Question 1

The data in the above table indicate that the slope of the AE curve is

Accepted Answer

A)  0.30. 
B)  0.50. 
C)  0.90. 
D)  None of the above answers are correct. 
A)  0.30. 
B)  0.50. 
C)  0.90. 
D)  None of the above answers are correct.

Question 2

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Disposable income } \
\text { (billions of dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption expenditure } \
\text { (billions of dollars) }
\end{array} \
\hline 400 & 450 \
\hline 600 & 600 \
\hline 800 & 750 \
\hline 1000 & 900 \
\hline 1200 & 1050 \
\hline
\end{array}$$
-Based upon the above table,the MPC for the consumption function is

Accepted Answer

A)  increasing as income rises. 
B)  equal to 1.0 at $600 billion. 
C)  constant at 0.75. 
D)  constant at 0.25. 
A)  increasing as income rises. 
B)  equal to 1.0 at $600 billion. 
C)  constant at 0.75. 
D)  constant at 0.25.

Question 3

How does the concept of the multiplier help explain business cycle turning points?

Accepted Answer

Business cycle turning points are the po

Question 4

-In the above figure,if the level of real GDP is $13 trillion,

Accepted Answer

A)  inventories are above the levels planned by firms. 
B)  inventories are below the levels planned by firms. 
C)  inventories are equal to the levels planned by firms. 
D)  planned expenditures are zero. 
A)  inventories are above the levels planned by firms. 
B)  inventories are below the levels planned by firms. 
C)  inventories are equal to the levels planned by firms. 
D)  planned expenditures are zero.

Question 5

-The figure above illustrates an economy's consumption function.What is the marginal propensity to save in this economy?

Accepted Answer

A)  0.67 
B)  1.00 
C)  0.75 
D)  0.33 
A)  0.67 
B)  1.00 
C)  0.75 
D)  0.33

Question 6

Suppose the consumption function is given by the equation C = 100 + 0.8YD,where YD is disposable income.What is the marginal propensity to save?

Accepted Answer

A)  0.2 
B)  0.8 
C)  2.0 
D)  100 
A)  0.2 
B)  0.8 
C)  2.0 
D)  100

Question 7

When investment exceeds planned investment,aggregate planned expenditure is ________ than actual aggregate expenditure and inventories are ________ than planned.

Accepted Answer

A)  greater; greater 
B)  greater; less 
C)  less; greater 
D)  less; less 
A)  greater; greater 
B)  greater; less 
C)  less; greater 
D)  less; less

Question 8

In the Keynesian model of aggregate expenditure,real GDP is determined by the

Accepted Answer

A)  price level. 
B)  level of aggregate demand. 
C)  level of aggregate supply. 
D)  level of taxes. 
A)  price level. 
B)  level of aggregate demand. 
C)  level of aggregate supply. 
D)  level of taxes.

Question 9

Planned saving equals

Accepted Answer

A)  disposable income minus planned consumption expenditure. 
B)  planned consumption expenditure minus disposable income. 
C)  zero when disposable income is less than planned consumption expenditure. 
D)  planned consumption expenditure plus disposable income. 
A)  disposable income minus planned consumption expenditure. 
B)  planned consumption expenditure minus disposable income. 
C)  zero when disposable income is less than planned consumption expenditure. 
D)  planned consumption expenditure plus disposable income.

Question 10

If prices are fixed,an increase in aggregate expenditures results in an increase in equilibrium GDP that

Accepted Answer

A)  is greater than the change in aggregate expenditure. 
B)  is equal to the change in aggregate expenditure. 
C)  is less than the change in aggregate expenditure. 
D)  has no necessary relationship to the size of the change in aggregate expenditure. 
A)  is greater than the change in aggregate expenditure. 
B)  is equal to the change in aggregate expenditure. 
C)  is less than the change in aggregate expenditure. 
D)  has no necessary relationship to the size of the change in aggregate expenditure.

Question 11

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

Accepted Answer

A)  $6,500. 
B)  $500. 
C)  -$500. 
D)  $1,500. 
A)  $6,500. 
B)  $500. 
C)  -$500. 
D)  $1,500.

Question 12

The MPS equals the ratio of

Accepted Answer

A)  saving to real GDP. 
B)  the change in saving to the change in consumption expenditure. 
C)  saving to consumption expenditure. 
D)  None of the above answers is correct. 
A)  saving to real GDP. 
B)  the change in saving to the change in consumption expenditure. 
C)  saving to consumption expenditure. 
D)  None of the above answers is correct.

Question 13

-In the above figure,at point d firms would find themselves with inventories ________ their target level and so would ________ production.

Accepted Answer

A)  increasing above; increase 
B)  increasing above; decrease 
C)  decreasing below; increase 
D)  decreasing below; decrease 
A)  increasing above; increase 
B)  increasing above; decrease 
C)  decreasing below; increase 
D)  decreasing below; decrease

Question 14

"The global financial crisis has had a considerable impact on China's export growth,which will continue to show weakness with recession in the U.S.and Europe," said a report by JP Morgan & Co. www.money.cnn.com,11/11/2008
If Chinese exports continue to decline,the AE curve will shift ________,the price level will ________ in the short run and real GDP will ________ in the short run.

Accepted Answer

A)  upward; decrease; decrease 
B)  downward; decrease; decrease 
C)  upward; decrease; not change 
D)  downward; decrease; not change 
A)  upward; decrease; decrease 
B)  downward; decrease; decrease 
C)  upward; decrease; not change 
D)  downward; decrease; not change

Question 15

-In the above figure,an increase in autonomous expenditure is depicted by the movement from point E to

Accepted Answer

A)  point F. 
B)  point G. 
C)  point H. 
D)  point I. 
A)  point F. 
B)  point G. 
C)  point H. 
D)  point I.

Question 16

The slope of the consumption function is

Accepted Answer

A)  less than the slope of the 45-degree line but not equal to zero. 
B)  greater than the slope of the 45-degree line. 
C)  equal to the slope of the 45-degree line. 
D)  equal to zero. 
A)  less than the slope of the 45-degree line but not equal to zero. 
B)  greater than the slope of the 45-degree line. 
C)  equal to the slope of the 45-degree line. 
D)  equal to zero.

Question 17

What is the marginal propensity to consume?
Can the marginal propensity to consume be greater than 1?

Accepted Answer

The marginal propensity to consume is th

Question 18

Suppose disposable income increases from $5 trillion to $6 trillion.As a result,consumption expenditure increases from $4 trillion to ________.This result means the MPC equals ________.

Accepted Answer

A)  $4.5 trillion; 4.50 
B)  $5 trillion; 0.80 
C)  $4.8 trillion; 0.80 
D)  $6 trillion; 1.00 
A)  $4.5 trillion; 4.50 
B)  $5 trillion; 0.80 
C)  $4.8 trillion; 0.80 
D)  $6 trillion; 1.00

Question 19

"Aggregate planned expenditure is the sum of planned consumption expenditure,investment,government expenditure on goods and services,and exports minus imports." Is the previous statement correct or incorrect?

Accepted Answer

The statement accura

Question 20

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Real GDP } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption } \
\text { expenditure } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Investment } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { expenditure } \
\text { (dollars) }
\end{array} \
\hline 3,000 & 2,500 & 500 & 500 \
\hline 4,000 & 3,250 & 500 & 500 \
\hline 5,000 & 4,000 & 500 & 500 \
\hline 6,000 & 4,750 & 500 & 500 \
\hline 7,000 & 5,500 & 500 & 500 \
\hline 8,000 & 6,250 & 500 & 500 \
\hline
\end{array}$$
-In the above table,there are no taxes and no imports or exports.Suppose that investment increases from $500 to $750 at each level of real GDP.After the increase,what is the level of planned expenditure when real GDP equals $5,000?

Accepted Answer

A)  $5,000 
B)  $5,250 
C)  $1,000 
D)  $250 
A)  $5,000 
B)  $5,250 
C)  $1,000 
D)  $250

The data in the above table indicate that the slope of the AE curve is

Disposable income (billions of dollars) Consumption expenditure (billions of dollars) 400 450 600 600 800 750 1000 900 1200 1050 -Based upon the above table,the MPC for the consumption function is

How does the concept of the multiplier help explain business cycle turning points?

-In the above figure,if the level of real GDP is $13 trillion,

-The figure above illustrates an economy's consumption function.What is the marginal propensity to save in this economy?

Suppose the consumption function is given by the equation C = 100 + 0.8YD,where YD is disposable income.What is the marginal propensity to save?

When investment exceeds planned investment,aggregate planned expenditure is than actual aggregate expenditure and inventories are than planned.

In the Keynesian model of aggregate expenditure,real GDP is determined by the

Planned saving equals

If prices are fixed,an increase in aggregate expenditures results in an increase in equilibrium GDP that

The MPS equals the ratio of

-In the above figure,at point d firms would find themselves with inventories their target level and so would production.

-In the above figure,an increase in autonomous expenditure is depicted by the movement from point E to

The slope of the consumption function is

What is the marginal propensity to consume? Can the marginal propensity to consume be greater than 1?

Suppose disposable income increases from $5 trillion to $6 trillion.As a result,consumption expenditure increases from $4 trillion to .This result means the MPC equals .

"Aggregate planned expenditure is the sum of planned consumption expenditure,investment,government expenditure on goods and services,and exports minus imports." Is the previous statement correct or incorrect?

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

The data in the above table indicate that the slope of the AE curve is

Disposable income (billions of dollars) Consumption expenditure (billions of dollars) 400 450 600 600 800 750 1000 900 1200 1050 -Based upon the above table,the MPC for the consumption function is

How does the concept of the multiplier help explain business cycle turning points?

-In the above figure,if the level of real GDP is $13 trillion,

-The figure above illustrates an economy's consumption function.What is the marginal propensity to save in this economy?

Suppose the consumption function is given by the equation C = 100 + 0.8YD,where YD is disposable income.What is the marginal propensity to save?

When investment exceeds planned investment,aggregate planned expenditure is ________ than actual aggregate expenditure and inventories are ________ than planned.

In the Keynesian model of aggregate expenditure,real GDP is determined by the

Planned saving equals

If prices are fixed,an increase in aggregate expenditures results in an increase in equilibrium GDP that

The MPS equals the ratio of

-In the above figure,at point d firms would find themselves with inventories ________ their target level and so would ________ production.

-In the above figure,an increase in autonomous expenditure is depicted by the movement from point E to

The slope of the consumption function is

What is the marginal propensity to consume? Can the marginal propensity to consume be greater than 1?

Suppose disposable income increases from $5 trillion to $6 trillion.As a result,consumption expenditure increases from $4 trillion to ________.This result means the MPC equals ________.

"Aggregate planned expenditure is the sum of planned consumption expenditure,investment,government expenditure on goods and services,and exports minus imports." Is the previous statement correct or incorrect?

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

When investment exceeds planned investment,aggregate planned expenditure is than actual aggregate expenditure and inventories are than planned.

-In the above figure,at point d firms would find themselves with inventories their target level and so would production.

Suppose disposable income increases from $5 trillion to $6 trillion.As a result,consumption expenditure increases from $4 trillion to .This result means the MPC equals .