Question 1

The slope of the consumption function is

Accepted Answer

A)  perfectly horizontal at the equilibrium level. 
B)  equal to 1. 
C)  equal to the MPC. 
D)  vertical at the full employment level of income. 
A)  perfectly horizontal at the equilibrium level. 
B)  equal to 1. 
C)  equal to the MPC. 
D)  vertical at the full employment level of income.

Question 2

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

Accepted Answer

A)  decrease to less than 0.8. 
B)  increase. 
C)  remain steady. 
D)  decrease to more than 0.8. 
A)  decrease to less than 0.8. 
B)  increase. 
C)  remain steady. 
D)  decrease to more than 0.8.

Question 3

The multiplier effect is smallest

Accepted Answer

A)  in the long run. 
B)  in the short run. 
C)  when the price level is fixed. 
D)  when the economy is in a recession. 
A)  in the long run. 
B)  in the short run. 
C)  when the price level is fixed. 
D)  when the economy is in a recession.

Question 4

Equilibrium expenditure occurs where

Accepted Answer

A)  the aggregate expenditure curve crosses the 45-degree line. 
B)  planned expenditures exceed national income. 
C)  savings exceed planned investment. 
D)  All of the answers are correct. 
A)  the aggregate expenditure curve crosses the 45-degree line. 
B)  planned expenditures exceed national income. 
C)  savings exceed planned investment. 
D)  All of the answers are correct.

Question 5

Any change in the price level will result in a

Accepted Answer

A)  shift in the AE curve and a movement along the AD curve. 
B)  movement along the AE curve and a shift of the AD curve. 
C)  shift in the AE and AD curves in the same direction. 
D)  shift in the AE and AD curves in opposite directions. 
A)  shift in the AE curve and a movement along the AD curve. 
B)  movement along the AE curve and a shift of the AD curve. 
C)  shift in the AE and AD curves in the same direction. 
D)  shift in the AE and AD curves in opposite directions.

Question 6

When investment exceeds 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 7

If the consumption function lies below the 45-degree line, then saving at these levels of disposable income will

Accepted Answer

A)  be positive. 
B)  be negative. 
C)  equal zero. 
D)  be some amount that cannot be determined without additional information. 
A)  be positive. 
B)  be negative. 
C)  equal zero. 
D)  be some amount that cannot be determined without additional information.

Question 8

-Using the above table, if disposable income is $400, saving is

Accepted Answer

A)  -$50. 
B)  $0. 
C)  $50. 
D)  $100. 
A)  -$50. 
B)  $0. 
C)  $50. 
D)  $100.

Question 9

Induced consumption is equal to

Accepted Answer

A)  saving when consumption equals disposable income. 
B)  consumption when disposable income is zero. 
C)  consumption caused by an increase in disposable income. 
D)  dissaving when disposable income is greater than zero. 
A)  saving when consumption equals disposable income. 
B)  consumption when disposable income is zero. 
C)  consumption caused by an increase in disposable income. 
D)  dissaving when disposable income is greater than zero.

Question 10

If the slope of the AE curve increases, the multiplier

Accepted Answer

A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  can either increase or decrease depending on what happens to the MPC. 
A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  can either increase or decrease depending on what happens to the MPC.

Question 11

What is the relationship between U.S. real GDP and U.S. imports?

Accepted Answer

When U.S. real GDP increases,

Question 12

-Based upon the above table, the MPS is equal to

Accepted Answer

A)  1. 
B)  0.75. 
C)  0.25. 
D)  Cannot be determined from the information given. 
A)  1. 
B)  0.75. 
C)  0.25. 
D)  Cannot be determined from the information given.

Question 13

If there are no taxes or imports and MPC = 0.67, the multiplier is

Accepted Answer

A)  1.5. 
B)  3. 
C)  6. 
D)  0.33. 
A)  1.5. 
B)  3. 
C)  6. 
D)  0.33.

Question 14

An increase in investment spending results in a ________ the aggregate expenditure curve and ________ the aggregate demand curve.

Accepted Answer

A)  movement along; a shift in 
B)  shift in; a movement along 
C)  shift in; has no effect on 
D)  shift in; a shift in 
A)  movement along; a shift in 
B)  shift in; a movement along 
C)  shift in; has no effect on 
D)  shift in; a shift in

Question 15

The marginal propensity to import is the ________ that is spent on imports.

Accepted Answer

A)  fraction of an increase in real GDP 
B)  total amount of real GDP 
C)  total amount of potential GDP 
D)  fraction of an increase in potential GDP 
A)  fraction of an increase in real GDP 
B)  total amount of real GDP 
C)  total amount of potential GDP 
D)  fraction of an increase in potential GDP

Question 16

When real GDP exceeds aggregate planned expenditure

Accepted Answer

A)  actual inventories decrease below their target. 
B)  the circular flow will increase. 
C)  GDP will decrease. 
D)  a higher level of equilibrium income will prevail. 
A)  actual inventories decrease below their target. 
B)  the circular flow will increase. 
C)  GDP will decrease. 
D)  a higher level of equilibrium income will prevail.

Question 17

The slope of the consumption function is

Accepted Answer

A)  less than the slope of the 45-degree line but not equal to zero. 
B)  greater than the slope of the 45-degree line. 
C)  equal to the slope of the 45-degree line. 
D)  equal to zero. 
A)  less than the slope of the 45-degree line but not equal to zero. 
B)  greater than the slope of the 45-degree line. 
C)  equal to the slope of the 45-degree line. 
D)  equal to zero.

Question 18

Autonomous consumption is that portion of consumption expenditure that is not influenced by

Accepted Answer

A)  income. 
B)  preferences. 
C)  prices. 
D)  the legal authorities. 
A)  income. 
B)  preferences. 
C)  prices. 
D)  the legal authorities.

Question 19

The value of the marginal propensity to consume is

Accepted Answer

A)  between 0 and 1. 
B)  between 1 and 10. 
C)  between -1 and +1. 
D)  between 1 percent and 100 percent. 
A)  between 0 and 1. 
B)  between 1 and 10. 
C)  between -1 and +1. 
D)  between 1 percent and 100 percent.

Question 20

The graph of the consumption function has consumption expenditure on the vertical axis and

Accepted Answer

A)  the interest rate on the horizontal axis. 
B)  time on the horizontal axis. 
C)  disposable income on the horizontal axis. 
D)  the Consumer Price Index on the horizontal axis. 
A)  the interest rate on the horizontal axis. 
B)  time on the horizontal axis. 
C)  disposable income on the horizontal axis. 
D)  the Consumer Price Index on the horizontal axis.

The slope of the consumption function is

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

The multiplier effect is smallest

Equilibrium expenditure occurs where

Any change in the price level will result in a

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

If the consumption function lies below the 45-degree line, then saving at these levels of disposable income will

-Using the above table, if disposable income is $400, saving is

Induced consumption is equal to

If the slope of the AE curve increases, the multiplier

What is the relationship between U.S. real GDP and U.S. imports?

-Based upon the above table, the MPS is equal to

If there are no taxes or imports and MPC = 0.67, the multiplier is

An increase in investment spending results in a the aggregate expenditure curve and the aggregate demand curve.

The marginal propensity to import is the ________ that is spent on imports.

When real GDP exceeds aggregate planned expenditure

The slope of the consumption function is

Autonomous consumption is that portion of consumption expenditure that is not influenced by

The value of the marginal propensity to consume is

The graph of the consumption function has consumption expenditure on the vertical axis and

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

The slope of the consumption function is

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

The multiplier effect is smallest

Equilibrium expenditure occurs where

Any change in the price level will result in a

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

If the consumption function lies below the 45-degree line, then saving at these levels of disposable income will

-Using the above table, if disposable income is $400, saving is

Induced consumption is equal to

If the slope of the AE curve increases, the multiplier

What is the relationship between U.S. real GDP and U.S. imports?

-Based upon the above table, the MPS is equal to

If there are no taxes or imports and MPC = 0.67, the multiplier is

An increase in investment spending results in a ________ the aggregate expenditure curve and ________ the aggregate demand curve.

The marginal propensity to import is the ________ that is spent on imports.

When real GDP exceeds aggregate planned expenditure

The slope of the consumption function is

Autonomous consumption is that portion of consumption expenditure that is not influenced by

The value of the marginal propensity to consume is

The graph of the consumption function has consumption expenditure on the vertical axis and

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

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

An increase in investment spending results in a the aggregate expenditure curve and the aggregate demand curve.