Question 1

Consumption expenditure decreases when ________ decreases.

Accepted Answer

A)  the interest rate 
B)  the price level 
C)  disposable income 
D)  saving 
A)  the interest rate 
B)  the price level 
C)  disposable income 
D)  saving

Question 2

-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 unplanned inventory change when GDP is equal to $400?

Accepted Answer

A)  $26 
B)  -$26 
C)  $5 
D)  -$5 
A)  $26 
B)  -$26 
C)  $5 
D)  -$5

Question 3

Suppose that the slope of the AE curve is 0.67. Then a $100 decrease in autonomous spending means equilibrium expenditure will

Accepted Answer

A)  decrease by $200. 
B)  increase by $200. 
C)  decrease by $300. 
D)  increase by $300. 
A)  decrease by $200. 
B)  increase by $200. 
C)  decrease by $300. 
D)  increase by $300.

Question 4

An increase in the price level results in a

Accepted Answer

A)  downward shift in the AE curve and a movement up along the AD curve. 
B)  downward shift in both the AE and AD curves. 
C)  downward shift in the AD curve and a movement down along the AE curve. 
D)  leftward movement along both the AE and AD curves. 
A)  downward shift in the AE curve and a movement up along the AD curve. 
B)  downward shift in both the AE and AD curves. 
C)  downward shift in the AD curve and a movement down along the AE curve. 
D)  leftward movement along both the AE and AD curves.

Question 5

If the multiplier for a change in autonomous expenditure is 10 and there are no income taxes or imports, then the MPC is

Accepted Answer

A)  0.9. 
B)  0.1. 
C)  1.0. 
D)  9.0. 
A)  0.9. 
B)  0.1. 
C)  1.0. 
D)  9.0.

Question 6

An increase in the price level decreases planned expenditures because

Accepted Answer

A)  real wealth increases, decreasing expenditure. 
B)  current prices rise relative to future prices, decreasing expenditure. 
C)  domestic prices rise relative to foreign prices, increasing net exports. 
D)  the real interest rate rises, increasing expenditure. 
A)  real wealth increases, decreasing expenditure. 
B)  current prices rise relative to future prices, decreasing expenditure. 
C)  domestic prices rise relative to foreign prices, increasing net exports. 
D)  the real interest rate rises, increasing expenditure.

Question 7

-In the above table, savings equal zero when disposable income equals

Accepted Answer

A)  0. 
B)  $200. 
C)  $300. 
D)  $500. 
A)  0. 
B)  $200. 
C)  $300. 
D)  $500.

Question 8

The intertemporal substitution effect of a change in the price level results from a

Accepted Answer

A)  change in the price of current goods relative to future goods. 
B)  change in the purchasing power of wealth. 
C)  change in the price of foreign goods relative to domestic goods. 
D)  Both answers B and C are correct. 
A)  change in the price of current goods relative to future goods. 
B)  change in the purchasing power of wealth. 
C)  change in the price of foreign goods relative to domestic goods. 
D)  Both answers B and C are correct.

Question 9

In the Keynesian model of aggregate expenditure, real GDP is determined by the

Accepted Answer

A)  price level. 
B)  level of aggregate demand. 
C)  level of aggregate supply. 
D)  level of taxes. 
A)  price level. 
B)  level of aggregate demand. 
C)  level of aggregate supply. 
D)  level of taxes.

Question 10

-In the above table, there are no taxes and no imports or exports. The equilibrium level of expenditure for this economy is

Accepted Answer

A)  any level because investment always equals government expenditures. 
B)  no level because consumption expenditure is always less than real GDP. 
C)  $3,000. 
D)  $5,000. 
A)  any level because investment always equals government expenditures. 
B)  no level because consumption expenditure is always less than real GDP. 
C)  $3,000. 
D)  $5,000.

Question 11

List the four components of aggregate expenditure. Explain the two-way link with real GDP.

Accepted Answer

The four components of aggregate expendi

Question 12

Saving rather than dissaving occurs at any level of disposable income at which

Accepted Answer

A)  the consumption function is above the 45-degree line. 
B)  the consumption function intersects the saving/income curve. 
C)  the consumption function is below the 45-degree line. 
D)  autonomous consumption is positive. 
A)  the consumption function is above the 45-degree line. 
B)  the consumption function intersects the saving/income curve. 
C)  the consumption function is below the 45-degree line. 
D)  autonomous consumption is positive.

Question 13

In a diagram with the consumption function, the 45-degree line indicates all points where

Accepted Answer

A)  consumption expenditures and saving are equal. 
B)  saving and investment are equal. 
C)  consumption expenditures and disposable income are equal. 
D)  saving and disposable income are equal. 
A)  consumption expenditures and saving are equal. 
B)  saving and investment are equal. 
C)  consumption expenditures and disposable income are equal. 
D)  saving and disposable income are equal.

Question 14

In the very short term, planned investment, planned government expenditure, planned exports, planned consumption, and planned imports are all fixed and do not change when GDP changes.

Accepted Answer

A) True 
 B)False

Question 15

At equilibrium expenditure, unplanned changes in inventory

Accepted Answer

A)  must be positive. 
B)  must be zero. 
C)  must be negative. 
D)  might be either positive or negative. 
A)  must be positive. 
B)  must be zero. 
C)  must be negative. 
D)  might be either positive or negative.

Question 16

-In the figure above, the induced consumption when real GDP is $15 trillion is

Accepted Answer

A)  zero. 
B)  $5 trillion. 
C)  $10 trillion. 
D)  $15 trillion. 
A)  zero. 
B)  $5 trillion. 
C)  $10 trillion. 
D)  $15 trillion.

Question 17

The vertical distance between the 45-degree line and the consumption line represents

Accepted Answer

A)  investment. 
B)  total consumption expenditure. 
C)  the difference between consumption expenditure and investment. 
D)  saving or dissaving. 
A)  investment. 
B)  total consumption expenditure. 
C)  the difference between consumption expenditure and investment. 
D)  saving or dissaving.

Question 18

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000, the

Accepted Answer

A)  household is dissaving. 
B)  slope of the consumption function is 0.2. 
C)  slope of the consumption function is 0.5. 
D)  slope of the consumption function is 1,000. 
A)  household is dissaving. 
B)  slope of the consumption function is 0.2. 
C)  slope of the consumption function is 0.5. 
D)  slope of the consumption function is 1,000.

Question 19

-In the above table, suppose investment decreases by $0.1 trillion. The multiplier equals

Accepted Answer

A)  5.0. 
B)  9.0. 
C)  10.0. 
D)  None of the above answers are correct. 
A)  5.0. 
B)  9.0. 
C)  10.0. 
D)  None of the above answers are correct.

Question 20

The Keynesian model of aggregate expenditure describes the economy in

Accepted Answer

A)  the short run. 
B)  the long run. 
C)  both the short run and the long run. 
D)  only a strong expansion. 
A)  the short run. 
B)  the long run. 
C)  both the short run and the long run. 
D)  only a strong expansion.

Consumption expenditure decreases when ________ decreases.

-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 unplanned inventory change when GDP is equal to $400?

Suppose that the slope of the AE curve is 0.67. Then a $100 decrease in autonomous spending means equilibrium expenditure will

An increase in the price level results in a

If the multiplier for a change in autonomous expenditure is 10 and there are no income taxes or imports, then the MPC is

An increase in the price level decreases planned expenditures because

-In the above table, savings equal zero when disposable income equals

The intertemporal substitution effect of a change in the price level results from a

In the Keynesian model of aggregate expenditure, real GDP is determined by the

-In the above table, there are no taxes and no imports or exports. The equilibrium level of expenditure for this economy is

List the four components of aggregate expenditure. Explain the two-way link with real GDP.

Saving rather than dissaving occurs at any level of disposable income at which

In a diagram with the consumption function, the 45-degree line indicates all points where

In the very short term, planned investment, planned government expenditure, planned exports, planned consumption, and planned imports are all fixed and do not change when GDP changes.

At equilibrium expenditure, unplanned changes in inventory

-In the figure above, the induced consumption when real GDP is $15 trillion is

The vertical distance between the 45-degree line and the consumption line represents

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000, the

-In the above table, suppose investment decreases by $0.1 trillion. The multiplier equals

The Keynesian model of aggregate expenditure describes the economy in

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

Consumption expenditure decreases when ________ decreases.

-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 unplanned inventory change when GDP is equal to $400?

Suppose that the slope of the AE curve is 0.67. Then a $100 decrease in autonomous spending means equilibrium expenditure will

An increase in the price level results in a

If the multiplier for a change in autonomous expenditure is 10 and there are no income taxes or imports, then the MPC is

An increase in the price level decreases planned expenditures because

-In the above table, savings equal zero when disposable income equals

The intertemporal substitution effect of a change in the price level results from a

In the Keynesian model of aggregate expenditure, real GDP is determined by the

-In the above table, there are no taxes and no imports or exports. The equilibrium level of expenditure for this economy is

List the four components of aggregate expenditure. Explain the two-way link with real GDP.

Saving rather than dissaving occurs at any level of disposable income at which

In a diagram with the consumption function, the 45-degree line indicates all points where

In the very short term, planned investment, planned government expenditure, planned exports, planned consumption, and planned imports are all fixed and do not change when GDP changes.

At equilibrium expenditure, unplanned changes in inventory

-In the figure above, the induced consumption when real GDP is $15 trillion is

The vertical distance between the 45-degree line and the consumption line represents

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000, the

-In the above table, suppose investment decreases by $0.1 trillion. The multiplier equals

The Keynesian model of aggregate expenditure describes the economy in

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