Exam 11: Expenditure Multipliers

-In the above table, there are no taxes and no imports or exports. Suppose that investment increases from $500 to $750 at each level of real GDP. After the increase, what is the level of planned expenditure when real GDP equals $5,000?

As disposable income increases, saving increases.

Suppose the equilibrium level of expenditure is $18 trillion. If real GDP is $19 trillion, then planned expenditures

-In the above figure, if real GDP equals $15 trillion, there would be

The larger the multiplier, the ________ the AE curve and the ________ the AD curve from an increase in investment.

An increase in investment by U.S. firms that is intended to maintain U.S. competitiveness in world markets represents ________ in the United States.

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would

-According to the data in the above table, at what level of disposable income is savings negative?

When the economy is at full employment and investment increases, in the long run the price level will ________ and, if potential GDP does not change, in the long run real GDP will ________.

The slope of the saving function is equal to the

Planned saving equals

When U.S. real GDP increases, the quantity of U.S. imports

-The value of the multiplier in the economy illustrated in the figure above is

Consumption expenditures equal disposable income

The multiplier shows that as ________ changes, real GDP changes by a ________ amount.

-If AE₀ is the aggregate planned expenditure curve, then equilibrium real GDP in the figure above is

There is a movement along the consumption function if there is

Which of the following is INCORRECT?

In 2007, investment in France increased by 7 billion euros. Assume the price level was constant, the multiplier was 5 and the economy was at full employment. As a result, equilibrium expenditure

If the marginal propensity to save is 0.25 in an economy with no imports or taxes, the multiplier equals