Question 1

-In the above figure, the MPC equals

Accepted Answer

A)  0.17. 
B)  0.125. 
C)  0.25. 
D)  0.50. 
A)  0.17. 
B)  0.125. 
C)  0.25. 
D)  0.50.

Question 2

The marginal propensity to consume is equal to

Accepted Answer

A)  what people spend out of total disposable income. 
B)  the desired amount of consumption expenditure as a proportion of disposable income. 
C)  the average, after-tax consumption amount. 
D)  the change in consumption expenditure resulting from a change in disposable income. 
A)  what people spend out of total disposable income. 
B)  the desired amount of consumption expenditure as a proportion of disposable income. 
C)  the average, after-tax consumption amount. 
D)  the change in consumption expenditure resulting from a change in disposable income.

Question 3

In the economy of Keynesian Island, autonomous consumption expenditure is $50 million, and the marginal propensity to consume is 0.8. Investment is $160 million, government expenditure is $190 million, and net taxes are $250 million. Investment, government purchases, and taxes are constant-they do not vary with income. The island does not trade with the rest of the world.
a) Draw the aggregate expenditure curve.
b) What is equilibrium real GDP for Keynesian Island?
c) What is the size of the multiplier in Keynesian Island's economy?
d) If the government increases its purchases by $200 million, what will be the change in the economy's equilibrium real GDP?

Accepted Answer

@#IMG-DLM& a) See the figure above. The aggregate

Question 4

-In the above figure, if real GDP equals $13 trillion

Accepted Answer

A)  actual and planned investment will both increase. 
B)  unplanned inventories will increase. 
C)  actual investment will decrease but planned investment will increase. 
D)  unplanned inventories will decrease. 
A)  actual and planned investment will both increase. 
B)  unplanned inventories will increase. 
C)  actual investment will decrease but planned investment will increase. 
D)  unplanned inventories will decrease.

Question 5

If the price level rises, the purchasing power of wealth

Accepted Answer

A)  increases. 
B)  does not change. 
C)  decreases. 
D)  increases at first but in the long run decreases. 
A)  increases. 
B)  does not change. 
C)  decreases. 
D)  increases at first but in the long run decreases.

Question 6

If aggregate planned expenditure exceeds real GDP

Accepted Answer

A)  firms are not maximizing their profits. 
B)  planned investment is greater than planned saving. 
C)  actual inventories decrease below their target. 
D)  planned consumption expenditure is less than actual consumption expenditure. 
A)  firms are not maximizing their profits. 
B)  planned investment is greater than planned saving. 
C)  actual inventories decrease below their target. 
D)  planned consumption expenditure is less than actual consumption expenditure.

Question 7

When disposable income equals $800 billion, planned consumption expenditure equals $600 billion, and when disposable income equals $1,000 billion, planned consumption expenditure equals $760 billion. What is the marginal propensity to save?

Accepted Answer

A)  0.80 
B)  0.64 
C)  0.25 
D)  0.20 
A)  0.80 
B)  0.64 
C)  0.25 
D)  0.20

Question 8

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, and X - M is net exports. All entries are in dollars. The slope of the aggregate expenditure function is

Accepted Answer

A)  -0.10. 
B)  0.10. 
C)  0.60. 
D)  0.70. 
A)  -0.10. 
B)  0.10. 
C)  0.60. 
D)  0.70.

Question 9

In the third quarter of 2008, investment in the U.S. totaled $1.4 trillion and in 2007, investment was $1.3 trillion. In addition, third quarter real GDP was $11 trillion. Suppose the MPC in the U.S. is 0.80. Ignoring the effects of imports and taxes, the multiplier is ________ and the change in investment will decrease equilibrium expenditure by ________.

Accepted Answer

A)  2; $1 trillion 
B)  5; $1 trillion 
C)  2; $200 million 
D)  5; $500 million 
A)  2; $1 trillion 
B)  5; $1 trillion 
C)  2; $200 million 
D)  5; $500 million

-In the above figure, the MPC equals

The marginal propensity to consume is equal to

-In the above figure, if real GDP equals $13 trillion

If the price level rises, the purchasing power of wealth

If aggregate planned expenditure exceeds real GDP

When disposable income equals $800 billion, planned consumption expenditure equals $600 billion, and when disposable income equals $1,000 billion, planned consumption expenditure equals $760 billion. What is the marginal propensity to save?

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, and X - M is net exports. All entries are in dollars. The slope of the aggregate expenditure function 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

-In the above figure, the MPC equals

The marginal propensity to consume is equal to

-In the above figure, if real GDP equals $13 trillion

If the price level rises, the purchasing power of wealth

If aggregate planned expenditure exceeds real GDP

When disposable income equals $800 billion, planned consumption expenditure equals $600 billion, and when disposable income equals $1,000 billion, planned consumption expenditure equals $760 billion. What is the marginal propensity to save?

-In the above table, C is consumption expenditure, I is investment, G is government expenditure, and X - M is net exports. All entries are in dollars. The slope of the aggregate expenditure function 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