Question 1

Planned aggregate expenditure is equal to

Accepted Answer

A) consumption spending only. 
B) consumption spending plus planned investment spending. 
C) planned investment spending only. 
D) consumption spending plus planned investment spending plus government purchases plus net exports. 
A) consumption spending only. 
B) consumption spending plus planned investment spending. 
C) planned investment spending only. 
D) consumption spending plus planned investment spending plus government purchases plus net exports.

Question 2

Figure 23-3  
-Refer to Figure 23-3.Suppose that government spending increases,shifting up the aggregate expenditure line.GDP increases from GDP1 to GDP2,and this amount is $400 billion.If the MPC is 0.75,then what is the distance between N and L or by how much did government spending change?

Accepted Answer

A) $10 billion 
B) $100 billion 
C) $200 billion 
D) $300 billion 
A) $10 billion 
B) $100 billion 
C) $200 billion 
D) $300 billion

Question 3

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to ________ and real GDP to ________.

Accepted Answer

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

Question 4

What impact does a decrease in the price level in the United States have on net exports and why?

Accepted Answer

A) A decrease in the price level increases net exports because lower prices increase the value of the dollar. 
B) A decrease in the price level increases net exports by reducing the relative cost of American goods. 
C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. 
D) A decrease in the price level reduces net exports because lower prices increase American spending on imports. 
A) A decrease in the price level increases net exports because lower prices increase the value of the dollar. 
B) A decrease in the price level increases net exports by reducing the relative cost of American goods. 
C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. 
D) A decrease in the price level reduces net exports because lower prices increase American spending on imports.

Question 5

Higher interest rates increase both consumption and investment spending.

Accepted Answer

A) True 
 B)False

Question 6

If inflation in the United States is higher 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 decrease. 
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 decrease. 
C) Net exports will decrease as U.S.exports decrease. 
D) Net exports will decrease as U.S.imports decrease.

Question 7

If firms sell exactly what they expected to sell,all of the following will be true except

Accepted Answer

A) aggregate expenditure will be greater than GDP. 
B) there is no unplanned change in inventories. 
C) inventories will not change,and GDP and employment will remain stable. 
D) aggregate expenditure will be equal to GDP. 
A) aggregate expenditure will be greater than GDP. 
B) there is no unplanned change in inventories. 
C) inventories will not change,and GDP and employment will remain stable. 
D) aggregate expenditure will be equal to GDP.

Question 8

In the aggregate expenditure model,________ has both an autonomous component and an induced component.

Accepted Answer

A) planned investment spending 
B) consumption spending 
C) government spending 
D) net export spending 
A) planned investment spending 
B) consumption spending 
C) government spending 
D) net export spending

Question 9

Net exports usually ________ when the U.S.economy is in a recession and ________ when the U.S.economy is expanding.

Accepted Answer

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

Question 10

Table 23-2
 $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Real GDP } & \text { Consumption } & \begin{array} { c } 
\text { Planned } \
\text { Investment }
\end{array} & \begin{array} { c } 
\text { Government } \
\text { Purchases }
\end{array} & \text { Net Exports } \
\hline \$ 2,000 & \$ 1,600 & \$ 250 & \$ 250 & \$ 100 \
\hline 2,500 & 2,000 & 250 & 250 & 100 \
\hline 3,000 & 2,400 & 250 & 250 & 100 \
\hline 3,500 & 2,800 & 250 & 250 & 100 \
\hline
\end{array}$$
-Refer to Table 23-2.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

Accepted Answer

The macroeconomic equilibrium is determi

Question 11

An increase in the price level in the United States will shift the aggregate expenditure line upward.

Accepted Answer

A) True 
 B)False

Question 12

The five most important variables that determine the level of ________ are disposable income,wealth,expected future income,price level,and interest rate.

Accepted Answer

A) consumption 
B) government purchases 
C) planned investment 
D) net exports 
A) consumption 
B) government purchases 
C) planned investment 
D) net exports

Question 13

Assume that inventories declined by more than analysts predicted.This implies that

Accepted Answer

A) planned aggregate expenditure was greater than real GDP. 
B) planned aggregate expenditure was equal to real GDP. 
C) planned aggregate expenditure was less than real GDP. 
D) planned aggregate expenditure is unrelated to real GDP. 
A) planned aggregate expenditure was greater than real GDP. 
B) planned aggregate expenditure was equal to real GDP. 
C) planned aggregate expenditure was less than real GDP. 
D) planned aggregate expenditure is unrelated to real GDP.

Question 14

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 15

Goods that have been produced but not yet sold are referred to as

Accepted Answer

A) understocks. 
B) inventories. 
C) pre-sold goods. 
D) capital goods. 
A) understocks. 
B) inventories. 
C) pre-sold goods. 
D) capital goods.

Question 16

Figure 23-1  
-Refer to Figure 23-1.According to the figure above,at what point is aggregate expenditure greater than GDP?

Accepted Answer

A) J 
B) K 
C) L 
D) none of the above 
A) J 
B) K 
C) L 
D) none of the above

Question 17

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 18

Investment spending ________ during a recession,and ________ during an expansion.

Accepted Answer

A) declines;increases 
B) increases;declines 
C) increases;increases 
D) declines;declines 
A) declines;increases 
B) increases;declines 
C) increases;increases 
D) declines;declines

Question 19

Actual investment spending includes spending by consumers on

Accepted Answer

A) durable goods. 
B) nondurable goods. 
C) new houses. 
D) services. 
A) durable goods. 
B) nondurable goods. 
C) new houses. 
D) services.

Question 20

Consumption spending is $5 million,planned investment spending is $8 million,actual investment spending is $8 million,government purchases are $10 million,and net export spending is $2 million.Based on this information,which of the following is true?

Accepted Answer

A) There was an unplanned change in inventories. 
B) Aggregate expenditure is equal to GDP. 
C) Aggregate expenditure is greater than GDP. 
D) Aggregate expenditure is less than GDP. 
A) There was an unplanned change in inventories. 
B) Aggregate expenditure is equal to GDP. 
C) Aggregate expenditure is greater than GDP. 
D) Aggregate expenditure is less than GDP.

Exam 23: Aggregate Expenditure and Output in the Short Run

Planned aggregate expenditure is equal to

Figure 23-3 -Refer to Figure 23-3.Suppose that government spending increases,shifting up the aggregate expenditure line.GDP increases from GDP1 to GDP2,and this amount is $400 billion.If the MPC is 0.75,then what is the distance between N and L or by how much did government spending change?

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to ________ and real GDP to ________.

What impact does a decrease in the price level in the United States have on net exports and why?

Higher interest rates increase both consumption and investment spending.

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

If firms sell exactly what they expected to sell,all of the following will be true except

In the aggregate expenditure model,________ has both an autonomous component and an induced component.

Net exports usually ________ when the U.S.economy is in a recession and ________ when the U.S.economy is expanding.

An increase in the price level in the United States will shift the aggregate expenditure line upward.

The five most important variables that determine the level of ________ are disposable income,wealth,expected future income,price level,and interest rate.

Assume that inventories declined by more than analysts predicted.This implies that

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

Goods that have been produced but not yet sold are referred to as

Figure 23-1 -Refer to Figure 23-1.According to the figure above,at what point is aggregate expenditure greater than GDP?

Which of the following will reduce consumer expenditures?

Investment spending ________ during a recession,and ________ during an expansion.

Actual investment spending includes spending by consumers on

Consumption spending is $5 million,planned investment spending is $8 million,actual investment spending is $8 million,government purchases are $10 million,and net export spending is $2 million.Based on this information,which of the following is true?

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

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

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

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to and real GDP to .

Net exports usually when the U.S.economy is in a recession and when the U.S.economy is expanding.

Investment spending during a recession,and during an expansion.