Question 1

Business cycle turning points are

Accepted Answer

A)  unaffected by, and unrelated to the multiplier. 
B)  easy to predict. 
C)  brought about by changes in autonomous expenditures that are then subject to the multiplier effect. 
D)  None of the above is correct. 
A)  unaffected by, and unrelated to the multiplier. 
B)  easy to predict. 
C)  brought about by changes in autonomous expenditures that are then subject to the multiplier effect. 
D)  None of the above is correct.

Question 2

What effect does an increase in the MPC have on the slope of the AE curve?

Accepted Answer

An increase in the M

Question 3

-The slope of the AE curve is .80. What is the multiplier? Everything else the same, by how much does equilibrium aggregate expenditure increase if
a)exports increase from $1.75 trillion to $2.25 trillion.
b)government expenditure on goods and services decrease from $2.0 trillion to $1.8 trillion.
c)investment increases from $1.2 trillion to $2.3 trillion.

Accepted Answer

a)The change in equilibrium aggregate ex

Question 4

When the consumption function becomes steeper,

Accepted Answer

A)  less of every dollar is consumed. 
B)  the saving function also become steeper. 
C)  the MPC rises. 
D)  the MPC falls. 
A)  less of every dollar is consumed. 
B)  the saving function also become steeper. 
C)  the MPC rises. 
D)  the MPC falls.

Question 5

The marginal propensity to consume is

Accepted Answer

A)  the slope of the savings function. 
B)  never greater than 1. 
C)  the percentage or fraction of income that is consumed. 
D)  the percentage change in disposable income. 
A)  the slope of the savings function. 
B)  never greater than 1. 
C)  the percentage or fraction of income that is consumed. 
D)  the percentage change in disposable income.

Question 6

An economy has no imports and no taxes. The marginal propensity to save is 0.2. The multiplier is ________ so a ________ increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

Accepted Answer

A)  1.25; $48 billion 
B)  5; $12 billion 
C)  10; $6 billion 
D)  None of the above answers are correct. 
A)  1.25; $48 billion 
B)  5; $12 billion 
C)  10; $6 billion 
D)  None of the above answers are correct.

Question 7

The size of the marginal propensity to save

Accepted Answer

A)  is negative if dissaving is present. 
B)  is between 0 and 1. 
C)  equals 1. 
D)  exceeds 1. 
A)  is negative if dissaving is present. 
B)  is between 0 and 1. 
C)  equals 1. 
D)  exceeds 1.

Question 8

-The figure above illustrates an economy's consumption function. What is the marginal propensity to save in this economy?

Accepted Answer

A)  0.67 
B)  1.00 
C)  0.75 
D)  0.33 
A)  0.67 
B)  1.00 
C)  0.75 
D)  0.33

Question 9

-In the above table, there are no taxes and no imports or exports. The equilibrium level of expenditure for this economy is

Accepted Answer

A)  any level because investment always equals government expenditures. 
B)  no level because consumption expenditure is always less than real GDP. 
C)  $3,000. 
D)  $5,000. 
A)  any level because investment always equals government expenditures. 
B)  no level because consumption expenditure is always less than real GDP. 
C)  $3,000. 
D)  $5,000.

Question 10

If the slope of the saving function is 0.27, then the marginal propensity to ________.

Accepted Answer

A)  import is less than 0.27 
B)  save is 0.73 
C)  consume is 0.73 
D)  consume is 0.27 
A)  import is less than 0.27 
B)  save is 0.73 
C)  consume is 0.73 
D)  consume is 0.27

Question 11

-According to the data in the above table, what is the marginal propensity to save?

Accepted Answer

A)  25. 
B)  0.75. 
C)  0.25. 
D)  1. 
A)  25. 
B)  0.75. 
C)  0.25. 
D)  1.

Question 12

The slope of the consumption function is

Accepted Answer

A)  less than 1. 
B)  1. 
C)  greater than 1. 
D)  negative. 
A)  less than 1. 
B)  1. 
C)  greater than 1. 
D)  negative.

Question 13

The MPC is equal to

Accepted Answer

A)  △C / △S. 
B)  △S / △C. 
C)  △C / △YD. 
D)  △S / △YD. 
A)  △C / △S. 
B)  △S / △C. 
C)  △C / △YD. 
D)  △S / △YD.

Question 14

-In the above figure, if real GDP equals $17 trillion

Accepted Answer

A)  actual and planned investment will both increase. 
B)  unplanned inventories will increase. 
C)  actual investment will decrease but planned investment will increase. 
D)  unplanned inventories will decrease. 
A)  actual and planned investment will both increase. 
B)  unplanned inventories will increase. 
C)  actual investment will decrease but planned investment will increase. 
D)  unplanned inventories will decrease.

Question 15

"Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase." Explain whether the previous sentence is correct or incorrect.

Accepted Answer

The sentence is incorrect along two dime

Question 16

An increase in ________ shifts the AE curve ________ and an increase in ________ shifts the aggregate demand curve ________.

Accepted Answer

A)  autonomous expenditure; upward; the price level; leftward 
B)  the price level; downward; autonomous expenditure; rightward 
C)  the price level; upward; autonomous expenditure; leftward 
D)  autonomous expenditure; upward; the price level; rightward 
A)  autonomous expenditure; upward; the price level; leftward 
B)  the price level; downward; autonomous expenditure; rightward 
C)  the price level; upward; autonomous expenditure; leftward 
D)  autonomous expenditure; upward; the price level; rightward

Question 17

A decrease in autonomous consumption will

Accepted Answer

A)  shift the aggregate expenditure function downward. 
B)  decrease the marginal propensity to save. 
C)  decrease the marginal propensity to consume. 
D)  change the slope of the aggregate expenditure curve. 
A)  shift the aggregate expenditure function downward. 
B)  decrease the marginal propensity to save. 
C)  decrease the marginal propensity to consume. 
D)  change the slope of the aggregate expenditure curve.

Question 18

Autonomous expenditure refers to

Accepted Answer

A)  aggregate expenditure solely prompted by policy. 
B)  changes in short-run aggregate supply. 
C)  aggregate expenditure that does not change when real GDP changes. 
D)  aggregate expenditure that varies because of changes in real GDP. 
A)  aggregate expenditure solely prompted by policy. 
B)  changes in short-run aggregate supply. 
C)  aggregate expenditure that does not change when real GDP changes. 
D)  aggregate expenditure that varies because of changes in real GDP.

Question 19

-In the above figure, if real GDP is greater than $15 trillion, inventories will be

Accepted Answer

A)  below target levels so firms will increase production. 
B)  below target levels so firms will decrease production. 
C)  above target levels so firms will increase production. 
D)  above target levels so firms will decrease production. 
A)  below target levels so firms will increase production. 
B)  below target levels so firms will decrease production. 
C)  above target levels so firms will increase production. 
D)  above target levels so firms will decrease production.

Question 20

-In the above figure, line ABC is called

Accepted Answer

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

Business cycle turning points are

What effect does an increase in the MPC have on the slope of the AE curve?

When the consumption function becomes steeper,

The marginal propensity to consume is

An economy has no imports and no taxes. The marginal propensity to save is 0.2. The multiplier is so a increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

The size of the marginal propensity to save

-The figure above illustrates an economy's consumption function. What is the marginal propensity to save in this economy?

-In the above table, there are no taxes and no imports or exports. The equilibrium level of expenditure for this economy is

If the slope of the saving function is 0.27, then the marginal propensity to ________.

-According to the data in the above table, what is the marginal propensity to save?

The slope of the consumption function is

The MPC is equal to

-In the above figure, if real GDP equals $17 trillion

"Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase." Explain whether the previous sentence is correct or incorrect.

An increase in shifts the AE curve and an increase in shifts the aggregate demand curve .

A decrease in autonomous consumption will

Autonomous expenditure refers to

-In the above figure, if real GDP is greater than $15 trillion, inventories will be

-In the above figure, line ABC is called

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

Business cycle turning points are

What effect does an increase in the MPC have on the slope of the AE curve?

When the consumption function becomes steeper,

The marginal propensity to consume is

An economy has no imports and no taxes. The marginal propensity to save is 0.2. The multiplier is ________ so a ________ increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

The size of the marginal propensity to save

-The figure above illustrates an economy's consumption function. What is the marginal propensity to save in this economy?

-In the above table, there are no taxes and no imports or exports. The equilibrium level of expenditure for this economy is

If the slope of the saving function is 0.27, then the marginal propensity to ________.

-According to the data in the above table, what is the marginal propensity to save?

The slope of the consumption function is

The MPC is equal to

-In the above figure, if real GDP equals $17 trillion

"Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase." Explain whether the previous sentence is correct or incorrect.

An increase in ________ shifts the AE curve ________ and an increase in ________ shifts the aggregate demand curve ________.

A decrease in autonomous consumption will

Autonomous expenditure refers to

-In the above figure, if real GDP is greater than $15 trillion, inventories will be

-In the above figure, line ABC is called

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

An economy has no imports and no taxes. The marginal propensity to save is 0.2. The multiplier is so a increase in autonomous expenditure increases equilibrium expenditure by $60 billion.

An increase in shifts the AE curve and an increase in shifts the aggregate demand curve .