Exam 25: Demand-Side Equilibrium: Unemployment or Inflation

If the U.S.price level decreases, then

Which of the following would be associated with an inflationary gap?

Why does the aggregate demand curve slope downward?

Investment increases by $200 million and the value of MPC is 0.75.What would be the total increase in spending?

When spending is greater than output, firms will experience falling inventories, and prices of goods and services will rise.

The expenditure schedule will shift upward when

The multiplier can be expressed as the ratio of the change in Y over the change in I.

When spending is less than production, inventories are higher than what producers expected.

The economy will reach equilibrium in a simple economy only if saving is

An increase in autonomous consumption has the same equilibrium effect as a(n)

Which one of the following could cause a recessionary gap?

At the equilibrium level of income, it must be true that total

If retail managers are ordering extra merchandise from their wholesale distributors, then it is probably true that

When total spending is less than production, GDP will decrease.

Producers will change their prices when GDP is at the equilibrium level.

A major reason for the existence of inflationary and deflationary gaps is that

If total spending exceeds total output, then

Economists are very good at explaining how individual markets work.Economists are less successful at explaining

Figure 9-5 ​ -If the level of investment spending increases by $100 and the MPC in the economy is 0.8, then the cumulative spending increase after three rounds of spending is

Movements along the consumption function are called