Question 1

The autonomous components of aggregate expenditures are consumption,savings,and investment.

Accepted Answer

A) True 
 B)False

Question 2

When autonomous expenditure decreases,________.

Accepted Answer

A)  the AE curve shifts downward 
B)  there is a movement down along the AE curve 
C)  the AE curve becomes less steep 
D)  the AE curve shifts upward 
A)  the AE curve shifts downward 
B)  there is a movement down along the AE curve 
C)  the AE curve becomes less steep 
D)  the AE curve shifts upward

Question 3

-In the above figure,at the equilibrium,induced expenditure is

Accepted Answer

A)  $4 trillion. 
B)  $8 trillion. 
C)  $12 trillion. 
D)  some amount not given in the above answers. 
A)  $4 trillion. 
B)  $8 trillion. 
C)  $12 trillion. 
D)  some amount not given in the above answers.

Question 4

In an article regarding Bangladesh's economy,the author suggests that the government ..."[g]ive double tax breaks on investment dollars.Give a tax break to R&D [research and development].Give a tax break on donations to educational institutions." www.groundreport.com,March 24,2008
Suppose the multiplier in Bangladesh is 2. As a result of enacting the proposed policies,which of the following describe possible outcomes in the short run?
I. an $20 billion increase in investment will increase aggregate expenditure by $40 billion.
II. the AE curve will shift upward.
III. there will be an unplanned increase in inventories.

Accepted Answer

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

Question 5

An increase in investment by U.S.firms that is intended to maintain U.S.competitiveness in world markets is ________ in the United States.

Accepted Answer

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

Question 6

The slope of the consumption function

Accepted Answer

A)  is positive and equals 1 - MPC. 
B)  is negative. 
C)  equals the MPC. 
D)  is undefined below the 45-degree line. 
A)  is positive and equals 1 - MPC. 
B)  is negative. 
C)  equals the MPC. 
D)  is undefined below the 45-degree line.

Question 7

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Disposable } \
\text { income } \
\text { (thousands of } \
\text { dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption } \
\text { expenditure } \
\text { (thousands of dollars) }
\end{array} \
\hline 200 & 225 \
\hline 300 & 300 \
\hline 400 & 375 \
\hline 500 & 450 \
\hline
\end{array}$$
-According to the data in the above table,what is the marginal propensity to consume?

Accepted Answer

A)  75. 
B)  100. 
C)  0.75. 
D)  1. 
A)  75. 
B)  100. 
C)  0.75. 
D)  1.

Question 8

-The figure above illustrates an economy's consumption function.What is autonomous consumption in this economy?

Accepted Answer

A)  $0 
B)  $4 trillion 
C)  $6 trillion 
D)  None of the above answers is correct. 
A)  $0 
B)  $4 trillion 
C)  $6 trillion 
D)  None of the above answers is correct.

Question 9

What is the difference between movements along the consumption function and shifts in the consumption function?
What factor or factors lead to movements along the consumption function and what factor or factors lead to shifts in the consumption function?

Accepted Answer

The consumption function describes the r

Question 10

Components of induced aggregate expenditure include government expenditure,investment and consumption expenditure.

Accepted Answer

A) True 
 B)False

Question 11

Imports and income taxes make the multiplier larger than it would otherwise be.

Accepted Answer

A) True 
 B)False

Question 12

-In the figure above,the induced consumption when real GDP is $12 trillion is

Accepted Answer

A)  zero. 
B)  $2 trillion. 
C)  $8 trillion. 
D)  $12 trillion. 
A)  zero. 
B)  $2 trillion. 
C)  $8 trillion. 
D)  $12 trillion.

Question 13

$$\begin{array} { | c | c | c | c | c | c | } 
\hline \begin{array} { r } 
\text { Real } \
\text { GDP }
\end{array} & C & I & G & X & M \
\hline 100 & 75 & 25 & 95 & 10 & 1 \
\hline 200 & 150 & 25 & 95 & 10 & 2 \
\hline 300 & 225 & 25 & 95 & 10 & 3 \
\hline 400 & 300 & 25 & 95 & 10 & 4 \
\hline 500 & 375 & 25 & 95 & 10 & 5 \
\hline 600 & 450 & 25 & 95 & 10 & 6 \
\hline 700 & 525 & 25 & 95 & 10 & 7 \
\hline 800 & 600 & 25 & 95 & 10 & 8 \
\hline 900 & 675 & 25 & 95 & 10 & 9 \
\hline 1000 & 750 & 25 & 95 & 10 & 10 \
\hline
\end{array}$$
-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 marginal propensity to consume?

Accepted Answer

A)  0.20 
B)  0.25 
C)  0.75 
D)  0.80 
A)  0.20 
B)  0.25 
C)  0.75 
D)  0.80

Question 14

Suppose the economy has no income taxes or imports.The MPC equals 0.8.What does the expenditure model predict will be the change in real GDP if investment increases by $200 billion?

Accepted Answer

The multiplier equals @#LAT-DLM& ,so for the case

Question 15

In the short run,a factor that leads to changes in U.S.imports is

Accepted Answer

A)  the level of income in foreign nations. 
B)  the real interest rate. 
C)  U.S. real GDP. 
D)  U.S. exports. 
A)  the level of income in foreign nations. 
B)  the real interest rate. 
C)  U.S. real GDP. 
D)  U.S. exports.

Question 16

In an article regarding Bangladesh's economy,the author suggests that the government ..."[g]ive double tax breaks on investment dollars.Give a tax break to R&D [research and development].Give a tax break on donations to educational institutions." www.groundreport.com,March 24,2008
The increase in investment is considered ________ and will generate a larger increase in ________.

Accepted Answer

A)  equilibrium spending; autonomous expenditure 
B)  autonomous expenditure; induced expenditure 
C)  induced expenditure; autonomous expenditure 
D)  autonomous expenditure; multiplier spending. 
A)  equilibrium spending; autonomous expenditure 
B)  autonomous expenditure; induced expenditure 
C)  induced expenditure; autonomous expenditure 
D)  autonomous expenditure; multiplier spending.

Question 17

The slope of the AE curve is 0.9.Investment decreases by $100 million and the price level is constant.Real GDP

Accepted Answer

A)  decreases by $10 million. 
B)  increases by $90 million. 
C)  decreases by $1 billion. 
D)  increases by $1 billion. 
A)  decreases by $10 million. 
B)  increases by $90 million. 
C)  decreases by $1 billion. 
D)  increases by $1 billion.

Question 18

In a diagram with the consumption function,the 45-degree line indicates all points where

Accepted Answer

A)  consumption expenditures and saving are equal. 
B)  saving and investment are equal. 
C)  consumption expenditures and disposable income are equal. 
D)  saving and disposable income are equal. 
A)  consumption expenditures and saving are equal. 
B)  saving and investment are equal. 
C)  consumption expenditures and disposable income are equal. 
D)  saving and disposable income are equal.

Question 19

The multiplier is the ratio of the

Accepted Answer

A)  change in real GDP to the change in autonomous expenditures. 
B)  equilibrium level of real GDP to the change in induced expenditures. 
C)  change in induced expenditures to the change in autonomous expenditures. 
D)  change in autonomous expenditures to the change in real GDP. 
A)  change in real GDP to the change in autonomous expenditures. 
B)  equilibrium level of real GDP to the change in induced expenditures. 
C)  change in induced expenditures to the change in autonomous expenditures. 
D)  change in autonomous expenditures to the change in real GDP.

Question 20

The multiplier effect

Accepted Answer

A)  generates instability in autonomous expenditure. 
B)  promotes stability of the general price level. 
C)  magnifies small changes in spending into larger changes in real GDP. 
D)  increases the MPC. 
A)  generates instability in autonomous expenditure. 
B)  promotes stability of the general price level. 
C)  magnifies small changes in spending into larger changes in real GDP. 
D)  increases the MPC.

The autonomous components of aggregate expenditures are consumption,savings,and investment.

When autonomous expenditure decreases,________.

-In the above figure,at the equilibrium,induced expenditure is

An increase in investment by U.S.firms that is intended to maintain U.S.competitiveness in world markets is ________ in the United States.

The slope of the consumption function

Disposable income (thousands of dollars) Consumption expenditure (thousands of dollars) 200 225 300 300 400 375 500 450 -According to the data in the above table,what is the marginal propensity to consume?

-The figure above illustrates an economy's consumption function.What is autonomous consumption in this economy?

What is the difference between movements along the consumption function and shifts in the consumption function? What factor or factors lead to movements along the consumption function and what factor or factors lead to shifts in the consumption function?

Components of induced aggregate expenditure include government expenditure,investment and consumption expenditure.

Imports and income taxes make the multiplier larger than it would otherwise be.

-In the figure above,the induced consumption when real GDP is $12 trillion is

Suppose the economy has no income taxes or imports.The MPC equals 0.8.What does the expenditure model predict will be the change in real GDP if investment increases by $200 billion?

In the short run,a factor that leads to changes in U.S.imports is

The slope of the AE curve is 0.9.Investment decreases by $100 million and the price level is constant.Real GDP

In a diagram with the consumption function,the 45-degree line indicates all points where

The multiplier is the ratio of the

The multiplier effect

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 autonomous components of aggregate expenditures are consumption,savings,and investment.

When autonomous expenditure decreases,________.

-In the above figure,at the equilibrium,induced expenditure is

An increase in investment by U.S.firms that is intended to maintain U.S.competitiveness in world markets is ________ in the United States.

The slope of the consumption function

Disposable income (thousands of dollars) Consumption expenditure (thousands of dollars) 200 225 300 300 400 375 500 450 -According to the data in the above table,what is the marginal propensity to consume?

-The figure above illustrates an economy's consumption function.What is autonomous consumption in this economy?

What is the difference between movements along the consumption function and shifts in the consumption function? What factor or factors lead to movements along the consumption function and what factor or factors lead to shifts in the consumption function?

Components of induced aggregate expenditure include government expenditure,investment and consumption expenditure.

Imports and income taxes make the multiplier larger than it would otherwise be.

-In the figure above,the induced consumption when real GDP is $12 trillion is

Suppose the economy has no income taxes or imports.The MPC equals 0.8.What does the expenditure model predict will be the change in real GDP if investment increases by $200 billion?

In the short run,a factor that leads to changes in U.S.imports is

The slope of the AE curve is 0.9.Investment decreases by $100 million and the price level is constant.Real GDP

In a diagram with the consumption function,the 45-degree line indicates all points where

The multiplier is the ratio of the

The multiplier effect

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