Question 1

Between 2011 and 2012 real GDP increased by $600 billion and imports increased by $80 billion.Based on these data,the marginal propensity to import equals

Accepted Answer

A)  0.13. 
B)  7.5. 
C)  0.87 
D)  0.08. 
A)  0.13. 
B)  7.5. 
C)  0.87 
D)  0.08.

Question 2

The multiplier is 2.5 and the SAS curve is upward sloping.Investment increases by $20 billion.In the short run,equilibrium real GDP will

Accepted Answer

A)  increase by $50 billion. 
B)  increase by less than $50 billion. 
C)  decrease by $50 billion. 
D)  decrease by less than $50 billion. 
A)  increase by $50 billion. 
B)  increase by less than $50 billion. 
C)  decrease by $50 billion. 
D)  decrease by less than $50 billion.

Question 3

An economy saves 20 percent of any increase in income and there are no income taxes or imports.Then,an increase in investment of $2 billion leads to a short run increase in real GDP of

Accepted Answer

A)  $2 billion. 
B)  $10 billion. 
C)  $0.4 billion. 
D)  $1.6 billion. 
A)  $2 billion. 
B)  $10 billion. 
C)  $0.4 billion. 
D)  $1.6 billion.

Question 4

If the multiplier is 4.0 and investment decreases by $2.5 billion,the AD curve

Accepted Answer

A)  shifts rightward by $10 billion. 
B)  shifts rightward by less than $10 billion. 
C)  shifts leftward by $10 billion. 
D)  shifts leftward by more than $30 billion. 
A)  shifts rightward by $10 billion. 
B)  shifts rightward by less than $10 billion. 
C)  shifts leftward by $10 billion. 
D)  shifts leftward by more than $30 billion.

Question 5

The part of aggregate planned expenditure that does not vary with real GDP ________.

Accepted Answer

A)  equals equilibrium expenditure 
B)  is autonomous expenditure 
C)  is induced expenditure 
D)  equals zero 
A)  equals equilibrium expenditure 
B)  is autonomous expenditure 
C)  is induced expenditure 
D)  equals zero

Question 6

-In the above figure,a change in autonomous consumption to $4 trillion with no change to the MPC would cause the consumption function to

Accepted Answer

A)  become steeper. 
B)  become flatter. 
C)  shift downward. 
D)  shift upward. 
A)  become steeper. 
B)  become flatter. 
C)  shift downward. 
D)  shift upward.

Question 7

The marginal propensity to save equals the

Accepted Answer

A)  change in savings resulting from a one dollar change in disposable income. 
B)  change in savings from a change in consumption expenditure. 
C)  average amount of income saved. 
D)  ability to save the same percentage of income each month. 
A)  change in savings resulting from a one dollar change in disposable income. 
B)  change in savings from a change in consumption expenditure. 
C)  average amount of income saved. 
D)  ability to save the same percentage of income each month.

Question 8

-In the above figure,autonomous expenditure along AE₂ equals

Accepted Answer

A)  $3 trillion. 
B)  $6 trillion. 
C)  $12 trillion. 
D)  an amount not given in the above answers. 
A)  $3 trillion. 
B)  $6 trillion. 
C)  $12 trillion. 
D)  an amount not given in the above answers.

Question 9

In an economy with no income taxes or imports,the multiplier equals

Accepted Answer

A)  1/MPC. 
B)  1/MPS. 
C)  1/(1 - MPS). 
D)  1/(MPC + MPS). 
A)  1/MPC. 
B)  1/MPS. 
C)  1/(1 - MPS). 
D)  1/(MPC + MPS).

Question 10

If aggregate planned expenditure exceeds real GDP,

Accepted Answer

A)  firms are not maximizing their profits. 
B)  planned investment is greater than planned savings. 
C)  actual inventories decrease below their target. 
D)  planned consumption expenditure is less than actual consumption expenditure. 
A)  firms are not maximizing their profits. 
B)  planned investment is greater than planned savings. 
C)  actual inventories decrease below their target. 
D)  planned consumption expenditure is less than actual consumption expenditure.

Question 11

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 "...factories have been exposed to ...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
The decrease in exports represents a change in ________ expenditure and will cause ________.

Accepted Answer

A)  induced; a downward shift in the AE curve and a leftward shift in the AD curve 
B)  autonomous; a downward shift in the AE curve and a leftward shift in the AD curve 
C)  induced; an upward shift in the AE curve and a leftward shift in the AD curve 
D)  autonomous; a downward shift in the AE curve and a rightward shift in the AD curve 
A)  induced; a downward shift in the AE curve and a leftward shift in the AD curve 
B)  autonomous; a downward shift in the AE curve and a leftward shift in the AD curve 
C)  induced; an upward shift in the AE curve and a leftward shift in the AD curve 
D)  autonomous; a downward shift in the AE curve and a rightward shift in the AD curve

Question 12

Saving equals

Accepted Answer

A)  disposable income minus taxes. 
B)  disposable income minus consumption expenditure. 
C)  disposable income plus consumption expenditure. 
D)  consumption expenditure minus disposable income. 
A)  disposable income minus taxes. 
B)  disposable income minus consumption expenditure. 
C)  disposable income plus consumption expenditure. 
D)  consumption expenditure minus disposable income.

Question 13

When disposal income is $5.0 trillion,consumption expenditure is $4.5 trillion.When disposal income is $6.0 trillion,consumption expenditure is $5.0 trillion.What is the marginal propensity to consume?

Accepted Answer

The marginal propensity to consume is th

Question 14

One reason the aggregate expenditure curve slopes upward is because ________ increases when real GDP increases.

Accepted Answer

A)  investment 
B)  consumption expenditure 
C)  government expenditure on goods and services 
D)  exports 
A)  investment 
B)  consumption expenditure 
C)  government expenditure on goods and services 
D)  exports

Question 15

The saving function shows a ________ relationship between ________.

Accepted Answer

A)  positive; disposable income and saving 
B)  positive; disposable income and dissaving 
C)  negative; disposable income and consumption expenditure 
D)  negative; real GDP and saving 
A)  positive; disposable income and saving 
B)  positive; disposable income and dissaving 
C)  negative; disposable income and consumption expenditure 
D)  negative; real GDP and saving

Question 16

The marginal propensity to save (MPS) is equal to the

Accepted Answer

A)  slope of the savings function. 
B)  slope of the 45 degree. 
C)  reciprocal value of the MPC. 
D)  difference between consumption and income. 
A)  slope of the savings function. 
B)  slope of the 45 degree. 
C)  reciprocal value of the MPC. 
D)  difference between consumption and income.

Question 17

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Disposable income } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption } \
\text { expenditure (dollars) }
\end{array} \
\hline 0 & 100 \
\hline 100 & 180 \
\hline 300 & 340 \
\hline 500 & 500 \
\hline 700 & 660 \
\hline 900 & 820 \
\hline
\end{array}$$
-In the above table,savings equal zero when disposable income equals

Accepted Answer

A)  0. 
B)  $200. 
C)  $300. 
D)  $500. 
A)  0. 
B)  $200. 
C)  $300. 
D)  $500.

Question 18

The graph of the aggregate expenditure curve has ________ on the y-axis and ________ on the x-axis.

Accepted Answer

A)  real GDP; aggregate planned expenditure 
B)  aggregate actual expenditure; real GDP 
C)  household expenditures; real GDP 
D)  aggregate planned expenditure; real GDP 
A)  real GDP; aggregate planned expenditure 
B)  aggregate actual expenditure; real GDP 
C)  household expenditures; real GDP 
D)  aggregate planned expenditure; real GDP

Question 19

How do firms respond to unplanned inventory changes?
What is the effect on their production and GDP?

Accepted Answer

If inventories are above their target le

Question 20

At the equilibrium level of aggregate expenditure,what does aggregate planned expenditure equal?
What happens at other levels of real GDP to bring about an equilibrium?

Accepted Answer

At the equilibrium level of aggregate ex

Between 2011 and 2012 real GDP increased by $600 billion and imports increased by $80 billion.Based on these data,the marginal propensity to import equals

The multiplier is 2.5 and the SAS curve is upward sloping.Investment increases by $20 billion.In the short run,equilibrium real GDP will

An economy saves 20 percent of any increase in income and there are no income taxes or imports.Then,an increase in investment of $2 billion leads to a short run increase in real GDP of

If the multiplier is 4.0 and investment decreases by $2.5 billion,the AD curve

The part of aggregate planned expenditure that does not vary with real GDP ________.

-In the above figure,a change in autonomous consumption to $4 trillion with no change to the MPC would cause the consumption function to

The marginal propensity to save equals the

-In the above figure,autonomous expenditure along AE₂ equals

In an economy with no income taxes or imports,the multiplier equals

If aggregate planned expenditure exceeds real GDP,

Saving equals

When disposal income is $5.0 trillion,consumption expenditure is $4.5 trillion.When disposal income is $6.0 trillion,consumption expenditure is $5.0 trillion.What is the marginal propensity to consume?

One reason the aggregate expenditure curve slopes upward is because ________ increases when real GDP increases.

The saving function shows a relationship between .

The marginal propensity to save (MPS) is equal to the

Disposable income (dollars) Consumption expenditure (dollars) 0 100 100 180 300 340 500 500 700 660 900 820 -In the above table,savings equal zero when disposable income equals

The graph of the aggregate expenditure curve has on the y-axis and on the x-axis.

How do firms respond to unplanned inventory changes? What is the effect on their production and GDP?

At the equilibrium level of aggregate expenditure,what does aggregate planned expenditure equal? What happens at other levels of real GDP to bring about an equilibrium?

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

Between 2011 and 2012 real GDP increased by $600 billion and imports increased by $80 billion.Based on these data,the marginal propensity to import equals

The multiplier is 2.5 and the SAS curve is upward sloping.Investment increases by $20 billion.In the short run,equilibrium real GDP will

An economy saves 20 percent of any increase in income and there are no income taxes or imports.Then,an increase in investment of $2 billion leads to a short run increase in real GDP of

If the multiplier is 4.0 and investment decreases by $2.5 billion,the AD curve

The part of aggregate planned expenditure that does not vary with real GDP ________.

-In the above figure,a change in autonomous consumption to $4 trillion with no change to the MPC would cause the consumption function to

The marginal propensity to save equals the

-In the above figure,autonomous expenditure along AE₂ equals

In an economy with no income taxes or imports,the multiplier equals

If aggregate planned expenditure exceeds real GDP,

Saving equals

When disposal income is $5.0 trillion,consumption expenditure is $4.5 trillion.When disposal income is $6.0 trillion,consumption expenditure is $5.0 trillion.What is the marginal propensity to consume?

One reason the aggregate expenditure curve slopes upward is because ________ increases when real GDP increases.

The saving function shows a ________ relationship between ________.

The marginal propensity to save (MPS) is equal to the

Disposable income (dollars) Consumption expenditure (dollars) 0 100 100 180 300 340 500 500 700 660 900 820 -In the above table,savings equal zero when disposable income equals

The graph of the aggregate expenditure curve has ________ on the y-axis and ________ on the x-axis.

How do firms respond to unplanned inventory changes? What is the effect on their production and GDP?

At the equilibrium level of aggregate expenditure,what does aggregate planned expenditure equal? What happens at other levels of real GDP to bring about an equilibrium?

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

The saving function shows a relationship between .

The graph of the aggregate expenditure curve has on the y-axis and on the x-axis.