Exam 12: Aggregate Expenditure and Output in the Short Run

A rising price level decreases consumption by decreasing the real value of household wealth.

Figure 12-2 -Refer to Figure 12-2.Suppose that the level of GDP associated with point K is potential GDP.If the U.S.economy is currently at point N,

If disposable income increases by $100 million,and consumption increases by $90 million,then the marginal propensity to consume is

Household spending on goods and services is known as

If planned investment is greater than actual investment,then aggregate expenditure is less than GDP.

The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the

Which of the following correctly describes how an increase in the price level affects consumption spending?

When Jack's income increases by $1,000,he spends an additional $850 dollars.This implies that his marginal propensity to consume is 0.85.

Table 12-1 -Refer to Table 12-1.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

If planned aggregate expenditure is less than real GDP,some firms will experience unplanned increases in inventories.

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?

C = 2,800 + 0.9Y I = 750 G = 1,200 NX = 150 Given the equations for C,I,G,and NX above,what is the equilibrium level of GDP (Y)?

How does an increase in government spending affect the aggregate expenditure line?

The difference between GDP and net taxes is

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

________ usually increase(s)when the U.S.economy is in a recession and decrease(s)when the U.S.economy is expanding.

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

Figure 12-2 -Refer to Figure 12-2.Suppose that the level of GDP associated with point N is potential GDP.If the U.S.economy is currently at point K,

All of the following are true statements about the multiplier except

Actual investment spending includes spending by consumers on