Question 1

Actual expenditure might differ from planned expenditure because

Accepted Answer

A)  actual consumption expenditure differs from planned consumption expenditure. 
B)  actual investment differs from planned investment. 
C)  actual government expenditure differ from planned government expenditure. 
D)  actual net exports differ from planned net exports. 
A)  actual consumption expenditure differs from planned consumption expenditure. 
B)  actual investment differs from planned investment. 
C)  actual government expenditure differ from planned government expenditure. 
D)  actual net exports differ from planned net exports.

Question 2

The aggregate expenditure curve shows

Accepted Answer

A)  how consumption changes in response to a change in disposable income. 
B)  how planned aggregate expenditure and real GDP are related. 
C)  a negative relationship between the price level and real GDP. 
D)  Both answers B and C are correct. 
A)  how consumption changes in response to a change in disposable income. 
B)  how planned aggregate expenditure and real GDP are related. 
C)  a negative relationship between the price level and real GDP. 
D)  Both answers B and C are correct.

Question 3

Suppose that the slope of the AE curve is 0.75.Then a $100 increase in autonomous spending means equilibrium expenditure will

Accepted Answer

A)  decrease by $400. 
B)  increase by $400. 
C)  decrease by $750. 
D)  increase by $750. 
A)  decrease by $400. 
B)  increase by $400. 
C)  decrease by $750. 
D)  increase by $750.

Question 4

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Disposable } \
\text { income } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption } \
\text { expenditure (dollars) }
\end{array} \
\hline 100 & 225 \
\hline 200 & 300 \
\hline 300 & 375 \
\hline 400 & 450 \
\hline 500 & 525 \
\hline 600 & 600 \
\hline
\end{array}$$
-Using the data in above table,the marginal propensity to consume is

Accepted Answer

A)  increasing as disposable income increases. 
B)  equal to 1.0 when disposable income equals $600. 
C)  constant at 0.75. 
D)  constant at 0.25. 
A)  increasing as disposable income increases. 
B)  equal to 1.0 when disposable income equals $600. 
C)  constant at 0.75. 
D)  constant at 0.25.

Question 5

Between 2008 and 2009 the government reported that disposable income decreased by $300 billion.If the MPC equals 0.8,then consumption expenditure

Accepted Answer

A)  decreases by $40 billion. 
B)  decreases by $1,500 billion. 
C)  decreases by $24 billion. 
D)  decreases by $32 billion. 
A)  decreases by $40 billion. 
B)  decreases by $1,500 billion. 
C)  decreases by $24 billion. 
D)  decreases by $32 billion.

Question 6

Explain the relationships between real GDP,aggregate planned expenditure,induced expenditure,and unplanned investment.

Accepted Answer

All buyers in the economy make expenditu

Question 7

-In the above figure,if real GDP equals $15 trillion,

Accepted Answer

A)  actual and planned investment will both increase. 
B)  unplanned inventories will increase. 
C)  actual investment will decrease but planned investment will increase. 
D)  unplanned inventories will decrease. 
A)  actual and planned investment will both increase. 
B)  unplanned inventories will increase. 
C)  actual investment will decrease but planned investment will increase. 
D)  unplanned inventories will decrease.

Question 8

-In the above figure,if real GDP is below $12 trillion,inventories will be

Accepted Answer

A)  below target levels, so firms increase production. 
B)  below target levels, so firms decrease production. 
C)  above target levels, so firms increase production. 
D)  above target levels, so firms decrease production. 
A)  below target levels, so firms increase production. 
B)  below target levels, so firms decrease production. 
C)  above target levels, so firms increase production. 
D)  above target levels, so firms decrease production.

Question 9

If aggregate planned expenditure is less than real GDP,

Accepted Answer

A)  real GDP will increase. 
B)  real GDP remain unchanged. 
C)  real GDP will either decrease or increase, depending on the MPC. 
D)  inventories will increase above their target level and real GDP will decrease. 
A)  real GDP will increase. 
B)  real GDP remain unchanged. 
C)  real GDP will either decrease or increase, depending on the MPC. 
D)  inventories will increase above their target level and real GDP will decrease.

Question 10

If disposable income increases,

Accepted Answer

A)  the consumption function shifts upward. 
B)  there is a movement upward along the consumption function. 
C)  the consumption function shifts downward. 
D)  there is movement downward along the consumption function. 
A)  the consumption function shifts upward. 
B)  there is a movement upward along the consumption function. 
C)  the consumption function shifts downward. 
D)  there is movement downward along the consumption function.

Question 11

$$\begin{array} { | c | c | c | c | c | c | } 
\hline \begin{array} { r } 
\text { Real } \
\text { GDP }
\end{array} & C & I & G & X & M \
\hline 100 & 75 & 25 & 95 & 10 & 1 \
\hline 200 & 150 & 25 & 95 & 10 & 2 \
\hline 300 & 225 & 25 & 95 & 10 & 3 \
\hline 400 & 300 & 25 & 95 & 10 & 4 \
\hline 500 & 375 & 25 & 95 & 10 & 5 \
\hline 600 & 450 & 25 & 95 & 10 & 6 \
\hline 700 & 525 & 25 & 95 & 10 & 7 \
\hline 800 & 600 & 25 & 95 & 10 & 8 \
\hline 900 & 675 & 25 & 95 & 10 & 9 \
\hline 1000 & 750 & 25 & 95 & 10 & 10 \
\hline
\end{array}$$
-In the above table,C is consumption expenditure,I is investment,G is government expenditure,X is exports,and M is imports.All entries are in dollars.If investment increased by $26 to $51 then equilibrium expenditure will

Accepted Answer

A)  increase by $25. 
B)  decrease by $50. 
C)  increase by $100. 
D)  decrease by $100. 
A)  increase by $25. 
B)  decrease by $50. 
C)  increase by $100. 
D)  decrease by $100.

Question 12

Which of the following shifts the aggregate demand curve rightward?

Accepted Answer

A)  an increase in the price level 
B)  an increase in the income tax rate 
C)  an increase in government expenditure 
D)  a decrease in investment 
A)  an increase in the price level 
B)  an increase in the income tax rate 
C)  an increase in government expenditure 
D)  a decrease in investment

Question 13

In the above figure,the shift from AE₀ to AE₁ might have been caused by

Accepted Answer

A)  an increase in government expenditures. 
B)  an increase in the real interest rate. 
C)  an increase in the price level. 
D)  All of the above answers are correct. 
A)  an increase in government expenditures. 
B)  an increase in the real interest rate. 
C)  an increase in the price level. 
D)  All of the above answers are correct.

Question 14

An increase in the size of the multiplier can be caused by

Accepted Answer

A)  an increase in the MPS. 
B)  an increase in the MPC. 
C)  a decrease in induced expenditures. 
D)  an increase in the marginal propensity to import. 
A)  an increase in the MPS. 
B)  an increase in the MPC. 
C)  a decrease in induced expenditures. 
D)  an increase in the marginal propensity to import.

Question 15

The consumption function relates consumption expenditure to

Accepted Answer

A)  the interest rate. 
B)  disposable income. 
C)  saving. 
D)  the price level. 
A)  the interest rate. 
B)  disposable income. 
C)  saving. 
D)  the price level.

Question 16

-In the above figure,when disposable income is greater than $12 trillion,then

Accepted Answer

A)  savings are negative. 
B)  the MPC is greater than 1. 
C)  savings are positive. 
D)  the MPS is negative. 
A)  savings are negative. 
B)  the MPC is greater than 1. 
C)  savings are positive. 
D)  the MPS is negative.

Question 17

Equilibrium expenditure occurs where

Accepted Answer

A)  the aggregate expenditure curve crosses the 45-degree line. 
B)  planned expenditures exceed national income. 
C)  savings exceed planned investment. 
D)  All of the answers are correct. 
A)  the aggregate expenditure curve crosses the 45-degree line. 
B)  planned expenditures exceed national income. 
C)  savings exceed planned investment. 
D)  All of the answers are correct.

Question 18

An increase in U.S.exports because of increasing foreign incomes is ________ in the United States.

Accepted Answer

A)  an increase in autonomous expenditure 
B)  a decrease in autonomous expenditure 
C)  an increase in induced expenditure 
D)  a decrease in induced expenditure 
A)  an increase in autonomous expenditure 
B)  a decrease in autonomous expenditure 
C)  an increase in induced expenditure 
D)  a decrease in induced expenditure

Question 19

The vertical distance between the 45-degree line and the consumption line represents

Accepted Answer

A)  investment. 
B)  total consumption expenditure. 
C)  the difference between consumption expenditure and investment. 
D)  saving or dissaving. 
A)  investment. 
B)  total consumption expenditure. 
C)  the difference between consumption expenditure and investment. 
D)  saving or dissaving.

Question 20

The short-run impact changes in autonomous spending have on real GDP and the price level depends on aggregate supply.

Accepted Answer

A) True 
 B)False

Actual expenditure might differ from planned expenditure because

The aggregate expenditure curve shows

Suppose that the slope of the AE curve is 0.75.Then a $100 increase in autonomous spending means equilibrium expenditure will

Disposable income (dollars) Consumption expenditure (dollars) 100 225 200 300 300 375 400 450 500 525 600 600 -Using the data in above table,the marginal propensity to consume is

Between 2008 and 2009 the government reported that disposable income decreased by $300 billion.If the MPC equals 0.8,then consumption expenditure

Explain the relationships between real GDP,aggregate planned expenditure,induced expenditure,and unplanned investment.

-In the above figure,if real GDP equals $15 trillion,

-In the above figure,if real GDP is below $12 trillion,inventories will be

If aggregate planned expenditure is less than real GDP,

If disposable income increases,

Which of the following shifts the aggregate demand curve rightward?

In the above figure,the shift from AE₀ to AE₁ might have been caused by

An increase in the size of the multiplier can be caused by

The consumption function relates consumption expenditure to

-In the above figure,when disposable income is greater than $12 trillion,then

Equilibrium expenditure occurs where

An increase in U.S.exports because of increasing foreign incomes is ________ in the United States.

The vertical distance between the 45-degree line and the consumption line represents

The short-run impact changes in autonomous spending have on real GDP and the price level depends on aggregate supply.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 11: Expenditure Multipliers

Actual expenditure might differ from planned expenditure because

The aggregate expenditure curve shows

Suppose that the slope of the AE curve is 0.75.Then a $100 increase in autonomous spending means equilibrium expenditure will

Disposable income (dollars) Consumption expenditure (dollars) 100 225 200 300 300 375 400 450 500 525 600 600 -Using the data in above table,the marginal propensity to consume is

Between 2008 and 2009 the government reported that disposable income decreased by $300 billion.If the MPC equals 0.8,then consumption expenditure

Explain the relationships between real GDP,aggregate planned expenditure,induced expenditure,and unplanned investment.

-In the above figure,if real GDP equals $15 trillion,

-In the above figure,if real GDP is below $12 trillion,inventories will be

If aggregate planned expenditure is less than real GDP,

If disposable income increases,

Which of the following shifts the aggregate demand curve rightward?

In the above figure,the shift from AE₀ to AE₁ might have been caused by

An increase in the size of the multiplier can be caused by

The consumption function relates consumption expenditure to

-In the above figure,when disposable income is greater than $12 trillion,then

Equilibrium expenditure occurs where

An increase in U.S.exports because of increasing foreign incomes is ________ in the United States.

The vertical distance between the 45-degree line and the consumption line represents

The short-run impact changes in autonomous spending have on real GDP and the price level depends on aggregate supply.

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters