Exam 11: Expenditure Multipliers

Autonomous consumption is equal to

In the short run with fixed prices,an increase in investment of $100 billion

Explain the relationship between real GDP and aggregate planned expenditure,AE.What change to inventories takes place when the two are not equal?

If the multiplier is 6 and exports decrease by $30,what impact will that have on aggregate expenditure?

With a steep short-run aggregate supply curve,

The government increases its expenditures.The steeper the SAS curve,the ________ will be the increase in the price level and the ________ will be the increase in real GDP.

The MPC and MPS

The multiplier is larger if the

What is the difference between induced and autonomous expenditure? Which components of aggregate expenditure fall under which category?

What is the marginal propensity to consume? Why it is an important concept?

Mauritius,an island off the coast of Africa,competes with other countries producing goods with low-skilled labor. In 2006,it was reported that ..."its clothing factories have been exposed to frontal competition from China,India and other Asian mass producers." As a result,"the main export industry has seen a 30 per cent reduction in volume ..." www.ft.com,3/13/2006 Suppose real GDP is $14 billion,exports total $2 billion and the multiplier is 4. If exports decline by $600,000,000,real GDP in Mauritius will

Disposable income (dollars) Consumption expenditure (dollars) 0 100 100 180 300 340 500 500 700 660 900 820 -In the above table,savings are positive when disposable income is greater than

The marginal propensity to consume is

An estimate of the MPC in the U.S.is 0.90. Paul Krugman,the 2008 Nobel Prize winner in economics,stated,"...you'd be hard pressed to argue for an overall multiplier as high as 2." Www)nytimes.com,11/10/2008 What factors could explain the difference between the MPC and Krugman's estimate of the multiplier?

The Keynesian model of aggregate expenditure describes the economy in

The MPC is the fraction of

If investment increases by $150 and,in response,equilibrium expenditure rises by $600,

-In the above figure,if the marginal propensity to consume increases,the slope of the AE curve would

Assume there are no taxes or imports.The government estimates that between 2008 and 2009 disposable income decreased by $300 billion and consumption expenditure decreased by $180 billion.Based on these data,the multiplier equals

Real GDP C I G X M 100 75 25 95 10 1 200 150 25 95 10 2 300 225 25 95 10 3 400 300 25 95 10 4 500 375 25 95 10 5 600 450 25 95 10 6 700 525 25 95 10 7 800 600 25 95 10 8 900 675 25 95 10 9 1000 750 25 95 10 10 -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.What is the level of aggregate planned expenditure when real GDP is equal to $900 billion?