Exam 27: Expenditure Multipliers

Autonomous consumption is 50. With every increase of one dollar in disposable income, consumption increases 60 cents. The marginal tax rate is 10 percent. The equation of the consumption function is

The components of aggregate expenditure that are influenced by real GDP are

Which one of the following will lead to an increase in the slope of the AE function?

Use the figure below to answer the following questions. Figure 27.2.1 There are no exports or imports in this economy. -Refer to Figure 27.2.1. When real GDP is equal to Yb, then

The marginal propensity to consume

Use the figure below to answer the following questions. Figure 27.5.2 -Refer to Figure 27.5.2. The equation of the consumption function is

The slope of the consumption function is

A change in consumption, in response to a change in income, is

If the saving function is S = -25 + 0.4YD, then autonomous consumption is

Everything else remaining the same, if Canadians expect future disposable income to rise, then

Use the table below to answer the following questions. Table 27.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 27.3.1. If investment increases by $25 billion, the real GDP becomes

If aggregate planned expenditure exceeds real GDP then

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. What is equilibrium real GDP in this economy?

Use the information below to answer the following questions. Fact 27.5.2 The economy of Tinseltown has a consumption function of C = 15 + 0.7Y , investment equal to 8, government expenditure equal to 12, exports equal to 20, and an import function of M = 0.2Y. -Refer to Fact 27.5.2. What is the equation for the aggregate expenditure curve for this economy?

Use the figure below to answer the following questions. Figure 27.2.3 There are no taxes in this economy. -In Figure 27.2.3, equilibrium expenditure is

Suppose that investment decreases by $15 billion. If the multiplier is 2, and the short-run aggregate supply curve is positively sloped. In the short run, equilibrium real GDP

Use the information below to answer the following questions. Fact 27.5.2 The economy of Tinseltown has a consumption function of C = 15 + 0.7Y , investment equal to 8, government expenditure equal to 12, exports equal to 20, and an import function of M = 0.2Y. -Refer to Fact 27.5.2. What is the multiplier for this economy?

Use the information below to answer the following questions. Fact 27.1.1 In an economy, when disposable income increases from $400 billion to $500 billion, consumption expenditure increases from $480 billion to $540 billion. -Consider Fact 27.1.1. The marginal propensity to save is

Everything else remaining the same, if aggregate demand changes, the amount by which the AD curve shifts depends on

The multiplier can take on any value