Question 1

-In the above figure, a change in autonomous consumption to $4 trillion with no change to the MPC would cause the consumption function to

Accepted Answer

A)  become steeper. 
B)  become flatter. 
C)  exhibit a parallel shift downward. 
D)  exhibit a parallel shift upward. 
A)  become steeper. 
B)  become flatter. 
C)  exhibit a parallel shift downward. 
D)  exhibit a parallel shift upward.

Question 2

-Suppose a country has no income taxes or imports. If the MPC is 0.75, what does the multiplier equal?

Accepted Answer

The multiplier equal

Question 3

-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 4

Dissaving

Accepted Answer

A)  is equal to consumption expenditure when disposable income is greater than zero. 
B)  is equal to the amount of saving when consumption is less than disposable income. 
C)  is equal to taxation when disposable income is zero. 
D)  occurs when consumption is greater than disposable income. 
A)  is equal to consumption expenditure when disposable income is greater than zero. 
B)  is equal to the amount of saving when consumption is less than disposable income. 
C)  is equal to taxation when disposable income is zero. 
D)  occurs when consumption is greater than disposable income.

Question 5

-In the above table, savings are positive when disposable income is greater than

Accepted Answer

A)  zero. 
B)  $100. 
C)  $300. 
D)  $500. 
A)  zero. 
B)  $100. 
C)  $300. 
D)  $500.

Question 6

If the price level is constant and the slope of the AE curve is 0.75, a decrease in government expenditures of $100 leads to a decrease in real GDP of

Accepted Answer

A)  $25. 
B)  $100. 
C)  $400. 
D)  $800. 
A)  $25. 
B)  $100. 
C)  $400. 
D)  $800.

Question 7

-The value of the multiplier in the economy illustrated in the figure above is

Accepted Answer

A)  2.0. 
B)  2.5. 
C)  4.0. 
D)  10.0. 
A)  2.0. 
B)  2.5. 
C)  4.0. 
D)  10.0.

Question 8

When the economy is in equilibrium

Accepted Answer

A)  planned investment equals actual investment. 
B)  planned savings will equal zero. 
C)  there can be no unemployment. 
D)  changes in autonomous spending will have no impact on real GDP. 
A)  planned investment equals actual investment. 
B)  planned savings will equal zero. 
C)  there can be no unemployment. 
D)  changes in autonomous spending will have no impact on real GDP.

Question 9

If investment increases by $150 and, in response, equilibrium expenditure rises by $600

Accepted Answer

A)  the multiplier is 0.25. 
B)  the multiplier is 4.0. 
C)  the MPC is 4. 
D)  the slope of the AE curve is 3.0. 
A)  the multiplier is 0.25. 
B)  the multiplier is 4.0. 
C)  the MPC is 4. 
D)  the slope of the AE curve is 3.0.

Question 10

The slope of the consumption function is

Accepted Answer

A)  perfectly horizontal at the equilibrium level. 
B)  equal to 1. 
C)  equal to the MPC. 
D)  vertical at the full employment level of income. 
A)  perfectly horizontal at the equilibrium level. 
B)  equal to 1. 
C)  equal to the MPC. 
D)  vertical at the full employment level of income.

Question 11

If the multiplier is 3, a $750,000 increase in autonomous expenditure increases equilibrium expenditure by $2.25 million.

Accepted Answer

A) True 
 B)False

Question 12

-In the above figure, the line AB is called

Accepted Answer

A)  the saving function. 
B)  the consumption function. 
C)  the 45-degree line. 
D)  the expenditure function. 
A)  the saving function. 
B)  the consumption function. 
C)  the 45-degree line. 
D)  the expenditure function.

Question 13

When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increase from $6.5 trillion to $6.9 trillion. The MPS is equal to

Accepted Answer

A)  0.75. 
B)  0.76. 
C)  0.8. 
D)  0.2. 
A)  0.75. 
B)  0.76. 
C)  0.8. 
D)  0.2.

Question 14

As a nation's GDP increases, that nation's

Accepted Answer

A)  autonomous consumption increases. 
B)  autonomous consumption decreases. 
C)  exports increase. 
D)  imports increase. 
A)  autonomous consumption increases. 
B)  autonomous consumption decreases. 
C)  exports increase. 
D)  imports increase.

Question 15

-In the above table, there are no taxes and no imports or exports. Suppose that investment increases from $500 to $750 at each level of real GDP. After the increase, what is the level of planned expenditure when real GDP equals $5,000?

Accepted Answer

A)  $5,000 
B)  $5,250 
C)  $1,000 
D)  $250 
A)  $5,000 
B)  $5,250 
C)  $1,000 
D)  $250

Question 16

A movement along the consumption function is the result of changes in disposable income.

Accepted Answer

A) True 
 B)False

Question 17

At equilibrium expenditure

Accepted Answer

A)  consumers' expenditures on goods and services equal firms' purchases of investment goods. 
B)  firms hold no inventories of raw materials or final goods. 
C)  aggregate planned expenditure equals real GDP. 
D)  aggregate planned expenditure equals real GDP minus net exports. 
A)  consumers' expenditures on goods and services equal firms' purchases of investment goods. 
B)  firms hold no inventories of raw materials or final goods. 
C)  aggregate planned expenditure equals real GDP. 
D)  aggregate planned expenditure equals real GDP minus net exports.

Question 18

The multiplier shows that as ________ changes, real GDP changes by a ________ amount.

Accepted Answer

A)  induced expenditure; larger 
B)  induced expenditure; smaller 
C)  autonomous expenditure; larger 
D)  autonomous expenditure; smaller 
A)  induced expenditure; larger 
B)  induced expenditure; smaller 
C)  autonomous expenditure; larger 
D)  autonomous expenditure; smaller

Question 19

-In the above figure, equilibrium real GDP is equal to

Accepted Answer

A)  $12 trillion. 
B)  $14 trillion. 
C)  $16 trillion. 
D)  $18 trillion. 
A)  $12 trillion. 
B)  $14 trillion. 
C)  $16 trillion. 
D)  $18 trillion.

Question 20

The marginal propensity to import reflects the relationship between changes in imports and changes in

Accepted Answer

A)  consumption expenditure. 
B)  investment spending. 
C)  exports. 
D)  real GDP. 
A)  consumption expenditure. 
B)  investment spending. 
C)  exports. 
D)  real GDP.

-In the above figure, a change in autonomous consumption to $4 trillion with no change to the MPC would cause the consumption function to

-Suppose a country has no income taxes or imports. If the MPC is 0.75, what does the multiplier equal?

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

Dissaving

-In the above table, savings are positive when disposable income is greater than

If the price level is constant and the slope of the AE curve is 0.75, a decrease in government expenditures of $100 leads to a decrease in real GDP of

-The value of the multiplier in the economy illustrated in the figure above is

When the economy is in equilibrium

If investment increases by $150 and, in response, equilibrium expenditure rises by $600

The slope of the consumption function is

If the multiplier is 3, a $750,000 increase in autonomous expenditure increases equilibrium expenditure by $2.25 million.

-In the above figure, the line AB is called

When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increase from $6.5 trillion to $6.9 trillion. The MPS is equal to

As a nation's GDP increases, that nation's

-In the above table, there are no taxes and no imports or exports. Suppose that investment increases from $500 to $750 at each level of real GDP. After the increase, what is the level of planned expenditure when real GDP equals $5,000?

A movement along the consumption function is the result of changes in disposable income.

At equilibrium expenditure

The multiplier shows that as changes, real GDP changes by a amount.

-In the above figure, equilibrium real GDP is equal to

The marginal propensity to import reflects the relationship between changes in imports and changes in

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

-In the above figure, a change in autonomous consumption to $4 trillion with no change to the MPC would cause the consumption function to

-Suppose a country has no income taxes or imports. If the MPC is 0.75, what does the multiplier equal?

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

Dissaving

-In the above table, savings are positive when disposable income is greater than

If the price level is constant and the slope of the AE curve is 0.75, a decrease in government expenditures of $100 leads to a decrease in real GDP of

-The value of the multiplier in the economy illustrated in the figure above is

When the economy is in equilibrium

If investment increases by $150 and, in response, equilibrium expenditure rises by $600

The slope of the consumption function is

If the multiplier is 3, a $750,000 increase in autonomous expenditure increases equilibrium expenditure by $2.25 million.

-In the above figure, the line AB is called

When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increase from $6.5 trillion to $6.9 trillion. The MPS is equal to

As a nation's GDP increases, that nation's

-In the above table, there are no taxes and no imports or exports. Suppose that investment increases from $500 to $750 at each level of real GDP. After the increase, what is the level of planned expenditure when real GDP equals $5,000?

A movement along the consumption function is the result of changes in disposable income.

At equilibrium expenditure

The multiplier shows that as ________ changes, real GDP changes by a ________ amount.

-In the above figure, equilibrium real GDP is equal to

The marginal propensity to import reflects the relationship between changes in imports and changes in

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

The multiplier shows that as changes, real GDP changes by a amount.