640 million 
B)  $800 million 
C)  $1 billion 
D)  $1.8 billion

The aggregate demand curve

Which of the following occurs when party A would like to change his behavior if party B would change hers,and vice versa,and yet the two changes do not take place because the decisions of A and B are made independently?

Why does the aggregate demand curve slope downward?

If investment spending depends on GDP,this is called induced investment.

As the multiplier process works through time,the size of the multiplier effect becomes

A rising price level should shift the expenditure schedule

Two variables that affect the slope of the aggregate demand curve are

The economic impact of the multiplier is ,and then becomes .

Investment increases by $200 million and the value of MPC is 0.75.What would be the total increase in spending?

The oversimplified multiplier formula assumes that the

When demand for goods and services is high,firms are more likely to hire more workers.

An expenditure schedule model with no government sector shows the relationship between

Businesses in the United States cut their investment projects by $30 billion.If the MPC is 2,what will be the impact on the national income (Y)?

Investment spending might be larger when GDP is higher.Such added investment as GDP rises is called

When the expenditure level is above the full employment level of GDP,a possible consequence is

The actual multiplier for the U.S.economy is estimated to be

John Maynard Keynes concluded that investment spending is determined by

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP,the multiplier is

An increase in the U.S.price level (foreign prices held constant)will cause a leftward shift in the aggregate demand curve.

If the government increases defense spending by $1 billion and the MPC is 0.8,how much additional spending will occur in the third "round" of spending?

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

The aggregate demand curve

Which of the following occurs when party A would like to change his behavior if party B would change hers,and vice versa,and yet the two changes do not take place because the decisions of A and B are made independently?

Why does the aggregate demand curve slope downward?

If investment spending depends on GDP,this is called induced investment.

As the multiplier process works through time,the size of the multiplier effect becomes

A rising price level should shift the expenditure schedule

Two variables that affect the slope of the aggregate demand curve are

The economic impact of the multiplier is ____,and then becomes ____.

Investment increases by $200 million and the value of MPC is 0.75.What would be the total increase in spending?

The oversimplified multiplier formula assumes that the

When demand for goods and services is high,firms are more likely to hire more workers.

An expenditure schedule model with no government sector shows the relationship between

Businesses in the United States cut their investment projects by $30 billion.If the MPC is 2,what will be the impact on the national income (Y)?

Investment spending might be larger when GDP is higher.Such added investment as GDP rises is called

When the expenditure level is above the full employment level of GDP,a possible consequence is

The actual multiplier for the U.S.economy is estimated to be

John Maynard Keynes concluded that investment spending is determined by

If an increase in investment of $100 billion generates an increase of $500 billion in real GDP,the multiplier is

An increase in the U.S.price level (foreign prices held constant)will cause a leftward shift in the aggregate demand curve.

If the government increases defense spending by $1 billion and the MPC is 0.8,how much additional spending will occur in the third "round" of spending?

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

The economic impact of the multiplier is ,and then becomes .