Question 1

If the slope of the AE curve increases, the multiplier

Accepted Answer

A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  can either increase or decrease depending on what happens to the MPC. 
A)  decreases. 
B)  increases. 
C)  stays the same. 
D)  can either increase or decrease depending on what happens to the MPC.

Question 2

At equilibrium expenditure, unplanned changes in inventory

Accepted Answer

A)  must be positive. 
B)  must be zero. 
C)  must be negative. 
D)  might be either positive or negative. 
A)  must be positive. 
B)  must be zero. 
C)  must be negative. 
D)  might be either positive or negative.

Question 3

"Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure on goods and services, and exports minus imports." Is the previous statement correct or incorrect?

Accepted Answer

The statement accura

Question 4

-In the figure above, negative saving occurs

Accepted Answer

A)  at all levels of disposable income. 
B)  when disposable income is $10 trillion. 
C)  when disposable income is $15 trillion. 
D)  when disposable income is $20 trillion. 
A)  at all levels of disposable income. 
B)  when disposable income is $10 trillion. 
C)  when disposable income is $15 trillion. 
D)  when disposable income is $20 trillion.

Question 5

Induced expenditure includes ________.

Accepted Answer

A)  induced consumption and government expenditure 
B)  induced consumption expenditure and imports 
C)  all autonomous expenditure 
D)  induced consumption expenditure and exports 
A)  induced consumption and government expenditure 
B)  induced consumption expenditure and imports 
C)  all autonomous expenditure 
D)  induced consumption expenditure and exports

Question 6

-When Audrey's disposable income is $40,000, her consumption expenditure is $39,000. When her disposable income is $50,000, Audrey's consumption expenditure is $47,000. What is Audrey's marginal propensity to consume?

Accepted Answer

The marginal propensity to consume is th

Question 7

The marginal propensity to consume is

Accepted Answer

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

Question 8

-In the above figure, the increase in autonomous expenditure moves the economy from point E to

Accepted Answer

A)  point F. 
B)  point G. 
C)  point H. 
D)  point I. 
A)  point F. 
B)  point G. 
C)  point H. 
D)  point I.

Question 9

Which of the following does NOT occur as the economy moves from an expansion to a recession?

Accepted Answer

A)  An initial decrease in autonomous spending is the trigger that creates the business cycle turning point. 
B)  The change in planned spending exceeds the change in real GDP. 
C)  The multiplier process reinforces any decrease in spending and pushes the economy into recession. 
D)  Incomes fall during recessions as firms cut production in response to unplanned increases in inventories. 
A)  An initial decrease in autonomous spending is the trigger that creates the business cycle turning point. 
B)  The change in planned spending exceeds the change in real GDP. 
C)  The multiplier process reinforces any decrease in spending and pushes the economy into recession. 
D)  Incomes fall during recessions as firms cut production in response to unplanned increases in inventories.

Question 10

If there are no taxes or imports and MPC = 0.75, the multiplier equals

Accepted Answer

A)  0.25. 
B)  1.33. 
C)  4.0. 
D)  6.0. 
A)  0.25. 
B)  1.33. 
C)  4.0. 
D)  6.0.

Question 11

In the very short term, planned investment, planned government expenditure, planned exports, planned consumption, and planned imports are all fixed and do not change when GDP changes.

Accepted Answer

A) True 
 B)False

Question 12

When the aggregate demand curve shifts, the steeper the SAS curve the ________ will be a change in the price level and the ________ will be the multiplier.

Accepted Answer

A)  larger; larger 
B)  larger; smaller 
C)  smaller; larger 
D)  smaller; smaller 
A)  larger; larger 
B)  larger; smaller 
C)  smaller; larger 
D)  smaller; smaller

Question 13

The slope of the AE curve is 0.9. Investment decreases by $100 million and the price level is constant. Real GDP

Accepted Answer

A)  decreases by $10 million. 
B)  increases by $90 million. 
C)  decreases by $1 billion. 
D)  increases by $1 billion. 
A)  decreases by $10 million. 
B)  increases by $90 million. 
C)  decreases by $1 billion. 
D)  increases by $1 billion.

Question 14

-In the above table, there are no taxes and no imports or exports. Investment increases from $500 to $750. After the increase in investment, the new equilibrium level of output is

Accepted Answer

A)  $5,000. 
B)  $7,000. 
C)  $6,000. 
D)  $5,750. 
A)  $5,000. 
B)  $7,000. 
C)  $6,000. 
D)  $5,750.

Question 15

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

Accepted Answer

A)  decrease to less than 0.8. 
B)  increase. 
C)  remain steady. 
D)  decrease to more than 0.8. 
A)  decrease to less than 0.8. 
B)  increase. 
C)  remain steady. 
D)  decrease to more than 0.8.

Question 16

-The above table has data on the consumption function in the nation of Mojo.
a)What is the amount of autonomous consumption expenditure?
b)What is the marginal propensity to consume?

Accepted Answer

a)Autonomous consumption expenditure equ

Question 17

With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that

Accepted Answer

A)  autonomous consumption spending is $8 trillion. 
B)  consumption spending is $8 trillion when disposable income is $8 trillion. 
C)  consumption spending is less than $8 trillion because taxes must be paid. 
D)  consumption spending is more than $8 trillion because taxes have been paid. 
A)  autonomous consumption spending is $8 trillion. 
B)  consumption spending is $8 trillion when disposable income is $8 trillion. 
C)  consumption spending is less than $8 trillion because taxes must be paid. 
D)  consumption spending is more than $8 trillion because taxes have been paid.

Question 18

Which of the following is NOT an autonomous expenditure in the aggregate expenditures model?

Accepted Answer

A)  investment 
B)  government expenditures 
C)  imports 
D)  exports 
A)  investment 
B)  government expenditures 
C)  imports 
D)  exports

Question 19

The positive slope of the consumption function indicates that

Accepted Answer

A)  consumers spend less out of each extra dollar of income. 
B)  the amount of household wealth is subject to change. 
C)  when prices fall consumers spend more. 
D)  consumers increase their total consumption expenditure when disposable income increases. 
A)  consumers spend less out of each extra dollar of income. 
B)  the amount of household wealth is subject to change. 
C)  when prices fall consumers spend more. 
D)  consumers increase their total consumption expenditure when disposable income increases.

Question 20

-In the above figure, an increase in autonomous expenditure is depicted by the movement from point E to

Accepted Answer

A)  point F. 
B)  point G. 
C)  point H. 
D)  point I. 
A)  point F. 
B)  point G. 
C)  point H. 
D)  point I.

If the slope of the AE curve increases, the multiplier

At equilibrium expenditure, unplanned changes in inventory

"Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure on goods and services, and exports minus imports." Is the previous statement correct or incorrect?

-In the figure above, negative saving occurs

Induced expenditure includes ________.

-When Audrey's disposable income is $40,000, her consumption expenditure is $39,000. When her disposable income is $50,000, Audrey's consumption expenditure is $47,000. What is Audrey's marginal propensity to consume?

The marginal propensity to consume is

-In the above figure, the increase in autonomous expenditure moves the economy from point E to

Which of the following does NOT occur as the economy moves from an expansion to a recession?

If there are no taxes or imports and MPC = 0.75, the multiplier equals

In the very short term, planned investment, planned government expenditure, planned exports, planned consumption, and planned imports are all fixed and do not change when GDP changes.

When the aggregate demand curve shifts, the steeper the SAS curve the will be a change in the price level and the will be the multiplier.

The slope of the AE curve is 0.9. Investment decreases by $100 million and the price level is constant. Real GDP

-In the above table, there are no taxes and no imports or exports. Investment increases from $500 to $750. After the increase in investment, the new equilibrium level of output is

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

-The above table has data on the consumption function in the nation of Mojo. a)What is the amount of autonomous consumption expenditure? b)What is the marginal propensity to consume?

With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that

Which of the following is NOT an autonomous expenditure in the aggregate expenditures model?

The positive slope of the consumption function indicates that

-In the above figure, an increase in autonomous expenditure is depicted by the movement from point E to

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

If the slope of the AE curve increases, the multiplier

At equilibrium expenditure, unplanned changes in inventory

"Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure on goods and services, and exports minus imports." Is the previous statement correct or incorrect?

-In the figure above, negative saving occurs

Induced expenditure includes ________.

-When Audrey's disposable income is $40,000, her consumption expenditure is $39,000. When her disposable income is $50,000, Audrey's consumption expenditure is $47,000. What is Audrey's marginal propensity to consume?

The marginal propensity to consume is

-In the above figure, the increase in autonomous expenditure moves the economy from point E to

Which of the following does NOT occur as the economy moves from an expansion to a recession?

If there are no taxes or imports and MPC = 0.75, the multiplier equals

In the very short term, planned investment, planned government expenditure, planned exports, planned consumption, and planned imports are all fixed and do not change when GDP changes.

When the aggregate demand curve shifts, the steeper the SAS curve the ________ will be a change in the price level and the ________ will be the multiplier.

The slope of the AE curve is 0.9. Investment decreases by $100 million and the price level is constant. Real GDP

-In the above table, there are no taxes and no imports or exports. Investment increases from $500 to $750. After the increase in investment, the new equilibrium level of output is

As globalization has increased, the trend in the U.S. marginal propensity to import has been for it to

-The above table has data on the consumption function in the nation of Mojo. a)What is the amount of autonomous consumption expenditure? b)What is the marginal propensity to consume?

With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that

Which of the following is NOT an autonomous expenditure in the aggregate expenditures model?

The positive slope of the consumption function indicates that

-In the above figure, an increase in autonomous expenditure is depicted by the movement from point E to

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 the aggregate demand curve shifts, the steeper the SAS curve the will be a change in the price level and the will be the multiplier.