Exam 27: Expenditure Multipliers

Use the figure below to answer the following questions. Figure 27.3.1 The economy shown in the graph does not engage in international trade and has no government. Planned aggregate expenditure equals the sum of consumption expenditure (C)and investment (I). -Refer to Figure 27.3.1. The multiplier for this economy is

Everything else remaining the same, which one of the following would increase equilibrium real GDP?

The fraction of a change in disposable income that is saved is the

Use the figure below to answer the following questions. Figure 27.2.2 The economy depicted does not engage in international trade and has no government. Planned aggregate expenditure (AE)is equal to the sum of consumption expenditure (C)and investment (I). -Refer to Figure 27.2.2. Investment is

When firms plan to restock their inventories, equilibrium expenditure ________ and real GDP ________.

Use the figure below to answer the following question. Figure 27.5.1 This figure describes the relationship between consumption expenditure and disposable income. -Refer to Figure 27.5.1. The equation of the consumption function is

The marginal propensity to import is calculated as

You are given the following information about the Canadian economy. Autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. The marginal propensity to consume is 0.7 and net taxes are $250 billion. Net taxes are assumed to be constant and not vary with income. Exports are $500 billion and imports are $450 billion. The equation of the AE curve in billions of dollars is ________. Equilibrium expenditure is ________.

As Canada experiences increasing wealth and increasing expected future income,

The marginal propensity to consume is calculated as

Use the figure below to answer the following questions. Figure 27.5.2 -Refer to Figure 27.5.2. The equation of the saving function that corresponds to the consumption function in this figure is

The marginal propensity to save is calculated as

As real GDP increases,

Use the table below to answer the following questions. Table 27.1.2 -Refer to Table 27.1.2. What is the value of the marginal propensity to consume?

Use the table below to answer the following questions. Table 27.1.3 -In Table 27.1.3, at which of the following values of disposable income is there positive saving?

If consumption is $8,000 when disposable income is $10,000, the marginal propensity to consume

Use the figure below to answer the following questions. Figure 27.1.1 This figure describes the relationship between consumption expenditure and disposable income for an economy. -Refer to Figure 27.1.1. The marginal propensity to consume for this economy is

The vertical distance between the consumption function and the 45° line measures

Use the information below to answer the following questions. Fact 27.3.1 An economy has a fixed price level, no imports, and no income taxes. MPC is 0.5 and real GDP is $200 billion. Businesses increase investment by $2 billion. -Consider Fact 27.3.1. The multiplier is

Use the information below to answer the following questions. Fact 27.5.1 The economy of Beverly Hills has a consumption function of C = 10 + 0.8Y, investment equal to 6, government expenditure equal to 10, exports equal to 10, and an import function of M = 0.1Y. -Refer to Fact 27.5.1. If autonomous consumption increases by 10, what is the new equation of the aggregate expenditure function for this economy?