Question 1

Other things being equal, planned investment spending _____ as long as _____.

Accepted Answer

A)  decreases; technological innovation develops faster than technological obsolescence 
B)  increases; sales exceed the existing production capacity 
C)  increases; the rate of growth of real GDP is lower than the marginal propensity to save 
D)  decreases; the rate of growth of physical capital is positive 
A)  decreases; technological innovation develops faster than technological obsolescence 
B)  increases; sales exceed the existing production capacity 
C)  increases; the rate of growth of real GDP is lower than the marginal propensity to save 
D)  decreases; the rate of growth of physical capital is positive

Question 2

Positive unplanned inventory investment leads to:

Accepted Answer

A)  prices increasing. 
B)  production increasing. 
C)  firms hiring more workers. 
D)  production decreasing. 
A)  prices increasing. 
B)  production increasing. 
C)  firms hiring more workers. 
D)  production decreasing.

Question 3

In an economy with no international trade, no government expenditure, no transfers, and no taxes, planned aggregate spending equals _____ plus planned investment spending.

Accepted Answer

A)  GDP minus disposable income 
B)  consumption 
C)  disposable income 
D)  GDP minus consumption 
A)  GDP minus disposable income 
B)  consumption 
C)  disposable income 
D)  GDP minus consumption

Question 4

If planned investment spending is $2 trillion and inventories decrease by $0.5 trillion, actual investment spending is:

Accepted Answer

A)  $2.5 trillion. 
B)  $1.5 trillion. 
C)  $2 trillion. 
D)  $1 trillion. 
A)  $2.5 trillion. 
B)  $1.5 trillion. 
C)  $2 trillion. 
D)  $1 trillion.

Question 5

Whenever planned aggregate spending exceeds real GDP, unplanned inventory investment is:

Accepted Answer

A)  negative. 
B)  zero. 
C)  positive. 
D)  unpredictable. 
A)  negative. 
B)  zero. 
C)  positive. 
D)  unpredictable.

Question 6

An initial change in the desired level of spending by firms, households, or government at a given level of real GDP is a(n):

Accepted Answer

A)  autonomous change in aggregate spending. 
B)  multiplier-induced change in spending. 
C)  endogenous spending. 
D)  budget surplus. 
A)  autonomous change in aggregate spending. 
B)  multiplier-induced change in spending. 
C)  endogenous spending. 
D)  budget surplus.

Question 7

The initial impact of an unexpected decrease in consumer spending will be a change in:

Accepted Answer

A)  planned investment spending. 
B)  unplanned investment spending. 
C)  both planned and unplanned investment spending. 
D)  neither planned nor unplanned investment spending. 
A)  planned investment spending. 
B)  unplanned investment spending. 
C)  both planned and unplanned investment spending. 
D)  neither planned nor unplanned investment spending.

Question 8

Whenever real GDP exceeds planned aggregate spending:

Accepted Answer

A)  firms reduce production, reducing real GDP. 
B)  households increase consumption, increasing disposable income. 
C)  firms increase production, increasing real GDP. 
D)  households decrease consumption, decreasing disposable income. 
A)  firms reduce production, reducing real GDP. 
B)  households increase consumption, increasing disposable income. 
C)  firms increase production, increasing real GDP. 
D)  households decrease consumption, decreasing disposable income.

Question 9

Positive unplanned inventory investment occurs when actual:

Accepted Answer

A)  depreciation is less than expected. 
B)  sales are less than expected. 
C)  depreciation is more than expected. 
D)  sales are higher than expected. 
A)  depreciation is less than expected. 
B)  sales are less than expected. 
C)  depreciation is more than expected. 
D)  sales are higher than expected.

Question 10

Actual investment spending equals:

Accepted Answer

A)  planned investment plus unplanned investment. 
B)  planned investment minus unplanned investment. 
C)  unplanned investment, even if there is a positive amount of planned investment. 
D)  unplanned investment minus planned investment. 
A)  planned investment plus unplanned investment. 
B)  planned investment minus unplanned investment. 
C)  unplanned investment, even if there is a positive amount of planned investment. 
D)  unplanned investment minus planned investment.

Question 11

When planned investment is less than actual investment, there must be:

Accepted Answer

A)  unplanned inventory investment. 
B)  unplanned inventory disinvestments. 
C)  unplanned depreciation. 
D)  unplanned technological progress. 
A)  unplanned inventory investment. 
B)  unplanned inventory disinvestments. 
C)  unplanned depreciation. 
D)  unplanned technological progress.

Question 12

The decline in the Finnish economy of 2016 is primarily an example of how:

Accepted Answer

A)  too much government regulation is harmful to the economy. 
B)  changes in consumer spending can be multiplied through the entire economy. 
C)  immigration affects local economies. 
D)  high tax rates can decrease economic activity in an area. 
A)  too much government regulation is harmful to the economy. 
B)  changes in consumer spending can be multiplied through the entire economy. 
C)  immigration affects local economies. 
D)  high tax rates can decrease economic activity in an area.

Question 13

The _____ the _____, the _____ the multiplier.

Accepted Answer

A)  smaller; level of wealth; bigger 
B)  bigger; marginal propensity to save; bigger 
C)  bigger; marginal propensity to consume; smaller 
D)  bigger; marginal propensity to consume; bigger 
A)  smaller; level of wealth; bigger 
B)  bigger; marginal propensity to save; bigger 
C)  bigger; marginal propensity to consume; smaller 
D)  bigger; marginal propensity to consume; bigger

Question 14

An increase in interest rates on business loans will change _____ investment spending.

Accepted Answer

A)  planned 
B)  unplanned 
C)  both planned and unplanned 
D)  neither planned nor unplanned 
A)  planned 
B)  unplanned 
C)  both planned and unplanned 
D)  neither planned nor unplanned

Other things being equal, planned investment spending _ as long as _.

Positive unplanned inventory investment leads to:

In an economy with no international trade, no government expenditure, no transfers, and no taxes, planned aggregate spending equals _____ plus planned investment spending.

If planned investment spending is $2 trillion and inventories decrease by $0.5 trillion, actual investment spending is:

Whenever planned aggregate spending exceeds real GDP, unplanned inventory investment is:

An initial change in the desired level of spending by firms, households, or government at a given level of real GDP is a(n):

The initial impact of an unexpected decrease in consumer spending will be a change in:

Whenever real GDP exceeds planned aggregate spending:

Positive unplanned inventory investment occurs when actual:

Actual investment spending equals:

When planned investment is less than actual investment, there must be:

The decline in the Finnish economy of 2016 is primarily an example of how:

The ___ the _, the ___ the multiplier.

An increase in interest rates on business loans will change _____ investment spending.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 11: Income and Expenditure

Other things being equal, planned investment spending _____ as long as _____.

Positive unplanned inventory investment leads to:

In an economy with no international trade, no government expenditure, no transfers, and no taxes, planned aggregate spending equals _____ plus planned investment spending.

If planned investment spending is $2 trillion and inventories decrease by $0.5 trillion, actual investment spending is:

Whenever planned aggregate spending exceeds real GDP, unplanned inventory investment is:

An initial change in the desired level of spending by firms, households, or government at a given level of real GDP is a(n):

The initial impact of an unexpected decrease in consumer spending will be a change in:

Whenever real GDP exceeds planned aggregate spending:

Positive unplanned inventory investment occurs when actual:

Actual investment spending equals:

When planned investment is less than actual investment, there must be:

The decline in the Finnish economy of 2016 is primarily an example of how:

The _____ the _____, the _____ the multiplier.

An increase in interest rates on business loans will change _____ investment spending.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Other things being equal, planned investment spending _ as long as _.

The ___ the _, the ___ the multiplier.