Question 1

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the

Accepted Answer

A)  45-degree line. 
B)  horizontal axis. 
C)  vertical axis. 
D)  consumption function. 
A)  45-degree line. 
B)  horizontal axis. 
C)  vertical axis. 
D)  consumption function.

Question 2

-In the above figure, when disposable income equals $12 trillion, induced consumption expenditure equals

Accepted Answer

A)  $1.2 trillion. 
B)  $10.8 trillion. 
C)  $12 trillion. 
D)  Cannot be determined from the information given. 
A)  $1.2 trillion. 
B)  $10.8 trillion. 
C)  $12 trillion. 
D)  Cannot be determined from the information given.

Question 3

If the marginal propensity to save is 0.6, then the marginal propensity to consume is

Accepted Answer

A)  0.6. 
B)  0.4. 
C)  1.0. 
D)  More information is needed in order to calculate the correct answer. 
A)  0.6. 
B)  0.4. 
C)  1.0. 
D)  More information is needed in order to calculate the correct answer.

Question 4

"If aggregate planned expenditure exceeds real GDP, then real GDP will increase." Explain whether the previous sentence is correct or incorrect.

Accepted Answer

The sentence is correct. If aggregate pl

Question 5

If investment increases by $300 and, in response, equilibrium aggregate expenditure increases by $600, then the multiplier must be

Accepted Answer

A)  0.2. 
B)  0.5. 
C)  2. 
D)  5. 
A)  0.2. 
B)  0.5. 
C)  2. 
D)  5.

Question 6

In the short run, a factor that leads to changes in U.S. imports is

Accepted Answer

A)  the level of income in foreign nations. 
B)  the real interest rate. 
C)  the U.S. real GDP. 
D)  U.S. exports. 
A)  the level of income in foreign nations. 
B)  the real interest rate. 
C)  the U.S. real GDP. 
D)  U.S. exports.

Question 7

If the marginal propensity to consume is 0.8, every $10 increase in disposable income increases

Accepted Answer

A)  consumption expenditure by $0.80. 
B)  consumption expenditure by $80.00. 
C)  saving by $0.20. 
D)  consumption expenditure by $8.00. 
A)  consumption expenditure by $0.80. 
B)  consumption expenditure by $80.00. 
C)  saving by $0.20. 
D)  consumption expenditure by $8.00.

Question 8

The MPC and MPS measure changes in consumption expenditure and saving that result from changes in

Accepted Answer

A)  expected inflation. 
B)  disposable income. 
C)  expected future income. 
D)  government expenditures on goods and services. 
A)  expected inflation. 
B)  disposable income. 
C)  expected future income. 
D)  government expenditures on goods and services.

Question 9

Between 2015 and 2016 the government reported that disposable income decreased by $400 billion and consumption expenditure decreased by $280 billion. Based on these data, the MPC equals

Accepted Answer

A)  1.43 
B)  0.80. 
C)  0.70. 
D)  $120 billion. 
A)  1.43 
B)  0.80. 
C)  0.70. 
D)  $120 billion.

Question 10

"If the income tax rate is high enough, the multiplier can be negative." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect. Th

Question 11

-The above table has data on the consumption function in the nation of Mojo.
a) What is the amount of autonomous consumption expenditure?
b) What is the marginal propensity to consume?

Accepted Answer

a) Autonomous consumption expenditure eq

Question 12

________ consumption is consumption that will occur ________ the level of GDP and disposable income.

Accepted Answer

A)  Autonomous; independent of 
B)  Autonomous; depending on 
C)  Induced; independent of 
D)  None of the above answers is correct. 
A)  Autonomous; independent of 
B)  Autonomous; depending on 
C)  Induced; independent of 
D)  None of the above answers is correct.

Question 13

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, X is exports, and M is imports. All entries are in dollars. What is the equilibrium expenditure?

Accepted Answer

A)  $200 
B)  $500 
C)  $700 
D)  $1,000 
A)  $200 
B)  $500 
C)  $700 
D)  $1,000

Question 14

-Based upon the above table, saving equals $100 billion when disposable income equals

Accepted Answer

A)  $800 billion. 
B)  $1,000 billion. 
C)  $1,200 billion. 
D)  some amount but we need more information to calculate the amount. 
A)  $800 billion. 
B)  $1,000 billion. 
C)  $1,200 billion. 
D)  some amount but we need more information to calculate the amount.

Question 15

-In the above figure, equilibrium expenditure along AE1 is

Accepted Answer

A)  $3 trillion. 
B)  $6 trillion. 
C)  $12 trillion. 
D)  an amount not given in the above answers. 
A)  $3 trillion. 
B)  $6 trillion. 
C)  $12 trillion. 
D)  an amount not given in the above answers.

Question 16

Disposable income is

Accepted Answer

A)  income minus saving. 
B)  income minus taxes plus transfer payments. 
C)  income plus transfer payments minus consumption expenditure. 
D)  total income divided by the price level. 
A)  income minus saving. 
B)  income minus taxes plus transfer payments. 
C)  income plus transfer payments minus consumption expenditure. 
D)  total income divided by the price level.

Question 17

The multiplier effect on real GDP occurs because

Accepted Answer

A)  changes in price levels affect our willingness to invest, consume, import and export. 
B)  an autonomous change in expenditure causes an induced change in consumption expenditure. 
C)  of government stabilization policies. 
D)  of income taxes. 
A)  changes in price levels affect our willingness to invest, consume, import and export. 
B)  an autonomous change in expenditure causes an induced change in consumption expenditure. 
C)  of government stabilization policies. 
D)  of income taxes.

Question 18

The aggregate demand curve slopes downward because of

Accepted Answer

A)  the multiplier. 
B)  the MPC. 
C)  wealth and substitution effects. 
D)  import and taxation effects. 
A)  the multiplier. 
B)  the MPC. 
C)  wealth and substitution effects. 
D)  import and taxation effects.

Question 19

When investment is less than planned investment, aggregate planned expenditure is ________ than actual aggregate expenditure and inventories are ________ than planned.

Accepted Answer

A)  greater; greater 
B)  greater; less 
C)  less; greater 
D)  less; less 
A)  greater; greater 
B)  greater; less 
C)  less; greater 
D)  less; less

Question 20

-The data in the above table indicate that autonomous expenditure is

Accepted Answer

A)  $0.3 trillion. 
B)  $3.0 trillion. 
C)  $4.8 trillion. 
D)  indeterminate from the information given. 
A)  $0.3 trillion. 
B)  $3.0 trillion. 
C)  $4.8 trillion. 
D)  indeterminate from the information given.

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the

-In the above figure, when disposable income equals $12 trillion, induced consumption expenditure equals

If the marginal propensity to save is 0.6, then the marginal propensity to consume is

"If aggregate planned expenditure exceeds real GDP, then real GDP will increase." Explain whether the previous sentence is correct or incorrect.

If investment increases by $300 and, in response, equilibrium aggregate expenditure increases by $600, then the multiplier must be

In the short run, a factor that leads to changes in U.S. imports is

If the marginal propensity to consume is 0.8, every $10 increase in disposable income increases

The MPC and MPS measure changes in consumption expenditure and saving that result from changes in

Between 2015 and 2016 the government reported that disposable income decreased by $400 billion and consumption expenditure decreased by $280 billion. Based on these data, the MPC equals

"If the income tax rate is high enough, the multiplier can be negative." Is the previous statement correct or incorrect?

-The above table has data on the consumption function in the nation of Mojo. a) What is the amount of autonomous consumption expenditure? b) What is the marginal propensity to consume?

consumption is consumption that will occur the level of GDP and disposable income.

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, X is exports, and M is imports. All entries are in dollars. What is the equilibrium expenditure?

-Based upon the above table, saving equals $100 billion when disposable income equals

-In the above figure, equilibrium expenditure along AE₁ is

Disposable income is

The multiplier effect on real GDP occurs because

The aggregate demand curve slopes downward because of

When investment is less than planned investment, aggregate planned expenditure is than actual aggregate expenditure and inventories are than planned.

-The data in the above table indicate that autonomous expenditure is

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 11: Expenditure Multipliers

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the

-In the above figure, when disposable income equals $12 trillion, induced consumption expenditure equals

If the marginal propensity to save is 0.6, then the marginal propensity to consume is

"If aggregate planned expenditure exceeds real GDP, then real GDP will increase." Explain whether the previous sentence is correct or incorrect.

If investment increases by $300 and, in response, equilibrium aggregate expenditure increases by $600, then the multiplier must be

In the short run, a factor that leads to changes in U.S. imports is

If the marginal propensity to consume is 0.8, every $10 increase in disposable income increases

The MPC and MPS measure changes in consumption expenditure and saving that result from changes in

Between 2015 and 2016 the government reported that disposable income decreased by $400 billion and consumption expenditure decreased by $280 billion. Based on these data, the MPC equals

"If the income tax rate is high enough, the multiplier can be negative." Is the previous statement correct or incorrect?

-The above table has data on the consumption function in the nation of Mojo. a) What is the amount of autonomous consumption expenditure? b) What is the marginal propensity to consume?

________ consumption is consumption that will occur ________ the level of GDP and disposable income.

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, X is exports, and M is imports. All entries are in dollars. What is the equilibrium expenditure?

-Based upon the above table, saving equals $100 billion when disposable income equals

-In the above figure, equilibrium expenditure along AE1 is

Disposable income is

The multiplier effect on real GDP occurs because

The aggregate demand curve slopes downward because of

When investment is less than planned investment, aggregate planned expenditure is ________ than actual aggregate expenditure and inventories are ________ than planned.

-The data in the above table indicate that autonomous expenditure is

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

consumption is consumption that will occur the level of GDP and disposable income.

-In the above figure, equilibrium expenditure along AE₁ is

When investment is less than planned investment, aggregate planned expenditure is than actual aggregate expenditure and inventories are than planned.