Question 1

At the equilibrium level of income it must be t that total

Accepted Answer

A)  income equals total spending. 
B)  product equals total output. 
C)  output equals total inventory. 
D)  income equals total saving. 
A)  income equals total spending. 
B)  product equals total output. 
C)  output equals total inventory. 
D)  income equals total saving.

Question 2

John Maynard Keynes concluded that investment spending is determined by

Accepted Answer

A)  business confidence. 
B)  economic expectations. 
C)  psychological perceptions about the economy. 
D)  All of the above are correct. 
A)  business confidence. 
B)  economic expectations. 
C)  psychological perceptions about the economy. 
D)  All of the above are correct.

Question 3

An inflationary gap will exist when the full employment level of GDP is

Accepted Answer

A)  equal to equilibrium GDP. 
B)  greater than equilibrium GDP. 
C)  less than equilibrium GDP. 
D)  greater than disposable income. 
A)  equal to equilibrium GDP. 
B)  greater than equilibrium GDP. 
C)  less than equilibrium GDP. 
D)  greater than disposable income.

Question 4

A recessionary gap exists when the equilibrium level of GDP exceeds potential GDP.

Accepted Answer

A) True 
 B)False

Question 5

If firms are experiencing falling inventories,one can expect that firms will cut production.

Accepted Answer

A) True 
 B)False

Question 6

A major Internet service provider decides to spend $70 million to purchase new server equipment.If the marginal propensity to consume is 0.8,the eventual change in GDP will be

Accepted Answer

A)  $40 million. 
B)  $50 million. 
C)  $90 million. 
D)  $350 million. 
E)  $850 million. 
A)  $40 million. 
B)  $50 million. 
C)  $90 million. 
D)  $350 million. 
E)  $850 million.

Question 7

For a given price level,an upward shift of the expenditures schedule corresponds to an

Accepted Answer

A)  inward shift of the aggregate demand curve. 
B)  outward shift of the aggregate demand curve 
C)  outward shift of the aggregate supply curve. 
D)  inward shift of the aggregate supply curve. 
A)  inward shift of the aggregate demand curve. 
B)  outward shift of the aggregate demand curve 
C)  outward shift of the aggregate supply curve. 
D)  inward shift of the aggregate supply curve.

Question 8

If,at the full employment level of income,the amount that businesses plan to invest is greater than the amount that consumers plan to save,then

Accepted Answer

A)  there will be an inflationary gap. 
B)  there will be a deflationary gap. 
C)  total demand will fall short of potential GDP. 
D)  the economy will suffer from increasing unemployment. 
A)  there will be an inflationary gap. 
B)  there will be a deflationary gap. 
C)  total demand will fall short of potential GDP. 
D)  the economy will suffer from increasing unemployment.

Question 9

In the basic 45-degree line model,what is the effect of an increase in the price level?

Accepted Answer

A)  There will be movement to the left on the expenditure line. 
B)  There will be movement to the right on the expenditure line. 
C)  The expenditure line will shift downward. 
D)  The expenditure line will shift upward. 
A)  There will be movement to the left on the expenditure line. 
B)  There will be movement to the right on the expenditure line. 
C)  The expenditure line will shift downward. 
D)  The expenditure line will shift upward.

Question 10

Equilibrium GDP occurs when total spending equals total output.

Accepted Answer

A) True 
 B)False

Question 11

Table 9-1
  
-In Table 9-1,the equilibrium level of output is

Accepted Answer

A)  2,500. 
B)  3,000. 
C)  3,500. 
D)  4,000. 
A)  2,500. 
B)  3,000. 
C)  3,500. 
D)  4,000.

Question 12

The inflationary gap is the

Accepted Answer

A)  inflation rate that will occur from excess aggregate demand. 
B)  budget deficit that caused the inflation to occur. 
C)  distance between the equilibrium level of output and the full employment level of output. 
D)  gap between expected and actual inflation. 
A)  inflation rate that will occur from excess aggregate demand. 
B)  budget deficit that caused the inflation to occur. 
C)  distance between the equilibrium level of output and the full employment level of output. 
D)  gap between expected and actual inflation.

Question 13

The formula for the multiplier can be written as change in

Accepted Answer

A)  Y/change in I. 
B)  I/change in Y. 
C)  Y/change in C. 
D)  Y/change in GDP. 
A)  Y/change in I. 
B)  I/change in Y. 
C)  Y/change in C. 
D)  Y/change in GDP.

Question 14

High unemployment and high rates of inflation are examples of coordination successes.

Accepted Answer

A) True 
 B)False

Question 15

If inventories are being depleted,firms may respond by cutting prices.

Accepted Answer

A) True 
 B)False

Question 16

In the income-expenditure model,at equilibrium GDP

Accepted Answer

A)  either unemployment or inflation may occur. 
B)  inflation can occur but unemployment cannot. 
C)  unemployment can occur but inflation cannot. 
D)  both unemployment and inflation are impossible. 
A)  either unemployment or inflation may occur. 
B)  inflation can occur but unemployment cannot. 
C)  unemployment can occur but inflation cannot. 
D)  both unemployment and inflation are impossible.

Question 17

If total spending is greater than the value of output,firms will

Accepted Answer

A)  cut prices. 
B)  decrease production levels. 
C)  tend to raise prices. 
D)  see inventories rise. 
A)  cut prices. 
B)  decrease production levels. 
C)  tend to raise prices. 
D)  see inventories rise.

Question 18

Investment spending is a leakage from the circular flow model.

Accepted Answer

A) True 
 B)False

Question 19

When businesses are cutting back production,then it probably t that

Accepted Answer

A)  total spending is greater than total output. 
B)  total output is greater than total income. 
C)  total spending is less than total output. 
D)  inventory levels are decreasing. 
A)  total spending is greater than total output. 
B)  total output is greater than total income. 
C)  total spending is less than total output. 
D)  inventory levels are decreasing.

Question 20

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

Accepted Answer

A)  market pricing. 
B)  recessions and inflation. 
C)  central planning. 
D)  business firm profits. 
A)  market pricing. 
B)  recessions and inflation. 
C)  central planning. 
D)  business firm profits.

At the equilibrium level of income it must be t that total

John Maynard Keynes concluded that investment spending is determined by

An inflationary gap will exist when the full employment level of GDP is

A recessionary gap exists when the equilibrium level of GDP exceeds potential GDP.

If firms are experiencing falling inventories,one can expect that firms will cut production.

A major Internet service provider decides to spend $70 million to purchase new server equipment.If the marginal propensity to consume is 0.8,the eventual change in GDP will be

For a given price level,an upward shift of the expenditures schedule corresponds to an

If,at the full employment level of income,the amount that businesses plan to invest is greater than the amount that consumers plan to save,then

In the basic 45-degree line model,what is the effect of an increase in the price level?

Equilibrium GDP occurs when total spending equals total output.

Table 9-1 -In Table 9-1,the equilibrium level of output is

The inflationary gap is the

The formula for the multiplier can be written as change in

High unemployment and high rates of inflation are examples of coordination successes.

If inventories are being depleted,firms may respond by cutting prices.

In the income-expenditure model,at equilibrium GDP

If total spending is greater than the value of output,firms will

Investment spending is a leakage from the circular flow model.

When businesses are cutting back production,then it probably t that

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

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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Exam 9: Demand-Side Equilibrium: Unemployment or Inflation?

At the equilibrium level of income it must be t that total

John Maynard Keynes concluded that investment spending is determined by

An inflationary gap will exist when the full employment level of GDP is

A recessionary gap exists when the equilibrium level of GDP exceeds potential GDP.

If firms are experiencing falling inventories,one can expect that firms will cut production.

A major Internet service provider decides to spend $70 million to purchase new server equipment.If the marginal propensity to consume is 0.8,the eventual change in GDP will be

For a given price level,an upward shift of the expenditures schedule corresponds to an

If,at the full employment level of income,the amount that businesses plan to invest is greater than the amount that consumers plan to save,then

In the basic 45-degree line model,what is the effect of an increase in the price level?

Equilibrium GDP occurs when total spending equals total output.

Table 9-1 -In Table 9-1,the equilibrium level of output is

The inflationary gap is the

The formula for the multiplier can be written as change in

High unemployment and high rates of inflation are examples of coordination successes.

If inventories are being depleted,firms may respond by cutting prices.

In the income-expenditure model,at equilibrium GDP

If total spending is greater than the value of output,firms will

Investment spending is a leakage from the circular flow model.

When businesses are cutting back production,then it probably t that

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

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters