Question 1

Does aggregate planned expenditure always equal real GDP?

Accepted Answer

No,aggregate planned expenditure does no

Question 2

Explain why the multiplier is greater than 1.

Accepted Answer

The multiplier is greater than 1 because

Question 3

A fall in the price level shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

Accepted Answer

A) True 
 B)False

Question 4

The MPC and MPS measure changes in consumption expenditure and saving that result from changes in

Accepted Answer

A)  expected inflation. 
B)  disposable income. 
C)  expected future income. 
D)  government expenditures on goods and services. 
A)  expected inflation. 
B)  disposable income. 
C)  expected future income. 
D)  government expenditures on goods and services.

Question 5

Between 2008 and 2009 the government reported that disposable income decreased by $300 billion and consumption expenditure decreased by $180 billion.Based on these data,the MPC equals

Accepted Answer

A)  4.4. 
B)  0.80. 
C)  0.60. 
D)  $120 billion. 
A)  4.4. 
B)  0.80. 
C)  0.60. 
D)  $120 billion.

Question 6

Disposable income is equal to

Accepted Answer

A)  consumption expenditure minus taxes plus transfer payments. 
B)  aggregate income minus taxes plus government expenditures on goods and services. 
C)  aggregate income minus taxes plus transfer payments. 
D)  aggregate income plus transfer payments. 
A)  consumption expenditure minus taxes plus transfer payments. 
B)  aggregate income minus taxes plus government expenditures on goods and services. 
C)  aggregate income minus taxes plus transfer payments. 
D)  aggregate income plus transfer payments.

Question 7

How is it possible for consumption expenditure to be positive even when disposable income is zero?

Accepted Answer

Consumption expenditure can be positive

Question 8

What is the consumption function?
What factor leads to a movement along the consumption function?

Accepted Answer

The consumption function is the relation

Question 9

"If the income tax rate is high enough,the multiplier can be negative." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The

Question 10

In 2007,investment in France increased by 7 billion euros. Which of following occurs?
I. an upward shift in the AE curve.
II. a leftward shift in the AD curve.
III. an increase in the price level and real GDP in the short run.
IV. an increase in the price level and no change in real GDP in the long run.

Accepted Answer

A)  I, II, III and IV. 
B)  I and III only. 
C)  I, III and IV only. 
D)  III and iv only. 
A)  I, II, III and IV. 
B)  I and III only. 
C)  I, III and IV only. 
D)  III and iv only.

Question 11

-In the figure above,if income taxes increase,

Accepted Answer

A)  the AE curve becomes steeper. 
B)  the AE curve becomes flatter. 
C)  there is a movement leftward along the unchanged AE curve. 
D)  there is a movement rightward along the unchanged AE curve. 
A)  the AE curve becomes steeper. 
B)  the AE curve becomes flatter. 
C)  there is a movement leftward along the unchanged AE curve. 
D)  there is a movement rightward along the unchanged AE curve.

Question 12

When the consumption function becomes steeper,

Accepted Answer

A)  less of every dollar is consumed. 
B)  the saving function also become steeper. 
C)  the MPC rises. 
D)  the MPC falls. 
A)  less of every dollar is consumed. 
B)  the saving function also become steeper. 
C)  the MPC rises. 
D)  the MPC falls.

Question 13

Between 2008 and 2009 the government estimates that disposable income in the United States decreased.Consequently,as a result of this change consumption expenditure

Accepted Answer

A)  remained constant. 
B)  decreased. 
C)  increased. 
D)  More information is needed about how taxes changed between 2008 and 2009. 
A)  remained constant. 
B)  decreased. 
C)  increased. 
D)  More information is needed about how taxes changed between 2008 and 2009.

Question 14

Discuss the link between real GDP and imports.

Accepted Answer

Imports are one of two components that a

Question 15

The multiplier effect exists because a change in autonomous expenditure

Accepted Answer

A)  leaves the economy in the form of imports. 
B)  leads to changes in income, which generate further spending. 
C)  prompts further exports. 
D)  will undergo its complete effect in one round. 
A)  leaves the economy in the form of imports. 
B)  leads to changes in income, which generate further spending. 
C)  prompts further exports. 
D)  will undergo its complete effect in one round.

Question 16

The slope of the aggregate expenditure curve equals the change in

Accepted Answer

A)  planned expenditure divided by the change in real GDP. 
B)  autonomous expenditure divided by the change in real GDP. 
C)  government expenditure divided by the change in real GDP. 
D)  real GDP divided by the change in planned expenditure. 
A)  planned expenditure divided by the change in real GDP. 
B)  autonomous expenditure divided by the change in real GDP. 
C)  government expenditure divided by the change in real GDP. 
D)  real GDP divided by the change in planned expenditure.

Question 17

When Audrey's disposable income is $40,000,her consumption expenditure is $39,000.When her disposable income is $50,000,Audrey's consumption expenditure is $47,000.What is Audrey's marginal propensity to consume?

Accepted Answer

The marginal propensity to consume is th

Question 18

The slope of the aggregate expenditure curve is

Accepted Answer

A)  0. 
B)  greater than 0 and less than 1. 
C)  1. 
D)  greater than 1. 
A)  0. 
B)  greater than 0 and less than 1. 
C)  1. 
D)  greater than 1.

Question 19

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Real GDP } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption } \
\text { expenditure } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Investment } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { expenditure } \
\text { (dollars) }
\end{array} \
\hline 3,000 & 2,500 & 500 & 500 \
\hline 4,000 & 3,250 & 500 & 500 \
\hline 5,000 & 4,000 & 500 & 500 \
\hline 6,000 & 4,750 & 500 & 500 \
\hline 7,000 & 5,500 & 500 & 500 \
\hline 8,000 & 6,250 & 500 & 500 \
\hline
\end{array}$$
-In the above table,there are no taxes and no imports or exports.The total level of expenditure in the economy when real GDP is $7,000 is

Accepted Answer

A)  $7,000. 
B)  $6,500. 
C)  $13,500. 
D)  0.75. 
A)  $7,000. 
B)  $6,500. 
C)  $13,500. 
D)  0.75.

Question 20

The multiplier is greater than 1 because

Accepted Answer

A)  most households are unable to save. 
B)  household spending exceeds income. 
C)  one person's spending becomes another's income. 
D)  corporate spending exceeds corporate income. 
A)  most households are unable to save. 
B)  household spending exceeds income. 
C)  one person's spending becomes another's income. 
D)  corporate spending exceeds corporate income.

Does aggregate planned expenditure always equal real GDP?

Explain why the multiplier is greater than 1.

A fall in the price level shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

The MPC and MPS measure changes in consumption expenditure and saving that result from changes in

Between 2008 and 2009 the government reported that disposable income decreased by $300 billion and consumption expenditure decreased by $180 billion.Based on these data,the MPC equals

Disposable income is equal to

How is it possible for consumption expenditure to be positive even when disposable income is zero?

What is the consumption function? What factor leads to a movement along the consumption function?

"If the income tax rate is high enough,the multiplier can be negative." Is the previous statement correct or incorrect?

-In the figure above,if income taxes increase,

When the consumption function becomes steeper,

Between 2008 and 2009 the government estimates that disposable income in the United States decreased.Consequently,as a result of this change consumption expenditure

Discuss the link between real GDP and imports.

The multiplier effect exists because a change in autonomous expenditure

The slope of the aggregate expenditure curve equals the change in

When Audrey's disposable income is $40,000,her consumption expenditure is $39,000.When her disposable income is $50,000,Audrey's consumption expenditure is $47,000.What is Audrey's marginal propensity to consume?

The slope of the aggregate expenditure curve is

The multiplier is greater than 1 because

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

Does aggregate planned expenditure always equal real GDP?

Explain why the multiplier is greater than 1.

A fall in the price level shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

The MPC and MPS measure changes in consumption expenditure and saving that result from changes in

Between 2008 and 2009 the government reported that disposable income decreased by $300 billion and consumption expenditure decreased by $180 billion.Based on these data,the MPC equals

Disposable income is equal to

How is it possible for consumption expenditure to be positive even when disposable income is zero?

What is the consumption function? What factor leads to a movement along the consumption function?

"If the income tax rate is high enough,the multiplier can be negative." Is the previous statement correct or incorrect?

-In the figure above,if income taxes increase,

When the consumption function becomes steeper,

Between 2008 and 2009 the government estimates that disposable income in the United States decreased.Consequently,as a result of this change consumption expenditure

Discuss the link between real GDP and imports.

The multiplier effect exists because a change in autonomous expenditure

The slope of the aggregate expenditure curve equals the change in

When Audrey's disposable income is $40,000,her consumption expenditure is $39,000.When her disposable income is $50,000,Audrey's consumption expenditure is $47,000.What is Audrey's marginal propensity to consume?

The slope of the aggregate expenditure curve is

The multiplier is greater than 1 because

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