Question 1

If the multiplier is 4 and there are no imports or income taxes,the marginal propensity to consume is

Accepted Answer

A)  0.25. 
B)  0.50. 
C)  0.75. 
D)  1.00. 
A)  0.25. 
B)  0.50. 
C)  0.75. 
D)  1.00.

Question 2

In the aggregate expenditure model,when real GDP is greater than aggregate planned expenditure,

Accepted Answer

A)  unplanned inventories are being accumulated. 
B)  inventories are being depleted. 
C)  inventories are not being changed. 
D)  this cannot happen, because the two variables are always equal. 
A)  unplanned inventories are being accumulated. 
B)  inventories are being depleted. 
C)  inventories are not being changed. 
D)  this cannot happen, because the two variables are always equal.

Question 3

For a household,the marginal propensity to save plus the marginal propensity to consume

Accepted Answer

A)  equals 1. 
B)  equals 0. 
C)  equals a number that is larger the larger the household's disposable income. 
D)  equals a number that is smaller the larger the household's disposable income. 
A)  equals 1. 
B)  equals 0. 
C)  equals a number that is larger the larger the household's disposable income. 
D)  equals a number that is smaller the larger the household's disposable income.

Question 4

The marginal propensity to consume is the ________.

Accepted Answer

A)  fraction of total disposable income consumed 
B)  fraction of GDP consumed 
C)  fraction of a change in disposable income that is consumed. 
D)  total amount of disposable income consumed 
A)  fraction of total disposable income consumed 
B)  fraction of GDP consumed 
C)  fraction of a change in disposable income that is consumed. 
D)  total amount of disposable income consumed

Question 5

A change in imports caused by rising U.S.incomes is

Accepted Answer

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

Question 6

A movement along the consumption function is the result of changes in disposable income.

Accepted Answer

A) True 
 B)False

Question 7

If the price level is constant,a change in investment has a multiplied impact on real GDP.

Accepted Answer

A) True 
 B)False

Question 8

-In the above figure,point d represents planned expenditures ________ real GDP.

Accepted Answer

A)  greater than 
B)  equal to 
C)  less than 
D)  There is not enough information to answer the question. 
A)  greater than 
B)  equal to 
C)  less than 
D)  There is not enough information to answer the question.

Question 9

An economy has no imports and no taxes.The marginal propensity to save is 0.2.The multiplier is ________ so a ________ increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

Accepted Answer

A)  1.25; $48 billion 
B)  5; $12 billion 
C)  10; $6 billion 
D)  none of the above answers are correct. 
A)  1.25; $48 billion 
B)  5; $12 billion 
C)  10; $6 billion 
D)  none of the above answers are correct.

Question 10

Suppose that the slope of the AE curve is 0.75.Then a $100 decrease 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 11

The marginal propensity to consume is equal to

Accepted Answer

A)  what people spend out of total disposable income. 
B)  the desired amount of consumption expenditure as a proportion of disposable income. 
C)  the average, after-tax consumption amount. 
D)  the change in consumption expenditure from a change in disposable income. 
A)  what people spend out of total disposable income. 
B)  the desired amount of consumption expenditure as a proportion of disposable income. 
C)  the average, after-tax consumption amount. 
D)  the change in consumption expenditure from a change in disposable income.

Question 12

Intertemporal substitution means changes in purchases

Accepted Answer

A)  through time. 
B)  between imports and exports. 
C)  across different stores. 
D)  across different goods and services. 
A)  through time. 
B)  between imports and exports. 
C)  across different stores. 
D)  across different goods and services.

Question 13

Suppose that firms find that their inventories are less than planned.In this case,what is the initial relationship between aggregate planned expenditure and real GDP?
Using the aggregate expenditure model,what adjustments,if any,take place?

Accepted Answer

If inventories are less than planned,agg

Question 14

The size of the multiplier

Accepted Answer

A)  is unaffected by the amount of time that elapses. 
B)  increases in the long run. 
C)  decreases in the long run. 
D)  is constant in the long run. 
A)  is unaffected by the amount of time that elapses. 
B)  increases in the long run. 
C)  decreases in the long run. 
D)  is constant in the long run.

Question 15

In the short run,an upward shift in the aggregate expenditure curve leads to a leftward shift in the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 16

At equilibrium expenditure,unplanned changes in inventory

Accepted Answer

A)  must be positive. 
B)  must be zero. 
C)  must be negative. 
D)  might be either positive or negative. 
A)  must be positive. 
B)  must be zero. 
C)  must be negative. 
D)  might be either positive or negative.

Question 17

If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion,then the multiplier is ________.

Accepted Answer

A)  $225 billion 
B)  0.625 
C)  $75 billion 
D)  2 
A)  $225 billion 
B)  0.625 
C)  $75 billion 
D)  2

Question 18

Suppose that in a particular economy,the multiplier is equal to 5.In terms of aggregate demand and aggregate supply,this value for the multiplier means that after an increase in investment

Accepted Answer

A)  at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment. 
B)  at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment. 
C)  at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment. 
D)  at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment. 
A)  at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment. 
B)  at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment. 
C)  at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment. 
D)  at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment.

Question 19

The presence of imports ________ the size of the U.S.multiplier because with an increase of U.S.real GDP,________.

Accepted Answer

A)  increases; U.S. consumers buy goods from other countries 
B)  increases; U.S. firms can sell goods to other countries 
C)  decreases; U.S. consumers buy goods from other countries 
D)  decreases; U.S. firms can sell goods to other countries 
A)  increases; U.S. consumers buy goods from other countries 
B)  increases; U.S. firms can sell goods to other countries 
C)  decreases; U.S. consumers buy goods from other countries 
D)  decreases; U.S. firms can sell goods to other countries

Question 20

A decrease in autonomous expenditure shifts the AE curve

Accepted Answer

A)  downward and leaves its slope unchanged. 
B)  downward and makes it steeper. 
C)  downward and makes it flatter. 
D)  upward and makes it steeper. 
A)  downward and leaves its slope unchanged. 
B)  downward and makes it steeper. 
C)  downward and makes it flatter. 
D)  upward and makes it steeper.

If the multiplier is 4 and there are no imports or income taxes,the marginal propensity to consume is

In the aggregate expenditure model,when real GDP is greater than aggregate planned expenditure,

For a household,the marginal propensity to save plus the marginal propensity to consume

The marginal propensity to consume is the ________.

A change in imports caused by rising U.S.incomes is

A movement along the consumption function is the result of changes in disposable income.

If the price level is constant,a change in investment has a multiplied impact on real GDP.

-In the above figure,point d represents planned expenditures ________ real GDP.

An economy has no imports and no taxes.The marginal propensity to save is 0.2.The multiplier is so a increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

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

The marginal propensity to consume is equal to

Intertemporal substitution means changes in purchases

Suppose that firms find that their inventories are less than planned.In this case,what is the initial relationship between aggregate planned expenditure and real GDP? Using the aggregate expenditure model,what adjustments,if any,take place?

The size of the multiplier

In the short run,an upward shift in the aggregate expenditure curve leads to a leftward shift in the short-run aggregate supply curve.

At equilibrium expenditure,unplanned changes in inventory

If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion,then the multiplier is ________.

Suppose that in a particular economy,the multiplier is equal to 5.In terms of aggregate demand and aggregate supply,this value for the multiplier means that after an increase in investment

The presence of imports the size of the U.S.multiplier because with an increase of U.S.real GDP,.

A decrease in autonomous expenditure shifts the AE curve

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

If the multiplier is 4 and there are no imports or income taxes,the marginal propensity to consume is

In the aggregate expenditure model,when real GDP is greater than aggregate planned expenditure,

For a household,the marginal propensity to save plus the marginal propensity to consume

The marginal propensity to consume is the ________.

A change in imports caused by rising U.S.incomes is

A movement along the consumption function is the result of changes in disposable income.

If the price level is constant,a change in investment has a multiplied impact on real GDP.

-In the above figure,point d represents planned expenditures ________ real GDP.

An economy has no imports and no taxes.The marginal propensity to save is 0.2.The multiplier is ________ so a ________ increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

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

The marginal propensity to consume is equal to

Intertemporal substitution means changes in purchases

Suppose that firms find that their inventories are less than planned.In this case,what is the initial relationship between aggregate planned expenditure and real GDP? Using the aggregate expenditure model,what adjustments,if any,take place?

The size of the multiplier

In the short run,an upward shift in the aggregate expenditure curve leads to a leftward shift in the short-run aggregate supply curve.

At equilibrium expenditure,unplanned changes in inventory

If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150 billion,then the multiplier is ________.

Suppose that in a particular economy,the multiplier is equal to 5.In terms of aggregate demand and aggregate supply,this value for the multiplier means that after an increase in investment

The presence of imports ________ the size of the U.S.multiplier because with an increase of U.S.real GDP,________.

A decrease in autonomous expenditure shifts the AE curve

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

An economy has no imports and no taxes.The marginal propensity to save is 0.2.The multiplier is so a increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

The presence of imports the size of the U.S.multiplier because with an increase of U.S.real GDP,.