Question 1

Suppose Canada experiences a long period of inflation relative to other countries.How will this affect Canadian net exports?

Accepted Answer

If inflation in Canada is higher than in

Question 2

If firms are more optimistic that future profits will rise and remain strong for the next few years, then

Accepted Answer

A) planned investment spending will fall. 
B) planned investment spending will rise. 
C) unplanned investment spending will remain unaffected. 
D) planned investment spending will rise and then fall. 
E) unplanned investment will rise. 
A) planned investment spending will fall. 
B) planned investment spending will rise. 
C) unplanned investment spending will remain unaffected. 
D) planned investment spending will rise and then fall. 
E) unplanned investment will rise.

Question 3

Table 8.1  
-Refer to Table 8.1.Using the table above, compute aggregate expenditure and identify the macroeconomic equilibrium.

Accepted Answer

The macroeconomic equilibrium is determi

Question 4

Tariffs and trade wars cause net exports to ________ and real GDP to ________.

Accepted Answer

A) increase; increase 
B) decrease; increase 
C) increase; decrease 
D) decrease; decrease 
A) increase; increase 
B) decrease; increase 
C) increase; decrease 
D) decrease; decrease

Question 5

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year, inventories did grow by exactly $500,000.This implies that

Accepted Answer

A) aggregate expenditure that year was equal to GDP that year. 
B) there was an unplanned increase in inventories that year. 
C) there was an unplanned decrease in inventories that year. 
D) aggregate expenditure that year was greater than GDP that year. 
E) government spending grew unpredictably. 
A) aggregate expenditure that year was equal to GDP that year. 
B) there was an unplanned increase in inventories that year. 
C) there was an unplanned decrease in inventories that year. 
D) aggregate expenditure that year was greater than GDP that year. 
E) government spending grew unpredictably.

Question 6

If the marginal propensity to save is 0.1, then a $10 million decrease in disposable income will

Accepted Answer

A) increase consumption by $9 million. 
B) increase consumption by $1 million. 
C) decrease consumption by $9 million. 
D) decrease consumption by $1 million. 
E) leave consumption unchanged. 
A) increase consumption by $9 million. 
B) increase consumption by $1 million. 
C) decrease consumption by $9 million. 
D) decrease consumption by $1 million. 
E) leave consumption unchanged.

Question 7

Aggregate expenditure includes consumption spending, planned investment spending, government purchases, and net exports.

Accepted Answer

A) True 
 B)False

Question 8

If inventories decline by more than analysts predict they will decline, this implies that

Accepted Answer

A) actual investment spending was greater than planned investment spending. 
B) actual investment spending was less than planned investment spending. 
C) actual investment spending was equal to than planned investment spending. 
D) there is no relationship between actual investment spending and planned investment spending. 
E) planned investment fell. 
A) actual investment spending was greater than planned investment spending. 
B) actual investment spending was less than planned investment spending. 
C) actual investment spending was equal to than planned investment spending. 
D) there is no relationship between actual investment spending and planned investment spending. 
E) planned investment fell.

Question 9

If the economy is currently in equilibrium at a level of GDP that is above potential GDP, which of the following would move the economy back to potential GDP?

Accepted Answer

A) a decrease in wealth 
B) a decrease in interest rates 
C) an increase in business confidence 
D) a decrease in the value of the dollar relative to other currencies 
E) an increase in government spending 
A) a decrease in wealth 
B) a decrease in interest rates 
C) an increase in business confidence 
D) a decrease in the value of the dollar relative to other currencies 
E) an increase in government spending

Question 10

On the 45-degree line diagram, the 45-degree line shows points where

Accepted Answer

A) real income equals real GDP. 
B) real aggregate expenditure equals C + I. 
C) real aggregate expenditure equals real GDP. 
D) real aggregate output equals the quantity produced. 
E) real aggregate expenditure equals real aggregate consumption. 
A) real income equals real GDP. 
B) real aggregate expenditure equals C + I. 
C) real aggregate expenditure equals real GDP. 
D) real aggregate output equals the quantity produced. 
E) real aggregate expenditure equals real aggregate consumption.

Question 11

Decreases in the price level will

Accepted Answer

A) lower consumption because goods and services are less affordable. 
B) raise consumption because goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases. 
E) leave consumption unchanged. 
A) lower consumption because goods and services are less affordable. 
B) raise consumption because goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases. 
E) leave consumption unchanged.

Question 12

What impact does a higher price level have on interest rates, wealth, and investment spending?

Accepted Answer

A higher price level reduces t

Question 13

If the consumption function is defined as C = 5,500 + 0.9Y, what is the marginal propensity to consume?

Accepted Answer

A) 0.1 
B) 0.9 
C) 5.5 
D) 6.1 
E) $5,500 
A) 0.1 
B) 0.9 
C) 5.5 
D) 6.1 
E) $5,500

Question 14

If aggregate expenditure is less than GDP, then inventories rise and GDP falls.

Accepted Answer

A) True 
 B)False

Question 15

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

Accepted Answer

A) GDP will rise. 
B) GDP will fall. 
C) Wages will rise. 
D) Inventories will fall. 
E) Unemployment will fall. 
A) GDP will rise. 
B) GDP will fall. 
C) Wages will rise. 
D) Inventories will fall. 
E) Unemployment will fall.

Question 16

The ________ illustrates the relationship between the price level and the quantity of planned aggregate expenditure, holding constant all other factors that affect aggregate expenditure.

Accepted Answer

A) aggregate demand curve 
B) savings line 
C) 45-degree line 
D) consumption function 
E) law of supply 
A) aggregate demand curve 
B) savings line 
C) 45-degree line 
D) consumption function 
E) law of supply

Question 17

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

Accepted Answer

Firms will decrease

Question 18

An increase in Canada Pension Plan contributions now will cause a

Accepted Answer

A) decrease consumption spending. 
B) decrease investment spending. 
C) decrease government spending. 
D) decrease export spending. 
E) decrease in future benefits. 
A) decrease consumption spending. 
B) decrease investment spending. 
C) decrease government spending. 
D) decrease export spending. 
E) decrease in future benefits.

Question 19

Given the equations for C, I, G, and NX below, what is the marginal propensity to consume? C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400

Accepted Answer

A) -0.1 
B) 0.1 
C) 0.2 
D) 0.9 
E) 2,000 
A) -0.1 
B) 0.1 
C) 0.2 
D) 0.9 
E) 2,000

Question 20

________ describes the relationship between consumption spending and disposable income.

Accepted Answer

A) Household wealth 
B) The liquidity trap 
C) The consumption function 
D) The paradox of thrift 
E) The sales tax rate 
A) Household wealth 
B) The liquidity trap 
C) The consumption function 
D) The paradox of thrift 
E) The sales tax rate

Suppose Canada experiences a long period of inflation relative to other countries.How will this affect Canadian net exports?

If firms are more optimistic that future profits will rise and remain strong for the next few years, then

Table 8.1 -Refer to Table 8.1.Using the table above, compute aggregate expenditure and identify the macroeconomic equilibrium.

Tariffs and trade wars cause net exports to and real GDP to .

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year, inventories did grow by exactly $500,000.This implies that

If the marginal propensity to save is 0.1, then a $10 million decrease in disposable income will

Aggregate expenditure includes consumption spending, planned investment spending, government purchases, and net exports.

If inventories decline by more than analysts predict they will decline, this implies that

If the economy is currently in equilibrium at a level of GDP that is above potential GDP, which of the following would move the economy back to potential GDP?

On the 45-degree line diagram, the 45-degree line shows points where

Decreases in the price level will

What impact does a higher price level have on interest rates, wealth, and investment spending?

If the consumption function is defined as C = 5,500 + 0.9Y, what is the marginal propensity to consume?

If aggregate expenditure is less than GDP, then inventories rise and GDP falls.

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

The ________ illustrates the relationship between the price level and the quantity of planned aggregate expenditure, holding constant all other factors that affect aggregate expenditure.

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

An increase in Canada Pension Plan contributions now will cause a

Given the equations for C, I, G, and NX below, what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

________ describes the relationship between consumption spending and disposable income.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 8: Aggregate Expenditure and Output in the Short Run

Suppose Canada experiences a long period of inflation relative to other countries.How will this affect Canadian net exports?

If firms are more optimistic that future profits will rise and remain strong for the next few years, then

Table 8.1 -Refer to Table 8.1.Using the table above, compute aggregate expenditure and identify the macroeconomic equilibrium.

Tariffs and trade wars cause net exports to ________ and real GDP to ________.

Firms in a small economy planned that inventories would grow over the past year by $500,000.Over that year, inventories did grow by exactly $500,000.This implies that

If the marginal propensity to save is 0.1, then a $10 million decrease in disposable income will

Aggregate expenditure includes consumption spending, planned investment spending, government purchases, and net exports.

If inventories decline by more than analysts predict they will decline, this implies that

If the economy is currently in equilibrium at a level of GDP that is above potential GDP, which of the following would move the economy back to potential GDP?

On the 45-degree line diagram, the 45-degree line shows points where

Decreases in the price level will

What impact does a higher price level have on interest rates, wealth, and investment spending?

If the consumption function is defined as C = 5,500 + 0.9Y, what is the marginal propensity to consume?

If aggregate expenditure is less than GDP, then inventories rise and GDP falls.

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

The ________ illustrates the relationship between the price level and the quantity of planned aggregate expenditure, holding constant all other factors that affect aggregate expenditure.

What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?

An increase in Canada Pension Plan contributions now will cause a

Given the equations for C, I, G, and NX below, what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

________ describes the relationship between consumption spending and disposable income.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Tariffs and trade wars cause net exports to and real GDP to .