Question 1

The marginal propensity to save is defined as

Accepted Answer

A) saving divided by disposable income. 
B) disposable income divided by saving. 
C) the change in saving divided by the change in disposable income. 
D) the change in disposable income divided by the change in saving.

Question 2

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

Question 3

What are inventories? What usually happens to inventories at the beginning of a recession,and what usually happens to inventories at the beginning of an expansion?

Accepted Answer

The answer of What are inventories? What usually happens to...

Question 4

If the MPC is 0.5,then a $10 million increase in disposable income will increase consumption by

Accepted Answer

A) $2 million. 
B) $5 million. 
C) $15 million 
D) $50 million.

Question 5

Ceteris paribus,how does an expansion in the United States affect U.S.net exports?

Accepted Answer

The answer of Ceteris paribus,how does an expansion in the...

Question 6

Table 12-4
 
-Refer to Table 12-4.Given the consumption schedule in the table above,the marginal propensity to save is

Accepted Answer

A) 0.3. 
B) 0.4. 
C) 0.5. 
D) 0.6.

Question 7

Given the equations for C,I,G,and NX below,what is the marginal propensity to save? C = 1,000 + 0.8Y
I = 1,500
G = 1,250
NX = 100

Accepted Answer

A) 0.2 
B) 0.8 
C) 1.8 
D) 10

Question 8

Decreases in the price level will

Accepted Answer

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

Question 9

In a small economy in 2016,aggregate expenditure was $800 million while GDP that year was $850 million.Which of the following can explain the difference between aggregate expenditure and GDP that year?

Accepted Answer

A) Aggregate expenditure is always less than GDP in developed countries. 
B) Firm investment in inventories was less than anticipated in 2016. 
C) Firm investment in inventories was greater than anticipated in 2016. 
D) Aggregate expenditure is always less than GDP in developing countries.

Question 10

Which of the following is a true statement about the multiplier?

Accepted Answer

A) The multiplier rises as the MPC rises. 
B) The smaller the MPC,the larger the multiplier. 
C) The multiplier is a value between zero and one. 
D) The multiplier effect does not occur when autonomous expenditure decreases.

Question 11

If the consumption function is defined as C = 5,500 + 0.9Y,what is the marginal propensity to consume?

Accepted Answer

A) 0.1 
B) 0.9 
C) 5.5 
D) 6.1

Question 12

When Javier's income increases by $5,000,he spends an additional $3,750 dollars.This implies that his marginal propensity to consume is 0.75.

Accepted Answer

A) True 
 B)False

Question 13

The ratio of the increase in ________ to the increase in ________ is called the multiplier.

Accepted Answer

A) equilibrium nominal GDP;autonomous expenditure 
B) equilibrium real GDP;autonomous expenditure 
C) autonomous expenditure;equilibrium real GDP 
D) induced expenditure;equilibrium real GDP

Question 14

The formula for the multiplier is (1 - MPC).

Accepted Answer

A) True 
 B)False

Question 15

From 1983-2015,net exports for the United States

Accepted Answer

A) grew and then declined. 
B) were negative. 
C) were positive. 
D) increased as exports rose above imports.

Question 16

When we graph consumption as a function of ________ rather than as a function of disposable income,the slope of this consumption function is ________.

Accepted Answer

A) national income;the MPC 
B) personal income; (MPC - MPS) 
C) national income;the MPS 
D) personal income;the MPS

Question 17

________ spending follows a smooth trend whereas,________ spending is more volatile and subject to fluctuations.

Accepted Answer

A) Consumer;government 
B) Consumer;investment 
C) Investment;consumer 
D) Government;consumer

Question 18

Explain how a stock market crash has the potential to lead to a recession in an economy.

Accepted Answer

The answer of Explain how a stock market crash has...

Question 19

The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run,assuming ________ is constant.

Accepted Answer

A) total production;total income;real GDP 
B) total spending;real GDP;total income 
C) total spending;real GDP;the price level 
D) total income;real GDP;the price level

Question 20

Intel is the world's largest semiconductor manufacturer and a major supplier of the microprocessors and memory chips found in most personal computers.During the recession of 2007-2009,Intel's revenues ________ and it ________ the size of its workforce.

Accepted Answer

A) fell;increased 
B) fell;decreased 
C) rose;increased 
D) rose;decreased

Exam 12: Aggregate Expenditure and Output in the Short Run

The marginal propensity to save is defined as

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

What are inventories? What usually happens to inventories at the beginning of a recession,and what usually happens to inventories at the beginning of an expansion?

If the MPC is 0.5,then a $10 million increase in disposable income will increase consumption by

Ceteris paribus,how does an expansion in the United States affect U.S.net exports?

Table 12-4 -Refer to Table 12-4.Given the consumption schedule in the table above,the marginal propensity to save is

Given the equations for C,I,G,and NX below,what is the marginal propensity to save? C = 1,000 + 0.8Y I = 1,500 G = 1,250 NX = 100

Decreases in the price level will

In a small economy in 2016,aggregate expenditure was $800 million while GDP that year was $850 million.Which of the following can explain the difference between aggregate expenditure and GDP that year?

Which of the following is a true statement about the multiplier?

If the consumption function is defined as C = 5,500 + 0.9Y,what is the marginal propensity to consume?

When Javier's income increases by $5,000,he spends an additional $3,750 dollars.This implies that his marginal propensity to consume is 0.75.

The ratio of the increase in to the increase in is called the multiplier.

The formula for the multiplier is (1 - MPC).

From 1983-2015,net exports for the United States

When we graph consumption as a function of rather than as a function of disposable income,the slope of this consumption function is .

spending follows a smooth trend whereas, spending is more volatile and subject to fluctuations.

Explain how a stock market crash has the potential to lead to a recession in an economy.

The aggregate expenditure model focuses on the relationship between and in the short run,assuming is constant.

Intel is the world's largest semiconductor manufacturer and a major supplier of the microprocessors and memory chips found in most personal computers.During the recession of 2007-2009,Intel's revenues and it the size of its workforce.