Exam 9: Aggregate Expenditure and Output in the Short Run

The consumption function describes the relationship between:

Investment spending ________ during a recession and ________ during an expansion.

Which of the following is true?

'Actual investment' spending includes spending by consumers on:

Refer to Figure 9.2 for the following questions. Figure 9.2 -If the economy is currently at point K in Figure 9.2, which of the following could cause it to move to point N?

An increase in social security payments will increase:

A general formula for the multiplier is:

Which of the following correctly describes how a decrease in the price level affects consumption spending?

The marginal propensity to consume is the ratio of consumption to disposable income.

A stock market crash which causes share prices to fall should cause:

Refer to Table 9.1 for the following questions. Table 9.1 -Refer to Table 9.1. The marginal propensity to consume is:

If planned aggregate expenditure is greater than total production, then:

An increase in the price level results in a(n)________ in household consumption spending and A(n)________ in investment spending.

An increase in taxes will ________ consumption spending and a decrease in transfer payments will ________ consumption spending.

The relationship between the rate of inflation and the level of planned aggregate expenditure is known as the 'aggregate demand curve'.

If firms are less optimistic that future profits will rise and remain strong for the next few years, then:

Refer to Figure 9.1 for the following questions. Figure 9.1 -How does a decrease in government spending affect the aggregate expenditure line in Figure 9.1?

A change in induced expenditure will lead to a shift in the aggregate expenditure line.

At macroeconomic equilibrium, total ________ equals total ________.

The multiplier is calculated as the change in: