Exam 12: Aggregate Expenditure and Output in the Short Run

Figure 12-4 -Refer to Figure 12-4.Potential GDP equals $100 billion.The economy is currently producing GDP₁ which is equal to $90 billion.If the MPC is 0.8,then how much must autonomous spending change for the economy to move to potential GDP?

A stock market crash which causes stock prices to fall should cause

Table 12-2 -Refer to Table 12-2.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

On the 45 degree-line diagram,the 45 degree line shows points where real aggregate expenditure equals

Table 12-7 -Given Table 12-7 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC).Show that MPC + MPS = 1.

A decrease in Social Security payments will

Household spending on goods and services is known as

Firms in a small economy anticipated that inventories would grow over the past year by $750,000,and over that year,inventories grew by exactly $750,000.This implies that

If the multiplier is 10,the marginal propensity to consume must be 0.1.

All of the following are true statements about the multiplier except:

The aggregate demand curve shows the relationship between the price level and the level of planned aggregate expenditure in the economy.

Autonomous expenditure times the multiplier equals

When Jack's income increases by $5,000,he spends an additional $4,000 dollars.This implies that his marginal propensity to consume is 1.25.

An increase in the price level in the United States will reduce exports and increase imports.

Investment spending will decrease when

A decrease in the real interest rate will

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

An unplanned increase in inventories results from

________ in taxes will decrease consumption spending,and ________ in transfer payments will increase consumption spending.

Which of the following is true?