Exam 11: Expenditure Multipliers

If firms set prices and then keep them fixed for a period of time, their fixed prices imply that

How is it possible for consumption expenditure to be positive even when disposable income is zero?

-Suppose the economy has no income taxes or imports. How is the size of the expenditure multiplier related to the marginal propensity to consume? What is the multiplier if the MPC equals 0.25? If the MPC equals 0.50? If the MPC equals 0.90?

The expenditure multiplier equals

________ consumption is consumption that will occur ________ the level of GDP and disposable income.

Please explain the relationship between consumption, disposable income and saving.

-In the above figure, if the level of real GDP is $17 trillion

In the aggregate expenditure model, when real GDP is greater than aggregate planned expenditure

The marginal propensity to consume is equal to

An economy saves 20 percent of any increase in income and there are no income taxes or imports. Then, an increase in investment of $2 billion leads to a short run increase in real GDP of

If the MPC is .9 and there are no income taxes or imports, the multiplier for a change in autonomous expenditure equals

If the consumption function lies below the 45-degree line, then saving at these levels of disposable income will

When U.S. real GDP increases, the quantity of U.S. imports

"Dissaving" occurs when

The MPC and MPS measure changes in consumption expenditure and saving that result from changes in

Between 2015 and 2016 the government reported that disposable income decreased by $400 billion and consumption expenditure decreased by $280 billion. Based on these data, the MPC equals

-In the above figure, equilibrium expenditure is

If the multiplier is 6 and exports decrease by $30, what impact will that have on aggregate expenditure? Aggregate expenditure will

The part of aggregate planned expenditure that does not vary with real GDP ________.

The marginal propensity to consume must increase as disposable income increases.