Question 1

If net exports are reduced,the expenditure schedule will shift

Accepted Answer

A)  downward and equilibrium real GDP will rise. 
B)  upward and equilibrium real GDP will rise. 
C)  downward and equilibrium real GDP will fall. 
D)  upward and equilibrium real GDP will fall. 
A)  downward and equilibrium real GDP will rise. 
B)  upward and equilibrium real GDP will rise. 
C)  downward and equilibrium real GDP will fall. 
D)  upward and equilibrium real GDP will fall.

Question 2

If the price level rises,the effect on the expenditure schedule and equilibrium real GDP is to

Accepted Answer

A)  increase both. 
B)  decrease both. 
C)  shift the expenditure schedule upward and decrease equilibrium real GDP. 
D)  shift the expenditure schedule downward and increase equilibrium real GDP. 
A)  increase both. 
B)  decrease both. 
C)  shift the expenditure schedule upward and decrease equilibrium real GDP. 
D)  shift the expenditure schedule downward and increase equilibrium real GDP.

Question 3

Figure 9-5  
-If the shift in the C + I + (X − IM)in Figure 9-5 was caused by a 80 dollar increase in investment,then the multiplier is

Accepted Answer

A)  0. 
B)  2. 
C)  3. 
D)  4. 
E)  5. 
A)  0. 
B)  2. 
C)  3. 
D)  4. 
E)  5.

Question 4

The multiplier principle explains how

Accepted Answer

A)  any change in the economy will be magnified. 
B)  $1 invested will increase GDP by more than $1. 
C)  expenditures and incomes increase as investment increases. 
D)  All of the above are correct. 
A)  any change in the economy will be magnified. 
B)  $1 invested will increase GDP by more than $1. 
C)  expenditures and incomes increase as investment increases. 
D)  All of the above are correct.

Question 5

For a simple economy (no government,no foreign sector),the condition for equilibrium can be stated correctly as

Accepted Answer

A)  saving equals actual investment. 
B)  saving equals inventory accumulation. 
C)  saving equals planned investment. 
D)  inventory accumulation equals planned investment. 
A)  saving equals actual investment. 
B)  saving equals inventory accumulation. 
C)  saving equals planned investment. 
D)  inventory accumulation equals planned investment.

Question 6

If total spending is greater than the value of output,firms will

Accepted Answer

A)  cut prices. 
B)  decrease production levels. 
C)  tend to raise prices. 
D)  see inventories rise. 
A)  cut prices. 
B)  decrease production levels. 
C)  tend to raise prices. 
D)  see inventories rise.

Question 7

One of the possible consequences of the expenditure schedule lying below the level of full employment GDP is

Accepted Answer

A)  unemployment. 
B)  rising prices. 
C)  increasing production. 
D)  decreasing inventories. 
A)  unemployment. 
B)  rising prices. 
C)  increasing production. 
D)  decreasing inventories.

Question 8

In a capitalist market economy,the decision to save is made by the same people who make the major investment decisions.

Accepted Answer

A) True 
 B)False

Question 9

Using the standard 45-degree line diagram,how does an increase in investment spending effect the expenditure schedule?

Accepted Answer

A)  It shifts the expenditure schedule downward. 
B)  It shifts the expenditure schedule upward. 
C)  It increases the slope of the expenditure schedule. 
D)  It decreases the slope of the expenditure schedule. 
A)  It shifts the expenditure schedule downward. 
B)  It shifts the expenditure schedule upward. 
C)  It increases the slope of the expenditure schedule. 
D)  It decreases the slope of the expenditure schedule.

Question 10

The price level effects consumer spending through changes in real

Accepted Answer

A)  disposable income. 
B)  interest rates. 
C)  wealth. 
D)  GDP. 
A)  disposable income. 
B)  interest rates. 
C)  wealth. 
D)  GDP.

Question 11

According to Baumol and Blinder,the real-world multiplier will be smaller than 1/(1 − MPC)because the 1/(1 − MPC)measure is based on

Accepted Answer

A)  a model that ignores inflation associated with the expansion of income. 
B)  a model that ignores taxes that tend to change as income changes. 
C)  a model that ignores the effects of international trade. 
D)  all of the above. 
A)  a model that ignores inflation associated with the expansion of income. 
B)  a model that ignores taxes that tend to change as income changes. 
C)  a model that ignores the effects of international trade. 
D)  all of the above.

Question 12

If businesses spend an additional $150 billion for investment projects in 2010,what will be the impact on national income (Y)if the multiplier is 2?

Accepted Answer

A)  Y will increase by $50 billion. 
B)  Y will increase by $150 billion. 
C)  Y will increase by $300 billion. 
D)  Y will increase by $450 billion. 
A)  Y will increase by $50 billion. 
B)  Y will increase by $150 billion. 
C)  Y will increase by $300 billion. 
D)  Y will increase by $450 billion.

Question 13

Equilibrium GDP on the demand side occurs when total spending

Accepted Answer

A)  equals total production,and inventories are zero. 
B)  equals total production,and firms are unable to adjust inventories. 
C)  exceeds total production,and inventories are rising. 
D)  equals total production,and inventories remain at desired levels. 
E)  is less than total production,and inventories are falling. 
A)  equals total production,and inventories are zero. 
B)  equals total production,and firms are unable to adjust inventories. 
C)  exceeds total production,and inventories are rising. 
D)  equals total production,and inventories remain at desired levels. 
E)  is less than total production,and inventories are falling.

Question 14

A decrease in autonomous consumption would have the same effect on the expenditures schedule as a(n)

Accepted Answer

A)  decrease in investment. 
B)  increase in government purchases. 
C)  increase in net exports. 
D)  decrease in taxes 
A)  decrease in investment. 
B)  increase in government purchases. 
C)  increase in net exports. 
D)  decrease in taxes

Question 15

U.S.exports:

Accepted Answer

A)  rise as our GDP rises,and fall as our GDP falls​ 
B)  ​fall as our GDP rises,and rise as our GDP falls 
C)  ​are insensitive to our GDP 
D)  ​have no relation to our GDP 
A)  rise as our GDP rises,and fall as our GDP falls​ 
B)  ​fall as our GDP rises,and rise as our GDP falls 
C)  ​are insensitive to our GDP 
D)  ​have no relation to our GDP

Question 16

The slope of the aggregate demand curve illustrates that real GDP demanded will increase when

Accepted Answer

A)  the price level rises. 
B)  the price level falls. 
C)  real income rises. 
D)  real income falls. 
A)  the price level rises. 
B)  the price level falls. 
C)  real income rises. 
D)  real income falls.

Question 17

Figure 9-1  
-In Figure 9-1,at $7,000 billion real GDP,

Accepted Answer

A)  inventories are increasing. 
B)  spending falls short of output. 
C)  spending exceeds output. 
D)  Both a and b are correct. 
A)  inventories are increasing. 
B)  spending falls short of output. 
C)  spending exceeds output. 
D)  Both a and b are correct.

Question 18

In a simple,private economy,suppose that the MPC is .8 and investment rises by $20 million.At the new equilibrium,how much will saving have increased?

Accepted Answer

A)  $8 million 
B)  $16 million 
C)  $20 million 
D)  $80 million 
E)  $100 million 
A)  $8 million 
B)  $16 million 
C)  $20 million 
D)  $80 million 
E)  $100 million

Question 19

Inventory reductions caused by strong demand are signals to retailers to order more products.

Accepted Answer

A) True 
 B)False

Question 20

If retail managers are ordering extra merchandise from their wholesale distributors,then it is probably true that

Accepted Answer

A)  total output is greater than total spending. 
B)  price levels are decreasing. 
C)  inventory levels are increasing. 
D)  inventory levels are decreasing. 
A)  total output is greater than total spending. 
B)  price levels are decreasing. 
C)  inventory levels are increasing. 
D)  inventory levels are decreasing.

If net exports are reduced,the expenditure schedule will shift

If the price level rises,the effect on the expenditure schedule and equilibrium real GDP is to

Figure 9-5 -If the shift in the C + I + (X − IM)in Figure 9-5 was caused by a 80 dollar increase in investment,then the multiplier is

The multiplier principle explains how

For a simple economy (no government,no foreign sector),the condition for equilibrium can be stated correctly as

If total spending is greater than the value of output,firms will

One of the possible consequences of the expenditure schedule lying below the level of full employment GDP is

In a capitalist market economy,the decision to save is made by the same people who make the major investment decisions.

Using the standard 45-degree line diagram,how does an increase in investment spending effect the expenditure schedule?

The price level effects consumer spending through changes in real

According to Baumol and Blinder,the real-world multiplier will be smaller than 1/(1 − MPC)because the 1/(1 − MPC)measure is based on

If businesses spend an additional $150 billion for investment projects in 2010,what will be the impact on national income (Y)if the multiplier is 2?

Equilibrium GDP on the demand side occurs when total spending

A decrease in autonomous consumption would have the same effect on the expenditures schedule as a(n)

U.S.exports:

The slope of the aggregate demand curve illustrates that real GDP demanded will increase when

Figure 9-1 -In Figure 9-1,at $7,000 billion real GDP,

In a simple,private economy,suppose that the MPC is .8 and investment rises by $20 million.At the new equilibrium,how much will saving have increased?

Inventory reductions caused by strong demand are signals to retailers to order more products.

If retail managers are ordering extra merchandise from their wholesale distributors,then it is probably true that

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

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Exam 9: Demand Side Equilibrium Unemployment Or Inflation

If net exports are reduced,the expenditure schedule will shift

If the price level rises,the effect on the expenditure schedule and equilibrium real GDP is to

Figure 9-5 -If the shift in the C + I + (X − IM)in Figure 9-5 was caused by a 80 dollar increase in investment,then the multiplier is

The multiplier principle explains how

For a simple economy (no government,no foreign sector),the condition for equilibrium can be stated correctly as

If total spending is greater than the value of output,firms will

One of the possible consequences of the expenditure schedule lying below the level of full employment GDP is

In a capitalist market economy,the decision to save is made by the same people who make the major investment decisions.

Using the standard 45-degree line diagram,how does an increase in investment spending effect the expenditure schedule?

The price level effects consumer spending through changes in real

According to Baumol and Blinder,the real-world multiplier will be smaller than 1/(1 − MPC)because the 1/(1 − MPC)measure is based on

If businesses spend an additional $150 billion for investment projects in 2010,what will be the impact on national income (Y)if the multiplier is 2?

Equilibrium GDP on the demand side occurs when total spending

A decrease in autonomous consumption would have the same effect on the expenditures schedule as a(n)

U.S.exports:

The slope of the aggregate demand curve illustrates that real GDP demanded will increase when

Figure 9-1 -In Figure 9-1,at $7,000 billion real GDP,

In a simple,private economy,suppose that the MPC is .8 and investment rises by $20 million.At the new equilibrium,how much will saving have increased?

Inventory reductions caused by strong demand are signals to retailers to order more products.

If retail managers are ordering extra merchandise from their wholesale distributors,then it is probably true that

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