Question 1

Actual aggregate expenditure is

Accepted Answer

A)  always equal to real GDP. 
B)  only equal to real GDP at the equilibrium level of aggregate planned expenditure. 
C)  never greater than real GDP but can be less than real GDP. 
D)  never less than real GDP but can be greater than real GDP. 
A)  always equal to real GDP. 
B)  only equal to real GDP at the equilibrium level of aggregate planned expenditure. 
C)  never greater than real GDP but can be less than real GDP. 
D)  never less than real GDP but can be greater than real GDP.

Question 2

The larger the multiplier, the ________ the AE curve and the ________ the AD curve from an increase in investment.

Accepted Answer

A)  steeper; smaller the shift in 
B)  steeper; larger the shift in 
C)  flatter; larger the movement along 
D)  flatter; smaller the movement along 
A)  steeper; smaller the shift in 
B)  steeper; larger the shift in 
C)  flatter; larger the movement along 
D)  flatter; smaller the movement along

Question 3

What does the marginal propensity to consume measure and how is it related to the consumption function?

Accepted Answer

The marginal propensity to consume, or M

Question 4

If real GDP is $16 trillion and planned aggregate expenditure is $16.5 trillion, inventories will be

Accepted Answer

A)  below their target and real GDP will increase. 
B)  below their target and real GDP will decrease. 
C)  above their target and real GDP will decrease. 
D)  above their target and real GDP will increase. 
A)  below their target and real GDP will increase. 
B)  below their target and real GDP will decrease. 
C)  above their target and real GDP will decrease. 
D)  above their target and real GDP will increase.

Question 5

Suppose the consumption function is given by the equation C = 100 + 0.8YD, where YD is disposable income. What is the marginal propensity to save?

Accepted Answer

A)  0.2 
B)  0.8 
C)  2.0 
D)  100 
A)  0.2 
B)  0.8 
C)  2.0 
D)  100

Question 6

Autonomous consumption is that portion of consumption expenditure that is not influenced by

Accepted Answer

A)  income. 
B)  preferences. 
C)  prices. 
D)  the legal authorities. 
A)  income. 
B)  preferences. 
C)  prices. 
D)  the legal authorities.

Question 7

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

Accepted Answer

A)  at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment. 
B)  at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment. 
C)  at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment. 
D)  at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment. 
A)  at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment. 
B)  at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment. 
C)  at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment. 
D)  at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment.

Question 8

-In the above figure, at point d firms would find themselves with inventories ________ their target level and so they would ________ production.

Accepted Answer

A)  increasing above; increase 
B)  increasing above; decrease 
C)  decreasing below; increase 
D)  decreasing below; decrease 
A)  increasing above; increase 
B)  increasing above; decrease 
C)  decreasing below; increase 
D)  decreasing below; decrease

Question 9

In a diagram with the consumption function, the ________ shows all points where disposable income equals consumption expenditures.

Accepted Answer

A)  consumption function 
B)  aggregate demand curve 
C)  45-degree line 
D)  saving function 
A)  consumption function 
B)  aggregate demand curve 
C)  45-degree line 
D)  saving function

Actual aggregate expenditure is

The larger the multiplier, the the AE curve and the the AD curve from an increase in investment.

What does the marginal propensity to consume measure and how is it related to the consumption function?

If real GDP is $16 trillion and planned aggregate expenditure is $16.5 trillion, inventories will be

Suppose the consumption function is given by the equation C = 100 + 0.8YD, where YD is disposable income. What is the marginal propensity to save?

Autonomous consumption is that portion of consumption expenditure that is not influenced by

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

-In the above figure, at point d firms would find themselves with inventories their target level and so they would production.

In a diagram with the consumption function, the ________ shows all points where disposable income equals consumption expenditures.

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

Actual aggregate expenditure is

The larger the multiplier, the ________ the AE curve and the ________ the AD curve from an increase in investment.

What does the marginal propensity to consume measure and how is it related to the consumption function?

If real GDP is $16 trillion and planned aggregate expenditure is $16.5 trillion, inventories will be

Suppose the consumption function is given by the equation C = 100 + 0.8YD, where YD is disposable income. What is the marginal propensity to save?

Autonomous consumption is that portion of consumption expenditure that is not influenced by

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

-In the above figure, at point d firms would find themselves with inventories ________ their target level and so they would ________ production.

In a diagram with the consumption function, the ________ shows all points where disposable income equals consumption expenditures.

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 larger the multiplier, the the AE curve and the the AD curve from an increase in investment.

-In the above figure, at point d firms would find themselves with inventories their target level and so they would production.