Question 1

The difference between GDP and disposable income is

Accepted Answer

A)   national income.
B)   actual investment spending.
C)   net taxes.
D)   unplanned investment spending.E) A) and D)
F) C) and D)

Question 2

Figure 23-4 1 which is equal to $90 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP? A)  -$18 billion B)  -$2 billion C)  $2 billion D)  $18 billion" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 23-4. Potential GDP equals $100 billion. The economy is currently producing GDP1 which is equal to $90 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?

Accepted Answer

A)   -$18 billion
B)   -$2 billion
C)   $2 billion
D)   $18 billionE) A) and B)
F) All of the above

Question 3

All of the following are components of aggregate expenditure except

Accepted Answer

A)   consumption spending.
B)   net export spending.
C)   actual investment spending.
D)   government spending.E) A) and C)
F) C) and D)

Question 4

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

Accepted Answer

A)   MPC.
B)   multiplier.
C)   MPS.
D)   consumption function.E) A) and B)
F) C) and D)

Question 5

Suppose the United States experiences a long period of high inflation relative to other countries. How will this affect U.S. net exports?

Accepted Answer

If inflation in the United States is hig...

Question 6

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 U.S. price level increases net exports because lower prices increase the value of the dollar.
B)   A decrease in the U.S. price level increases net exports by reducing the relative cost of American goods.
C)   A decrease in the U.S. price level reduces net exports because lower prices raise the value of the dollar.
D)   A decrease in the U.S. price level reduces net exports because lower prices increase American spending on imports.E) None of the above
F) B) and C)

Question 7

Macroeconomic equilibrium occurs when

Accepted Answer

A)   aggregate expenditure = GDP.
B)   aggregate expenditure = C+ I + G + net transfers.
C)   aggregate income = planned inventories.
D)   aggregate expenditure = planned inventories.E) None of the above
F) A) and D)

Question 8

If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is

Accepted Answer

A)   4.
B)   0.75.
C)   0.5.
D)   0.25.E) All of the above
F) B) and C)

Question 9

Use a 45 degree-line diagram to illustrate macroeconomic equilibrium. Make sure your diagram shows the aggregate expenditure function. Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Macroeconomic equilibrium occ...

Question 10

A decrease in Social Security payments will

Accepted Answer

A)   decrease consumption spending.
B)   decrease investment spending.
C)   decrease government spending.
D)   decrease export spending.E) A) and B)
F) C) and D)

Question 11

When aggregate expenditure is more than GDP, which of the following is true?

Accepted Answer

A)   There was an unplanned decrease in inventories.
B)   Firms spent less on capital goods than they planned.
C)   Households bought fewer new homes than they planned.
D)   All of the above must be true when aggregate expenditure is more than GDP.E) B) and D)
F) None of the above

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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; decreasedE) A) and C)
F) A) and B)

Question 14

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

Accepted Answer

A)   Cellar-Kefauver Act
B)   Sherman Antitrust Act
C)   Clayton Act
D)   Smoot-Hawley Tariff ActE) B) and C)
F) A) and D)

Question 15

Economists think that the marginal propensity to consume for the U.S. economy is somewhere around 0.9. Based on our simple multiplier formula, this would imply that the multiplier for the United States should be around 10. However, economists agree that the spending multiplier is closer to 2. What might explain this supposed anomaly?

Accepted Answer

The formula for the multiplier, M = <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> , i...

Question 16

Figure 23-3 1 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? A)  $10 billion B)  $100 billion C)  $200 billion D)  $300 billion" class="answers-bank-image d-inline" rel="preload" >
-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 billionE) A) and B)
F) A) and C)

Question 17

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

Accepted Answer

A)   Consumption; government
B)   Consumption; investment
C)   Investment; consumer
D)   Government; consumerE) A) and B)
F) A) and C)

Question 18

If disposable income falls by $40 billion and consumption falls by $30 billion, then the slope of the consumption function is

Accepted Answer

A)   1.33.
B)   0.75.
C)   0.4.
D)   0.3.E) A) and B)
F) A) and C)

Question 19

The consumption function describes the relationship between

Accepted Answer

A)   consumption spending and national income.
B)   consumption spending and aggregate income.
C)   consumption spending and disposable income.
D)   consumption spending and personal income.E) B) and C)
F) A) and D)

Question 20

Household spending on goods and services is known as

Accepted Answer

A)   consumption spending.
B)   planned investment spending.
C)   government purchases.
D)   net exports.E) C) and D)
F) B) and D)

Exam 23: Aggregate Expenditure and Output in the Short Run

Correct Answer
verified

If disposable income falls by $40 billion and consumption falls by $30 billion, then the slope of the consumption function is

Correct Answer
verified

Figure 23-4 -Refer to Figure 23-4. Potential GDP equals $100 billion. The economy is currently producing GDP₁ which is equal to $90 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?

Correct Answer
verified

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

Correct Answer
verified

Use a 45 degree-line diagram to illustrate macroeconomic equilibrium. Make sure your diagram shows the aggregate expenditure function. Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

Correct Answer
verified
Macroeconomic equilibrium occ...
View Answer

If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is

Correct Answer
verified

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

Correct Answer
verified

Household spending on goods and services is known as

Correct Answer
verified

A decrease in Social Security payments will

Correct Answer
verified

The difference between GDP and disposable income is

Correct Answer
verified

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

Correct Answer
verified

All of the following are components of aggregate expenditure except

Correct Answer
verified

Correct Answer
verified
The formula for the multiplier, M = , i...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

Suppose the United States experiences a long period of high inflation relative to other countries. How will this affect U.S. net exports?

Correct Answer
verified
If inflation in the United States is hig...
View Answer

The consumption function describes the relationship between

Correct Answer
verified

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.

Correct Answer
verified

Macroeconomic equilibrium occurs when

Correct Answer
verified

When aggregate expenditure is more than GDP, which of the following is true?

Correct Answer
verified

Exam 23: Aggregate Expenditure and Output in the Short Run

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?

Correct AnswerverifiedShow Answer

If disposable income falls by $40 billion and consumption falls by $30 billion, then the slope of the consumption function is

Correct AnswerverifiedShow Answer

Figure 23-4 -Refer to Figure 23-4. Potential GDP equals $100 billion. The economy is currently producing GDP1 which is equal to $90 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Use a 45 degree-line diagram to illustrate macroeconomic equilibrium. Make sure your diagram shows the aggregate expenditure function. Include in your diagram a point where aggregate expenditure is greater than GDP and a point where aggregate expenditure is less than GDP.

Correct Answerverified Macroeconomic equilibrium occ...View AnswerShow Answer

If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Household spending on goods and services is known as

Correct AnswerverifiedShow Answer

A decrease in Social Security payments will

Correct AnswerverifiedShow Answer

The difference between GDP and disposable income is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All of the following are components of aggregate expenditure except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe formula for the multiplier, M = , i...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the United States experiences a long period of high inflation relative to other countries. How will this affect U.S. net exports?

Correct AnswerverifiedIf inflation in the United States is hig...View AnswerShow Answer

The consumption function describes the relationship between

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Macroeconomic equilibrium occurs when

Correct AnswerverifiedShow Answer

When aggregate expenditure is more than GDP, which of the following is true?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Figure 23-4 -Refer to Figure 23-4. Potential GDP equals $100 billion. The economy is currently producing GDP₁ which is equal to $90 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
Macroeconomic equilibrium occ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The formula for the multiplier, M = , i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
If inflation in the United States is hig...
View Answer

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified