Exam 11: Expenditure Multipliers

The multiplier measures the

If consumption expenditures for a household increase from $1,000 to $1,800 when disposable income rises from $1,000 to $2,000, the marginal propensity to consume is

3 The Multiplier -When autonomous expenditure decreases,

-In the above figure the economy is initially at point A on the aggregate expenditure curve AE₀. Suppose investment decreases. As a result

-The figure above illustrates an economy's consumption function. What is autonomous consumption in this economy?

Explain the basic idea of the expenditure multiplier and the role consumers play in determining its magnitude.

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 MPS equals

-In the above figure, equilibrium expenditure is

An increase in the value of the multiplier can be caused by

-In the above figure, line ABC is called

Intertemporal substitution means changes in purchases

A decrease in autonomous consumption will

-In the above figure, the shift from AE₀ to AE₁ might have been caused by

A movement along the consumption function to higher levels of consumption expenditure arises because

If wealth increases, the consumption function shifts upward.

-In the above figure, point d represents the point where planned expenditures are ________ real GDP.

The government increases its expenditures. The steeper the SAS curve, the ________ will be the increase in the price level and the ________ will be the increase in real GDP.

The smaller the slope of the AE curve,

Disposable income is equal to

If aggregate planned expenditure is less than real GDP