Question 1

What is the relationship between the slope of the aggregate expenditure curve and the multiplier?

Accepted Answer

The multiplier equals @#IMG-DLM& . This

Question 2

The marginal propensity to save is

Accepted Answer

A)  total saving divided by total disposable income. 
B)  total saving divided by the change in disposable income. 
C)  the change in saving divided by the change in consumption expenditure. 
D)  the change in saving divided by the change in disposable income. 
A)  total saving divided by total disposable income. 
B)  total saving divided by the change in disposable income. 
C)  the change in saving divided by the change in consumption expenditure. 
D)  the change in saving divided by the change in disposable income.

Question 3

In the short run, an upward shift in the aggregate expenditure curve leads to a leftward shift in the short-run aggregate supply curve.

Accepted Answer

A) True 
 B)False

Question 4

List and explain factors that determine the size of the multiplier in the aggregate expenditure model when prices are constant.

Accepted Answer

The size of the multiplier depends on th

Question 5

-In the above figure, when disposable income equals $12 trillion, induced consumption expenditure equals

Accepted Answer

A)  $1.2 trillion. 
B)  $10.8 trillion. 
C)  $12 trillion. 
D)  cannot be determined from the information given. 
A)  $1.2 trillion. 
B)  $10.8 trillion. 
C)  $12 trillion. 
D)  cannot be determined from the information given.

Question 6

Income taxes reduce the size of the multiplier.

Accepted Answer

A) True 
 B)False

Question 7

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 8

-In the figure above, autonomous consumption is

Accepted Answer

A)  zero. 
B)  $5 trillion. 
C)  $10 trillion. 
D)  $15 trillion. 
A)  zero. 
B)  $5 trillion. 
C)  $10 trillion. 
D)  $15 trillion.

Question 9

In an article regarding Bangladesh's economy, the author suggests that the government ..."[g]ive double tax breaks on investment dollars. Give tax break to R&D [research and development]. Give tax break on donations to educational institutions."
Www)groundreport.com, March 24, 2008
As a result of enacting the policies, the AE curve will shift ________ and the AD curve will shift ________.

Accepted Answer

A)  upward; leftward 
B)  upward; rightward 
C)  downward; rightward 
D)  downward; leftward 
A)  upward; leftward 
B)  upward; rightward 
C)  downward; rightward 
D)  downward; leftward

Question 10

-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 11

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same but the AE curve would shift upwards. 
D)  stay the same but the AE curve would shift downwards. 
A)  increase. 
B)  decrease. 
C)  stay the same but the AE curve would shift upwards. 
D)  stay the same but the AE curve would shift downwards.

Question 12

When there is unplanned inventory investment, aggregate planned expenditure is ________ real GDP and actual investment is ________ planned investment.

Accepted Answer

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

Question 13

Any expenditure component that depends on the level of real GDP is called

Accepted Answer

A)  spurious expenditure. 
B)  equilibrium expenditure. 
C)  induced expenditure. 
D)  autonomous expenditure. 
A)  spurious expenditure. 
B)  equilibrium expenditure. 
C)  induced expenditure. 
D)  autonomous expenditure.

Question 14

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the

Accepted Answer

A)  45-degree line. 
B)  horizontal axis. 
C)  vertical axis. 
D)  consumption function. 
A)  45-degree line. 
B)  horizontal axis. 
C)  vertical axis. 
D)  consumption function.

Question 15

The value of the marginal propensity to consume is

Accepted Answer

A)  between 0 and 1. 
B)  between 1 and 10. 
C)  between -1 and +1. 
D)  between 1 percent and 100 percent. 
A)  between 0 and 1. 
B)  between 1 and 10. 
C)  between -1 and +1. 
D)  between 1 percent and 100 percent.

Question 16

Between 2013 and 2014 the government estimates that disposable income in the United States decreased. Consequently, as a result of this change, consumption expenditure

Accepted Answer

A)  remained constant. 
B)  decreased. 
C)  increased. 
D)  More information is needed about how taxes changed between 2013 and 2014. 
A)  remained constant. 
B)  decreased. 
C)  increased. 
D)  More information is needed about how taxes changed between 2013 and 2014.

Question 17

Mauritius, an island off the coast of Africa, competes with other countries producing goods with low-skilled labor. In 2006, it was reported that its "... factories have been exposed to ... competition from China, India and other Asian mass producers." As a result, "the main export industry has seen a 30 per cent reduction in volume ..."
Www)ft.com, 3/13/2006
The decrease in exports will cause ________ and the price level will ________.

Accepted Answer

A)  a downward shift in the AE curve; decrease as the AD curve shifts leftward in the short run 
B)  an upward shift in the AE curve; increase as the AD curve shifts rightward in the long run 
C)  a leftward shift in the AD curve; fall in the short run and rise in the long run 
D)  a leftward shift in the AD curve; rise in the long run as goods become more scarce 
A)  a downward shift in the AE curve; decrease as the AD curve shifts leftward in the short run 
B)  an upward shift in the AE curve; increase as the AD curve shifts rightward in the long run 
C)  a leftward shift in the AD curve; fall in the short run and rise in the long run 
D)  a leftward shift in the AD curve; rise in the long run as goods become more scarce

Question 18

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000, the

Accepted Answer

A)  household is dissaving. 
B)  slope of the consumption function is 0.2. 
C)  slope of the consumption function is 0.5. 
D)  slope of the consumption function is 1000. 
A)  household is dissaving. 
B)  slope of the consumption function is 0.2. 
C)  slope of the consumption function is 0.5. 
D)  slope of the consumption function is 1000.

Question 19

What is unplanned investment? How does it occur?

Accepted Answer

Unplanned investment occurs when invento

Question 20

Aggregate planned expenditure

Accepted Answer

A)  always equals actual aggregate expenditure. 
B)  is always less than actual aggregate expenditure. 
C)  is always greater than actual aggregate expenditure. 
D)  equals actual aggregate expenditure at the equilibrium level of real GDP. 
A)  always equals actual aggregate expenditure. 
B)  is always less than actual aggregate expenditure. 
C)  is always greater than actual aggregate expenditure. 
D)  equals actual aggregate expenditure at the equilibrium level of real GDP.

What is the relationship between the slope of the aggregate expenditure curve and the multiplier?

The marginal propensity to save is

In the short run, an upward shift in the aggregate expenditure curve leads to a leftward shift in the short-run aggregate supply curve.

List and explain factors that determine the size of the multiplier in the aggregate expenditure model when prices are constant.

-In the above figure, when disposable income equals $12 trillion, induced consumption expenditure equals

Income taxes reduce the size of the multiplier.

Planned saving equals

-In the figure above, autonomous consumption is

-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

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would

When there is unplanned inventory investment, aggregate planned expenditure is real GDP and actual investment is planned investment.

Any expenditure component that depends on the level of real GDP is called

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the

The value of the marginal propensity to consume is

Between 2013 and 2014 the government estimates that disposable income in the United States decreased. Consequently, as a result of this change, consumption expenditure

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000, the

What is unplanned investment? How does it occur?

Aggregate planned expenditure

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 11: Expenditure Multipliers

What is the relationship between the slope of the aggregate expenditure curve and the multiplier?

The marginal propensity to save is

In the short run, an upward shift in the aggregate expenditure curve leads to a leftward shift in the short-run aggregate supply curve.

List and explain factors that determine the size of the multiplier in the aggregate expenditure model when prices are constant.

-In the above figure, when disposable income equals $12 trillion, induced consumption expenditure equals

Income taxes reduce the size of the multiplier.

Planned saving equals

-In the figure above, autonomous consumption is

-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

-In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would

When there is unplanned inventory investment, aggregate planned expenditure is ________ real GDP and actual investment is ________ planned investment.

Any expenditure component that depends on the level of real GDP is called

Equilibrium expenditure occurs where the aggregate expenditure curve crosses the

The value of the marginal propensity to consume is

Between 2013 and 2014 the government estimates that disposable income in the United States decreased. Consequently, as a result of this change, consumption expenditure

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000, the

What is unplanned investment? How does it occur?

Aggregate planned expenditure

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

When there is unplanned inventory investment, aggregate planned expenditure is real GDP and actual investment is planned investment.