Exam 23: Aggregate Expenditure and Output in the Short Run

The marginal propensity to consume is the slope of the consumption function.

If consumption is defined as C = 2,400 + 0.9Y, then the value of the marginal propensity to consume is 0.9.

If firms sell exactly what they expected to sell, all of the following will be true except

When Jack's income increases by $1,000, he spends an additional $850 dollars. This implies that his marginal propensity to consume is 0.85.

If the marginal propensity to save is 0.1, then a $10 million decrease in disposable income will

In a small economy in 2018, aggregate expenditure was $800 million while GDP that year was $850 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?

Table 23-4 -Refer to Table 23-4. Given the data in the table above, the marginal propensity to consume is

If inflation in the United States is higher than inflation in other countries, what will be the effect on net exports for the United States?

If the marginal propensity to consume is 0.75, the marginal propensity to save is

Investment spending will decrease when

In the aggregate expenditure model, ________ has both an autonomous component and an induced component.

Consumption spending will ________ when disposable income ________.

Which of the following will reduce consumer expenditures?

A stock market boom which causes stock prices to rise should cause

The ________ model focuses on the relationship between total spending and real GDP in the short run, assuming the price level is constant.

Assume that inventories declined by more than what analysts predicted. This implies that

An increase in the price level in the United States will reduce exports and increase imports.

The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by

An increase in the real interest rate will

________ consumption is consumption that does not depend upon the level of GDP.