Question 1

Aggregate expenditure includes consumption spending,planned investment spending,government purchases,and net exports.

Accepted Answer

A) True 
 B)False

Question 2

Increases in the price level will

Accepted Answer

A) lower consumption because goods and services are less affordable. 
B) raise consumption because some goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases. 
A) lower consumption because goods and services are less affordable. 
B) raise consumption because some goods and services are more affordable. 
C) raise consumption because real wealth increases. 
D) lower consumption because real wealth decreases.

Question 3

How does a decrease in government spending affect the aggregate expenditure line?

Accepted Answer

A) It shifts the aggregate expenditure line upward. 
B) It shifts the aggregate expenditure line downward. 
C) It increases the slope of the aggregate expenditure line. 
D) It decreases the slope of the aggregate expenditure line. 
A) It shifts the aggregate expenditure line upward. 
B) It shifts the aggregate expenditure line downward. 
C) It increases the slope of the aggregate expenditure line. 
D) It decreases the slope of the aggregate expenditure line.

Question 4

Which of the following will raise consumer expenditures?

Accepted Answer

A) an increase in interest rates 
B) a general decline in housing prices 
C) an increase in expected future income 
D) an increase in the price level 
A) an increase in interest rates 
B) a general decline in housing prices 
C) an increase in expected future income 
D) an increase in the price level

Question 5

The National Restaurant Association states that the restaurant industry has economic effect of more than $1.7 trillion annually in the United States,with every dollar spent in restaurants generating an estimated total of $2.05 in spending in the economy.This indicates that the spending multiplier for the restaurant industry is equal to

Accepted Answer

A) 1.21. 
B) 1.70. 
C) 2.05. 
D) 4.25. 
A) 1.21. 
B) 1.70. 
C) 2.05. 
D) 4.25.

Question 6

If inflation in the United States is lower than inflation in other countries,what will be the effect on net exports for the United States?

Accepted Answer

A) Net exports will rise as U.S.exports increase. 
B) Net exports will rise as U.S.imports increase. 
C) Net exports will decrease as U.S.exports decrease. 
D) Net exports will decrease as U.S.imports decrease. 
A) Net exports will rise as U.S.exports increase. 
B) Net exports will rise as U.S.imports increase. 
C) Net exports will decrease as U.S.exports decrease. 
D) Net exports will decrease as U.S.imports decrease.

Question 7

When Jack's income increases by $5,000,he spends an additional $4,000 dollars.This implies that his marginal propensity to consume is 1.25.

Accepted Answer

A) True 
 B)False

Question 8

Table 12-11
  
-Refer to Table 12-11.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP.

Accepted Answer

The macroeconomic equilibrium is determi

Question 9

Disposable income is defined as

Accepted Answer

A) national income - transfers + taxes. 
B) national income + transfers + taxes. 
C) national income - transfers - taxes. 
D) national income + transfers - taxes. 
A) national income - transfers + taxes. 
B) national income + transfers + taxes. 
C) national income - transfers - taxes. 
D) national income + transfers - taxes.

Question 10

Which of the following will reduce consumer expenditures?

Accepted Answer

A) a decrease in interest rates 
B) a general increase in housing prices 
C) a decrease in expected future income 
D) a decrease in the price level 
A) a decrease in interest rates 
B) a general increase in housing prices 
C) a decrease in expected future income 
D) a decrease in the price level

Question 11

A decrease in consumer confidence can put your job at risk if

Accepted Answer

A) aggregate expenditures fall. 
B) consumers expect their incomes to rise in the future. 
C) aggregate expenditures rise. 
D) consumers expect firms to increase investment in the future. 
A) aggregate expenditures fall. 
B) consumers expect their incomes to rise in the future. 
C) aggregate expenditures rise. 
D) consumers expect firms to increase investment in the future.

Question 12

Which of the following will decrease aggregate expenditure in the United States?

Accepted Answer

A) a decrease in the value of the dollar 
B) a decrease in the price level 
C) a decrease in interest rates 
D) a decrease in government purchases 
A) a decrease in the value of the dollar 
B) a decrease in the price level 
C) a decrease in interest rates 
D) a decrease in government purchases

Question 13

An increase in the price level results in a(n)________ in household consumption spending and a(n)________ in investment spending.

Accepted Answer

A) increase; decrease 
B) increase; increase 
C) decrease; decrease 
D) decrease; increase 
A) increase; decrease 
B) increase; increase 
C) decrease; decrease 
D) decrease; increase

Question 14

Table 12-15
  
-Refer to Table 12-15.Using the table above,answer the following questions.The numbers in the table are in billions of dollars.
a.What is the equilibrium level of real GDP?
b.What is the MPC?
c.If investment spending declines by $10 billion,what will happen to equilibrium GDP?

Accepted Answer

a.Equilibrium real GDP is determined whe

Question 15

Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP

Accepted Answer

A) in the 1950s. 
B) during the Great Depression. 
C) at the end of the Civil War. 
D) during the Industrial Revolution. 
A) in the 1950s. 
B) during the Great Depression. 
C) at the end of the Civil War. 
D) during the Industrial Revolution.

Question 16

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Accepted Answer

A) consumer confidence 
B) the natural rate of unemployment 
C) the inflation rate 
D) the length of a business cycle 
A) consumer confidence 
B) the natural rate of unemployment 
C) the inflation rate 
D) the length of a business cycle

Question 17

Figure 12-1  
-Refer to Figure 12-1.If the economy is at point L,what will happen?

Accepted Answer

A) Inventories have fallen below their desired level,and firms decrease production. 
B) Inventories have fallen below their desired level,and firms increase production. 
C) Inventories have risen above their desired level,and firms decrease production. 
D) Inventories have risen above their desired level,and firms increase production. 
A) Inventories have fallen below their desired level,and firms decrease production. 
B) Inventories have fallen below their desired level,and firms increase production. 
C) Inventories have risen above their desired level,and firms decrease production. 
D) Inventories have risen above their desired level,and firms increase production.

Question 18

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $27 million,what unplanned changes in inventories occurred?

Accepted Answer

A) There was an unplanned increase in inventories equal to $2 million. 
B) There was no unplanned change in inventories. 
C) There was an unplanned decrease in inventories equal to $2 million. 
D) There was an unplanned decrease in inventories equal to $19 million. 
A) There was an unplanned increase in inventories equal to $2 million. 
B) There was no unplanned change in inventories. 
C) There was an unplanned decrease in inventories equal to $2 million. 
D) There was an unplanned decrease in inventories equal to $19 million.

Question 19

Which of the following is not a component of aggregate expenditure?

Accepted Answer

A) consumption spending 
B) planned investment spending 
C) actual investment spending 
D) government spending 
A) consumption spending 
B) planned investment spending 
C) actual investment spending 
D) government spending

Question 20

Equilibrium GDP is equal to

Accepted Answer

A) autonomous expenditure times the marginal propensity to consume. 
B) autonomous expenditure times the marginal propensity to save. 
C) autonomous expenditure times the multiplier. 
D) autonomous expenditure. 
A) autonomous expenditure times the marginal propensity to consume. 
B) autonomous expenditure times the marginal propensity to save. 
C) autonomous expenditure times the multiplier. 
D) autonomous expenditure.

Aggregate expenditure includes consumption spending,planned investment spending,government purchases,and net exports.

Increases in the price level will

How does a decrease in government spending affect the aggregate expenditure line?

Which of the following will raise consumer expenditures?

If inflation in the United States is lower than inflation in other countries,what will be the effect on net exports for the United States?

When Jack's income increases by $5,000,he spends an additional $4,000 dollars.This implies that his marginal propensity to consume is 1.25.

Table 12-11 -Refer to Table 12-11.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP.

Disposable income is defined as

Which of the following will reduce consumer expenditures?

A decrease in consumer confidence can put your job at risk if

Which of the following will decrease aggregate expenditure in the United States?

An increase in the price level results in a(n) in household consumption spending and a(n) in investment spending.

Table 12-15 -Refer to Table 12-15.Using the table above,answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If investment spending declines by $10 billion,what will happen to equilibrium GDP?

Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Figure 12-1 -Refer to Figure 12-1.If the economy is at point L,what will happen?

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $27 million,what unplanned changes in inventories occurred?

Which of the following is not a component of aggregate expenditure?

Equilibrium GDP is equal to

Economics: Foundations and Models

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 12: Aggregate Expenditure and Output in the Short Run

Aggregate expenditure includes consumption spending,planned investment spending,government purchases,and net exports.

Increases in the price level will

How does a decrease in government spending affect the aggregate expenditure line?

Which of the following will raise consumer expenditures?

If inflation in the United States is lower than inflation in other countries,what will be the effect on net exports for the United States?

When Jack's income increases by $5,000,he spends an additional $4,000 dollars.This implies that his marginal propensity to consume is 1.25.

Table 12-11 -Refer to Table 12-11.Using the table above,calculate the unplanned change in inventories for each level of GDP,and explain what will happen to GDP.

Disposable income is defined as

Which of the following will reduce consumer expenditures?

A decrease in consumer confidence can put your job at risk if

Which of the following will decrease aggregate expenditure in the United States?

An increase in the price level results in a(n)________ in household consumption spending and a(n)________ in investment spending.

Table 12-15 -Refer to Table 12-15.Using the table above,answer the following questions.The numbers in the table are in billions of dollars. a.What is the equilibrium level of real GDP? b.What is the MPC? c.If investment spending declines by $10 billion,what will happen to equilibrium GDP?

Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Figure 12-1 -Refer to Figure 12-1.If the economy is at point L,what will happen?

Consumption is $5 million,planned investment spending is $8 million,government purchases are $10 million,and net exports are equal to $2 million.If GDP during that same time period is equal to $27 million,what unplanned changes in inventories occurred?

Which of the following is not a component of aggregate expenditure?

Equilibrium GDP is equal to

Economics: Foundations and Models

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

An increase in the price level results in a(n) in household consumption spending and a(n) in investment spending.