Question 1

The curve that relates the level of total planned expenditure to the level of real GDP is the

Accepted Answer

A)   equilibrium GDP curve.
B)   consumption function.
C)   aggregate expenditure curve.
D)   dissavings function.E) A) and B)
F) A) and C)

Question 2

-In the above figure, an increase in autonomous expenditure is depicted by the movement from point E to

Accepted Answer

A)   point H.
B)   point F.
C)   point G.
D)   point I.E) C) and D)
F) A) and D)

Question 3

The consumption function shows how much

Accepted Answer

A)   all households plan to consume at each possible real interest rate.
B)   real disposable income people will earn at each income tax bracket.
C)   all households plan to consume at each level of savings.
D)   all households plan to consume at each level of real disposable income.E) B) and D)
F) B) and C)

Question 4

-In the figure above, autonomous consumption is

Accepted Answer

A)   $2 trillion.
B)   $3 trillion.
C)   $1 trillion.
D)   zero.E) A) and C)
F) B) and C)

Question 5

Actual expenditure might differ from planned expenditure because

Accepted Answer

A)   actual net exports differ from planned net exports.
B)   actual government expenditures differ from planned government expenditures.
C)   actual investment differs from planned investment.
D)   actual consumption expenditure differs from planned consumption expenditure.E) C) and D)
F) None of the above

Question 6

If real disposable income increases by $1500, consumption expenditures will

Accepted Answer

A)   decrease by less than $1500.
B)   increase by more than $1500.
C)   increase by less than $1500.
D)   stay constant.E) B) and D)
F) B) and C)

Question 7

Mauritius, an island off the coast of Africa, competes with other countries producing goods with low- skilled labor. In 2006, it was reported that its "... factories have been exposed to ... competition China, India and other Asian mass producers." As a result, "the main export industry has seen a 30 cent reduction in volume ..."
w.ft.com, 3/13/200
The decrease in exports will cause and the price level will _ .

Accepted Answer

A)   a leftward shift in the AD curve; fall in the short run and rise in the long run
B)   an upward shift in the AE curve; increase as the AD curve shifts rightward in the long run
C)   a leftward shift in the AD curve; rise in the long run as goods become more scarce
D)   a downward shift in the AE curve; decrease as the AD curve shifts leftward in the short runE) All of the above
F) A) and C)

Question 8

Suppose real GDP increases from $9 trillion to $10 trillion. As a result, consumption expenditure increases from $9 trillion to $9.75 trillion. This result implies the MPS equals

Accepted Answer

A)   0.25.
B)   0.75.
C)   0.
D)   some amount that cannot be determined without more information.E) B) and C)
F) All of the above

Question 9

In light of the economic crisis in 2008, Barack Obama has been advised by some economists to lower income taxes. This change would

Accepted Answer

A)   decrease the MPC and increase the multiplier.
B)   increase the MPC and the multiplier.
C)   decrease the MPC and decrease the multiplier.
D)   increase the MPC and lower the multiplier.E) C) and D)
F) B) and D)

Question 10

Explain what happens to equilibrium expenditure if autonomous expenditure increases by $100 million.

Accepted Answer

Equilibrium expenditure will increase by...

Question 11

-In the above table, there are no taxes and no imports or exports. The change in unplanned inventories when real GDP is $7,000 is

Accepted Answer

A)   $1,500.
B)   - $500.
C)   $500.
D)   $6,500.E) B) and C)
F) A) and C)

Question 12

The components of aggregate expenditure include
I. imports.
II. consumption.
III. government transfer payments.

Accepted Answer

A)   I, II and III
B)   I and II
C)   II only
D)   II and IIIE) A) and B)
F) A) and C)

Question 13

Any change in the price level will result in a

Accepted Answer

A)   shift in the AE and AD curves in the same direction.
B)   shift in the AE curve and a movement along the AD curve.
C)   shift in the AE and AD curves in opposite directions.
D)   movement along the AE curve and a shift of the AD curve.E) B) and C)
F) C) and D)

Question 14

The short- run multiplier is equal to 3, real GDP equals potential GDP of $8,000, and the price level is equal to 100. Suppose that government expenditures decrease by $200. The long- run effect of the decrease in government expenditures on real GDP is to change real GDP by

Accepted Answer

A)   a decrease of 600.
B)   an increase of 600.
C)   a decrease of $200 because the long- run multiplier is 1.
D)   nothing; that is, in the long run real GDP equals $8,000.E) None of the above
F) A) and D)

Question 15

Suppose that the slope of the AE curve is 0.75. Then a $100 increase in autonomous spending causes equilibrium expenditure to

Accepted Answer

A)   decrease by $400.
B)   decrease by $750.
C)   increase by $750.
D)   increase by $400.E) All of the above
F) A) and B)

Question 16

What is the relationship between the aggregate expenditure curve and the aggregate demand curve? Explain the relationship.

Accepted Answer

The aggregate demand curve is derived us...

Question 17

Since 1968, U.S. consumption function has generally shifted because of _.

Accepted Answer

A)   downward; higher real interest rates
B)   upward; higher real interest rates
C)   downward; falling wealth
D)   upward; higher expected future income and rising wealthE) A) and B)
F) A) and C)

Question 18

Which of the following will NOT shift the consumption function upward?

Accepted Answer

A)   an increase in disposable income
B)   an increase in wealth
C)   a fall in the real interest rate
D)   None of the above shift the consumption function upward.E) B) and D)
F) B) and C)

Question 19

-In the above figure, if real GDP equals $12 trillion, there would be

Accepted Answer

A)   an increase in autonomous inventories.
B)   an increase in autonomous consumption expenditure.
C)   no change in GDP.
D)   an unplanned increase in firms' inventories.E) All of the above
F) A) and B)

Question 20

The consumption function is the relationship between consumption expenditure and _, other things remaining the same.

Accepted Answer

A)   disposable income
B)   potential GDP
C)   saving
D)   the 45 degree lineE) None of the above
F) A) and B)

Exam 11: Expenditure Multipliers: They Keynesian Model

-In the figure above, autonomous consumption is

Correct Answer
verified

-In the above figure, if real GDP equals $12 trillion, there would be

Correct Answer
verified

Suppose that the slope of the AE curve is 0.75. Then a $100 increase in autonomous spending causes equilibrium expenditure to

Correct Answer
verified

In light of the economic crisis in 2008, Barack Obama has been advised by some economists to lower income taxes. This change would

Correct Answer
verified

The consumption function is the relationship between consumption expenditure and _, other things remaining the same.

Correct Answer
verified

Since 1968, U.S. consumption function has generally shifted because of _.

Correct Answer
verified

If real disposable income increases by $1500, consumption expenditures will

Correct Answer
verified

Correct Answer
verified

Which of the following will NOT shift the consumption function upward?

Correct Answer
verified

The consumption function shows how much

Correct Answer
verified

Any change in the price level will result in a

Correct Answer
verified

Explain what happens to equilibrium expenditure if autonomous expenditure increases by $100 million.

Correct Answer
verified
Equilibrium expenditure will increase by...
View Answer

The short- run multiplier is equal to 3, real GDP equals potential GDP of $8,000, and the price level is equal to 100. Suppose that government expenditures decrease by $200. The long- run effect of the decrease in government expenditures on real GDP is to change real GDP by

Correct Answer
verified

What is the relationship between the aggregate expenditure curve and the aggregate demand curve? Explain the relationship.

Correct Answer
verified
The aggregate demand curve is derived us...
View Answer

Actual expenditure might differ from planned expenditure because

Correct Answer
verified

The curve that relates the level of total planned expenditure to the level of real GDP is the

Correct Answer
verified

-In the above table, there are no taxes and no imports or exports. The change in unplanned inventories when real GDP is $7,000 is

Correct Answer
verified

Suppose real GDP increases from $9 trillion to $10 trillion. As a result, consumption expenditure increases from $9 trillion to $9.75 trillion. This result implies the MPS equals

Correct Answer
verified

The components of aggregate expenditure include I. imports. II. consumption. III. government transfer payments.

Correct Answer
verified

-In the above figure, an increase in autonomous expenditure is depicted by the movement from point E to

Correct Answer
verified

Exam 11: Expenditure Multipliers: They Keynesian Model

-In the figure above, autonomous consumption is

Correct AnswerverifiedShow Answer

-In the above figure, if real GDP equals $12 trillion, there would be

Correct AnswerverifiedShow Answer

Suppose that the slope of the AE curve is 0.75. Then a $100 increase in autonomous spending causes equilibrium expenditure to

Correct AnswerverifiedShow Answer

In light of the economic crisis in 2008, Barack Obama has been advised by some economists to lower income taxes. This change would

Correct AnswerverifiedShow Answer

The consumption function is the relationship between consumption expenditure and _, other things remaining the same.

Correct AnswerverifiedShow Answer

Since 1968, U.S. consumption function has generally shifted because of _.

Correct AnswerverifiedShow Answer

If real disposable income increases by $1500, consumption expenditures will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following will NOT shift the consumption function upward?

Correct AnswerverifiedShow Answer

The consumption function shows how much

Correct AnswerverifiedShow Answer

Any change in the price level will result in a

Correct AnswerverifiedShow Answer

Explain what happens to equilibrium expenditure if autonomous expenditure increases by $100 million.

Correct AnswerverifiedEquilibrium expenditure will increase by...View AnswerShow Answer

The short- run multiplier is equal to 3, real GDP equals potential GDP of $8,000, and the price level is equal to 100. Suppose that government expenditures decrease by $200. The long- run effect of the decrease in government expenditures on real GDP is to change real GDP by

Correct AnswerverifiedShow Answer

What is the relationship between the aggregate expenditure curve and the aggregate demand curve? Explain the relationship.

Correct AnswerverifiedThe aggregate demand curve is derived us...View AnswerShow Answer

Actual expenditure might differ from planned expenditure because

Correct AnswerverifiedShow Answer

The curve that relates the level of total planned expenditure to the level of real GDP is the

Correct AnswerverifiedShow Answer

-In the above table, there are no taxes and no imports or exports. The change in unplanned inventories when real GDP is $7,000 is

Correct AnswerverifiedShow Answer

Suppose real GDP increases from $9 trillion to $10 trillion. As a result, consumption expenditure increases from $9 trillion to $9.75 trillion. This result implies the MPS equals

Correct AnswerverifiedShow Answer

The components of aggregate expenditure include I. imports. II. consumption. III. government transfer payments.

Correct AnswerverifiedShow Answer

-In the above figure, an increase in autonomous expenditure is depicted by the movement from point E to

Correct AnswerverifiedShow Answer

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Equilibrium expenditure will increase by...
View Answer

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The aggregate demand curve is derived us...
View Answer

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