Exam 27: Expenditure Multipliers: The Keynesian Model

In a recent study,the University of Underfunded argued that it created four times as many jobs as people that it hired directly.This argument illustrates the idea

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

A rise in the price level

The multiplier is greater than 1 because a change in autonomous expenditure leads to ________.

Suppose that investment increases by $10 billion.Which one of the following would reduce the effect of this increase in autonomous expenditure on equilibrium real GDP in the short run?

If AE = 50 + 0.6Y and Y = 200,then unplanned inventories

In the long run,the multiplier

Use the information below to answer the following question. Fact 27.5.1 The economy of Beverly Hills 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 27.5.1.If autonomous consumption increases by 10,what is the new equilibrium real GDP for this economy?

Use the figure below to answer the following questions. Figure 27.2.2 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 27.2.2.Investment is

Use the table below to answer the following questions. Table 27.1.3 -Refer to Table 27.1.3.The marginal propensity to consume is

Use the information below to answer the following questions. Fact 27.5.2 The economy of Tinseltown 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 27.5.2.What is the multiplier for this economy?

Which of the following events would shift the consumption function upward?

Use the figure below to answer the following questions. Figure 27.2.3 There are no taxes in this economy. -In Figure 27.2.3,the marginal propensity to import is

The multiplier can take on any value

Which one of the following variables has an induced component?

The marginal propensity to import is equal to ________.

Use the information below to answer the following question. Fact 27.5.1 The economy of Beverly Hills 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 27.5.1.What is the multiplier for this economy?

A rise in the price level ________.

Use the figure below to answer the following question(s). Figure 27.3.1 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 27.3.1.At equilibrium induced expenditure equals

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