Question 1

An increase in real GDP leads to

Accepted Answer

A)  a decrease aggregate planned expenditure. 
B)  no change in aggregate planned expenditure. 
C)  an increase in aggregate planned expenditure. 
D)  a change in aggregate planned expenditure but whether the change is an increase or a decrease depends on whether nominal GDP increases or decreases. 
A)  a decrease aggregate planned expenditure. 
B)  no change in aggregate planned expenditure. 
C)  an increase in aggregate planned expenditure. 
D)  a change in aggregate planned expenditure but whether the change is an increase or a decrease depends on whether nominal GDP increases or decreases.

Question 2

In the above figure,AE₀ is the aggregate planned expenditure curve and then investment increases by an additional $3 trillion.As a result,the new equilibrium GDP will be

Accepted Answer

A)  $3 trillion. 
B)  $6 trillion. 
C)  $12 trillion. 
D)  None of the above answers is correct. 
A)  $3 trillion. 
B)  $6 trillion. 
C)  $12 trillion. 
D)  None of the above answers is correct.

Question 3

The relationship between net exports and GDP makes the slope of the aggregate expenditure curve

Accepted Answer

A)  flatter than it would be otherwise. 
B)  steeper than it would be otherwise. 
C)  neither flatter nor steeper than it would be otherwise. 
D)  steeper at low levels of GDP and flatter at high levels of GDP. 
A)  flatter than it would be otherwise. 
B)  steeper than it would be otherwise. 
C)  neither flatter nor steeper than it would be otherwise. 
D)  steeper at low levels of GDP and flatter at high levels of GDP.

Question 4

Induced expenditure includes ________.

Accepted Answer

A)  induced consumption and government expenditure 
B)  induced consumption expenditure and imports 
C)  all autonomous expenditure 
D)  induced consumption expenditure and exports 
A)  induced consumption and government expenditure 
B)  induced consumption expenditure and imports 
C)  all autonomous expenditure 
D)  induced consumption expenditure and exports

Question 5

In the very short term,in the Keynesian model,which of the following is fixed and does not change when GDP changes?

Accepted Answer

A)  planned investment 
B)  planned consumption 
C)  planned imports 
D)  All of the above answers are correct 
A)  planned investment 
B)  planned consumption 
C)  planned imports 
D)  All of the above answers are correct

Question 6

In general,the steeper the aggregate expenditure curve,the

Accepted Answer

A)  greater autonomous expenditure. 
B)  lower the marginal propensity to consume. 
C)  larger the multiplier. 
D)  smaller the multiplier. 
A)  greater autonomous expenditure. 
B)  lower the marginal propensity to consume. 
C)  larger the multiplier. 
D)  smaller the multiplier.

Question 7

Because of the multiplier,a one-time change in expenditure will

Accepted Answer

A)  have little secondary effect on real GDP. 
B)  expand real GDP by an infinite amount. 
C)  generate more additional real GDP than the initial change in expenditure. 
D)  decrease saving and investment activity and thereby decrease future real GDP. 
A)  have little secondary effect on real GDP. 
B)  expand real GDP by an infinite amount. 
C)  generate more additional real GDP than the initial change in expenditure. 
D)  decrease saving and investment activity and thereby decrease future real GDP.

Question 8

There is a movement along the consumption function if there is ________.

Accepted Answer

A)  an increase in autonomous consumption 
B)  a decrease in the real interest rate 
C)  an increase in the expected future income 
D)  an increase in disposable income 
A)  an increase in autonomous consumption 
B)  a decrease in the real interest rate 
C)  an increase in the expected future income 
D)  an increase in disposable income

Question 9

All else being constant,autonomous expenditure

Accepted Answer

A)  increases as real GDP increases. 
B)  increases as real GDP decreases. 
C)  does not change with changes in real GDP. 
D)  is assumed to be zero. 
A)  increases as real GDP increases. 
B)  increases as real GDP decreases. 
C)  does not change with changes in real GDP. 
D)  is assumed to be zero.

Question 10

Induced consumption is equal to

Accepted Answer

A)  saving when consumption equals disposable income. 
B)  consumption when disposable income is zero. 
C)  consumption caused by an increase in disposable income. 
D)  dissaving when disposable income is greater than zero. 
A)  saving when consumption equals disposable income. 
B)  consumption when disposable income is zero. 
C)  consumption caused by an increase in disposable income. 
D)  dissaving when disposable income is greater than zero.

Question 11

A country reports that it has an unplanned inventory increase of $1.0 trillion.Discuss how the economy adjusts until it reaches an unplanned inventory change of $0.0 trillion.

Accepted Answer

When unplanned inventory changes are pos

Question 12

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Real GDP } \
\text { (billions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
C \
\text { (billions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
I \
\text { (billions of } \
\text { 2005 dollars) }
\end{array} & \begin{array} { c } 
G \
\text { (billions of } \
\text { 2005 dollars) }
\end{array} \
\hline 100 & 150 & 150 & 150 \
\hline 200 & 200 & 150 & 150 \
\hline 300 & 250 & 150 & 150 \
\hline 400 & 300 & 150 & 150 \
\hline 500 & 350 & 150 & 150 \
\hline 600 & 400 & 150 & 150 \
\hline 700 & 450 & 150 & 150 \
\hline 800 & 500 & 150 & 150 \
\hline 900 & 550 & 150 & 150 \
\hline
\end{array}$$
-The above table gives information for the nation of North Hampton.There are no imports to or exports from North Hampton.
a) Find aggregate planned expenditure for each level of real GDP.
b) What is the equilibrium level of real GDP?

Accepted Answer

\[\begin{array} { | c | c | } 
\hline \b

Question 13

If real GDP is $13 trillion and planned aggregate expenditure is $13.5 trillion,inventories will be

Accepted Answer

A)  below their target and real GDP will increase. 
B)  below their target and real GDP will decrease. 
C)  above their target and real GDP will decrease. 
D)  above their target and real GDP will increase. 
A)  below their target and real GDP will increase. 
B)  below their target and real GDP will decrease. 
C)  above their target and real GDP will decrease. 
D)  above their target and real GDP will increase.

Question 14

If there are no income taxes or imports,the multiplier equals 1/(1 - marginal propensity to consume).

Accepted Answer

A) True 
 B)False

Question 15

Real GDP

Accepted Answer

A)  is always greater then aggregate income. 
B)  is always less than aggregate income. 
C)  might be less than or more than aggregate income depending on consumption. 
D)  is equal to aggregate income. 
A)  is always greater then aggregate income. 
B)  is always less than aggregate income. 
C)  might be less than or more than aggregate income depending on consumption. 
D)  is equal to aggregate income.

Question 16

In general,an increase in autonomous expenditure that is NOT created by a change in the price level results in a

Accepted Answer

A)  rightward shift of the AD curve. 
B)  movement upward along the AD curve. 
C)  movement downward along the AD curve. 
D)  leftward shift of the AD curve. 
A)  rightward shift of the AD curve. 
B)  movement upward along the AD curve. 
C)  movement downward along the AD curve. 
D)  leftward shift of the AD curve.

Question 17

The presence of income taxes and imports make the multiplier

Accepted Answer

A)  fall in value but remain positive. 
B)  rise in value. 
C)  not change in value. 
D)  become negative. 
A)  fall in value but remain positive. 
B)  rise in value. 
C)  not change in value. 
D)  become negative.

Question 18

The consumption function relates the consumption expenditure decisions of households to

Accepted Answer

A)  the level of disposable income. 
B)  investment decisions of firms. 
C)  saving decisions of households. 
D)  the nominal interest rate. 
A)  the level of disposable income. 
B)  investment decisions of firms. 
C)  saving decisions of households. 
D)  the nominal interest rate.

Question 19

-In the above figure,if real GDP equals $12 trillion,there would be

Accepted Answer

A)  an increase in autonomous consumption expenditure. 
B)  an increase in autonomous inventories. 
C)  no change in GDP. 
D)  an unplanned increase in firms' inventories. 
A)  an increase in autonomous consumption expenditure. 
B)  an increase in autonomous inventories. 
C)  no change in GDP. 
D)  an unplanned increase in firms' inventories.

Question 20

The equilibrium in the above figure is shown at point

Accepted Answer

A)  a. 
B)  b. 
C)  c. 
D)  d. 
A)  a. 
B)  b. 
C)  c. 
D)  d.

An increase in real GDP leads to

In the above figure,AE₀ is the aggregate planned expenditure curve and then investment increases by an additional $3 trillion.As a result,the new equilibrium GDP will be

The relationship between net exports and GDP makes the slope of the aggregate expenditure curve

Induced expenditure includes ________.

In the very short term,in the Keynesian model,which of the following is fixed and does not change when GDP changes?

In general,the steeper the aggregate expenditure curve,the

Because of the multiplier,a one-time change in expenditure will

There is a movement along the consumption function if there is ________.

All else being constant,autonomous expenditure

Induced consumption is equal to

A country reports that it has an unplanned inventory increase of $1.0 trillion.Discuss how the economy adjusts until it reaches an unplanned inventory change of $0.0 trillion.

If real GDP is $13 trillion and planned aggregate expenditure is $13.5 trillion,inventories will be

If there are no income taxes or imports,the multiplier equals 1/(1 - marginal propensity to consume).

Real GDP

In general,an increase in autonomous expenditure that is NOT created by a change in the price level results in a

The presence of income taxes and imports make the multiplier

The consumption function relates the consumption expenditure decisions of households to

-In the above figure,if real GDP equals $12 trillion,there would be

The equilibrium in the above figure is shown at point

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

An increase in real GDP leads to

In the above figure,AE₀ is the aggregate planned expenditure curve and then investment increases by an additional $3 trillion.As a result,the new equilibrium GDP will be

The relationship between net exports and GDP makes the slope of the aggregate expenditure curve

Induced expenditure includes ________.

In the very short term,in the Keynesian model,which of the following is fixed and does not change when GDP changes?

In general,the steeper the aggregate expenditure curve,the

Because of the multiplier,a one-time change in expenditure will

There is a movement along the consumption function if there is ________.

All else being constant,autonomous expenditure

Induced consumption is equal to

A country reports that it has an unplanned inventory increase of $1.0 trillion.Discuss how the economy adjusts until it reaches an unplanned inventory change of $0.0 trillion.

If real GDP is $13 trillion and planned aggregate expenditure is $13.5 trillion,inventories will be

If there are no income taxes or imports,the multiplier equals 1/(1 - marginal propensity to consume).

Real GDP

In general,an increase in autonomous expenditure that is NOT created by a change in the price level results in a

The presence of income taxes and imports make the multiplier

The consumption function relates the consumption expenditure decisions of households to

-In the above figure,if real GDP equals $12 trillion,there would be

The equilibrium in the above figure is shown at point

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