Question 1

Suppose that at a particular level of real GDP,the unintended change in inventories is zero.Which of the following is true?

Accepted Answer

A) That level of real GDP is less than the equilibrium level of real GDP demanded. 
B) That level of real GDP is greater than the equilibrium level of real GDP demanded. 
C) That level of real GDP is the equilibrium level of real GDP demanded. 
D) At that level of real GDP,there is no inflation. 
E) At that level of real GDP,there is no saving. 
A) That level of real GDP is less than the equilibrium level of real GDP demanded. 
B) That level of real GDP is greater than the equilibrium level of real GDP demanded. 
C) That level of real GDP is the equilibrium level of real GDP demanded. 
D) At that level of real GDP,there is no inflation. 
E) At that level of real GDP,there is no saving.

Question 2

Exhibit 9-9  
-The larger the marginal propensity to save,other things constant,

Accepted Answer

A) the smaller the marginal propensity to consume 
B) the larger the marginal propensity to consume 
C) the larger the multiplier 
D) the steeper the consumption function 
E) the flatter the saving function 
A) the smaller the marginal propensity to consume 
B) the larger the marginal propensity to consume 
C) the larger the multiplier 
D) the steeper the consumption function 
E) the flatter the saving function

Question 3

A decrease in planned investment would shift the

Accepted Answer

A) aggregate demand curve outward 
B) aggregate demand curve inward 
C) aggregate supply curve inward 
D) aggregate supply curve outward 
E) consumption function downward 
A) aggregate demand curve outward 
B) aggregate demand curve inward 
C) aggregate supply curve inward 
D) aggregate supply curve outward 
E) consumption function downward

Question 4

If the spending multiplier is greater than 1.0,a $200 billion increase in autonomous investment will cause

Accepted Answer

A) equilibrium investment to increase by less than $200 billion 
B) equilibrium investment to decrease by more than $200 billion 
C) equilibrium real GDP demanded to increase by more than $200 billion 
D) equilibrium real GDP demanded to decrease by less than $200 billion 
E) equilibrium saving to decrease by more than $200 billion 
A) equilibrium investment to increase by less than $200 billion 
B) equilibrium investment to decrease by more than $200 billion 
C) equilibrium real GDP demanded to increase by more than $200 billion 
D) equilibrium real GDP demanded to decrease by less than $200 billion 
E) equilibrium saving to decrease by more than $200 billion

Question 5

Which of the following is not true about a change in the price level?

Accepted Answer

A) It will shift the aggregate demand curve. 
B) It will shift the aggregate expenditure curve. 
C) It will result in a new value of equilibrium real GDP demanded. 
D) It will change the real value of dollar-denominated assets. 
E) It will shift the consumption function. 
A) It will shift the aggregate demand curve. 
B) It will shift the aggregate expenditure curve. 
C) It will result in a new value of equilibrium real GDP demanded. 
D) It will change the real value of dollar-denominated assets. 
E) It will shift the consumption function.

Question 6

Exhibit 9-11  
-In Exhibit 9-11,real GDP occurs at point

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) E 
A) A 
B) B 
C) C 
D) D 
E) E

Question 7

The economy will contract (shrink)if

Accepted Answer

A) leakages exceed injections 
B) injections exceed leakages 
C) injections equal leakages 
D) expenditures exceed output 
E) investment exceeds saving 
A) leakages exceed injections 
B) injections exceed leakages 
C) injections equal leakages 
D) expenditures exceed output 
E) investment exceeds saving

Question 8

Only a change in the price level can cause shifts in both the aggregate expenditure line and the aggregate demand curve.

Accepted Answer

A) True 
 B)False

Question 9

The simple spending multiplier is like

Accepted Answer

A) having a bird in the hand rather than two in the bush 
B) two wrongs making a right 
C) the spreading of ripples from a stone thrown in a pond 
D) getting too much of a good thing 
E) having too many chefs in the kitchen 
A) having a bird in the hand rather than two in the bush 
B) two wrongs making a right 
C) the spreading of ripples from a stone thrown in a pond 
D) getting too much of a good thing 
E) having too many chefs in the kitchen

Question 10

On the aggregate expenditure graph,if autonomous saving decreases by $15 billion,

Accepted Answer

A) the aggregate expenditure line shifts upward by $15 billion 
B) planned investment increases by $15 billion 
C) the aggregate expenditure line shifts downward by $15 billion 
D) planned investment decreases by $15 billion 
E) the equilibrium level of real GDP demanded decreases by $15 billion 
A) the aggregate expenditure line shifts upward by $15 billion 
B) planned investment increases by $15 billion 
C) the aggregate expenditure line shifts downward by $15 billion 
D) planned investment decreases by $15 billion 
E) the equilibrium level of real GDP demanded decreases by $15 billion

Question 11

An increase in the price level can be indicated by a downward shift of the aggregate expenditure line.

Accepted Answer

A) True 
 B)False

Question 12

If the level of autonomous spending decreases at a given price level,

Accepted Answer

A) the aggregate expenditure line shifts upward; the economy moves along the aggregate demand curve 
B) the aggregate expenditure line shifts downward; the economy moves along the aggregate demand curve 
C) the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right 
D) the aggregate expenditure line shifts downward; the aggregate demand curve shifts to the left 
E) the aggregate expenditure curve shifts downward; the aggregate demand curve shifts to the right 
A) the aggregate expenditure line shifts upward; the economy moves along the aggregate demand curve 
B) the aggregate expenditure line shifts downward; the economy moves along the aggregate demand curve 
C) the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right 
D) the aggregate expenditure line shifts downward; the aggregate demand curve shifts to the left 
E) the aggregate expenditure curve shifts downward; the aggregate demand curve shifts to the right

Question 13

Which of the following would result from a decrease in autonomous saving?

Accepted Answer

A) an upward shift of the aggregate expenditure line 
B) an upward shift of the 45-degree line 
C) a decrease in the equilibrium level of real GDP demanded 
D) an increase in the level of autonomous consumption 
E) an increase in the level of autonomous investment 
A) an upward shift of the aggregate expenditure line 
B) an upward shift of the 45-degree line 
C) a decrease in the equilibrium level of real GDP demanded 
D) an increase in the level of autonomous consumption 
E) an increase in the level of autonomous investment

Question 14

If households save $30 billion more at each level of income and the MPC = 0.9,the aggregate expenditure line will

Accepted Answer

A) not be affected 
B) shift upward by $30 billion 
C) shift downward by $30 billion 
D) shift upward by $300 billion because of the multiplier 
E) shift downward by $300 billion because of the multiplier 
A) not be affected 
B) shift upward by $30 billion 
C) shift downward by $30 billion 
D) shift upward by $300 billion because of the multiplier 
E) shift downward by $300 billion because of the multiplier

Question 15

If the level of autonomous spending increases at a given price level,

Accepted Answer

A) the aggregate expenditure line shifts upward; the economy moves upward along the aggregate demand curve 
B) the aggregate expenditure line shifts downward; the economy moves upward along the aggregate demand curve 
C) the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right 
D) the aggregate expenditure line shifts downward; the aggregate demand curve shifts to the left 
E) the aggregate expenditure curve shifts upward; the aggregate demand curve shifts to the left 
A) the aggregate expenditure line shifts upward; the economy moves upward along the aggregate demand curve 
B) the aggregate expenditure line shifts downward; the economy moves upward along the aggregate demand curve 
C) the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right 
D) the aggregate expenditure line shifts downward; the aggregate demand curve shifts to the left 
E) the aggregate expenditure curve shifts upward; the aggregate demand curve shifts to the left

Question 16

An increase in the price level will

Accepted Answer

A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward 
C) result in a movement upward along the aggregate expenditure line 
D) result in a movement downward along the aggregate expenditure line 
E) change the slope of the aggregate expenditure line 
A) shift the aggregate expenditure line upward 
B) shift the aggregate expenditure line downward 
C) result in a movement upward along the aggregate expenditure line 
D) result in a movement downward along the aggregate expenditure line 
E) change the slope of the aggregate expenditure line

Question 17

If the marginal propensity to consume is 3/4,the simple multiplier is

Accepted Answer

A) 3 
B) 7 
C) 4 
D) 25 
E) 3/10 
A) 3 
B) 7 
C) 4 
D) 25 
E) 3/10

Question 18

If the multiplier is 4,a $10 billion increase in autonomous investment will cause a

Accepted Answer

A) $10 billion increase in equilibrium investment 
B) $40 billion increase in equilibrium investment 
C) $40 billion increase in equilibrium real GDP demanded 
D) $400 billion increase in equilibrium real GDP demanded 
E) $40 billion increase in consumption spending 
A) $10 billion increase in equilibrium investment 
B) $40 billion increase in equilibrium investment 
C) $40 billion increase in equilibrium real GDP demanded 
D) $400 billion increase in equilibrium real GDP demanded 
E) $40 billion increase in consumption spending

Question 19

The aggregate demand curve illustrates a relationship between

Accepted Answer

A) interest rates and income levels 
B) the price level and real GDP 
C) the price level and interest rates 
D) income levels and real GDP levels 
E) income levels and nominal income levels 
A) interest rates and income levels 
B) the price level and real GDP 
C) the price level and interest rates 
D) income levels and real GDP levels 
E) income levels and nominal income levels

Question 20

If the price level rises,

Accepted Answer

A) the aggregate expenditures line shifts upward; the economy moves downward along the aggregate demand curve 
B) the aggregate expenditures line shifts downward; the economy moves upward along the aggregate demand curve 
C) the aggregate demand curve shifts to the right; the economy moves along the aggregate expenditure line 
D) the aggregate demand curve shifts to the left; the economy moves along the aggregate expenditure line 
E) the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right 
A) the aggregate expenditures line shifts upward; the economy moves downward along the aggregate demand curve 
B) the aggregate expenditures line shifts downward; the economy moves upward along the aggregate demand curve 
C) the aggregate demand curve shifts to the right; the economy moves along the aggregate expenditure line 
D) the aggregate demand curve shifts to the left; the economy moves along the aggregate expenditure line 
E) the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right

Exam 10: Baggregate Expenditure and Aggregate Demand

Suppose that at a particular level of real GDP,the unintended change in inventories is zero.Which of the following is true?

Exhibit 9-9 -The larger the marginal propensity to save,other things constant,

A decrease in planned investment would shift the

If the spending multiplier is greater than 1.0,a $200 billion increase in autonomous investment will cause

Which of the following is not true about a change in the price level?

Exhibit 9-11 -In Exhibit 9-11,real GDP occurs at point

The economy will contract (shrink)if

Only a change in the price level can cause shifts in both the aggregate expenditure line and the aggregate demand curve.

The simple spending multiplier is like

On the aggregate expenditure graph,if autonomous saving decreases by $15 billion,

An increase in the price level can be indicated by a downward shift of the aggregate expenditure line.

If the level of autonomous spending decreases at a given price level,

Which of the following would result from a decrease in autonomous saving?

If households save $30 billion more at each level of income and the MPC = 0.9,the aggregate expenditure line will

If the level of autonomous spending increases at a given price level,

An increase in the price level will

If the marginal propensity to consume is 3/4,the simple multiplier is

If the multiplier is 4,a $10 billion increase in autonomous investment will cause a

The aggregate demand curve illustrates a relationship between

If the price level rises,

The Art and Science of Economic Analysis

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Introduction to Macroeconomics

Tracking the Useconomy

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Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

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Macro Policy Debate: Active or Passive

International Trade

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understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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