Question 1

If AE₀ is the aggregate planned expenditure curve,then equilibrium real GDP in the figure above is

Accepted Answer

A)   $3 trillion.
B)   $6 trillion.
C)   $12 trillion.
D)   None of the above answers is correct.E) B) and C)
F) All of the above

Question 2

________ consumption expenditure is greater than disposable income.

Accepted Answer

A)   It is always the case that
B)   Saving is positive whenever
C)   Dissaving occurs whenever
D)   None of the above answers is correct because it is impossible for consumption expenditure to be greater than disposable income.E) A) and D)
F) All of the above

Question 3

With consumption expenditure on the vertical axis and disposable income on the horizontal axis,the consumption function intersects the 45-degree line at $8 trillion.This result indicates that

Accepted Answer

A)   autonomous consumption spending is $8 trillion.
B)   consumption spending is $8 trillion when disposable income is $8 trillion.
C)   consumption spending is less than $8 trillion because taxes must be paid.
D)   consumption spending is more than $8 trillion because taxes have been paid.E) A) and B)
F) B) and D)

Question 4

As a nation's GDP increases,that nation's

Accepted Answer

A)   autonomous consumption increases.
B)   autonomous consumption decreases.
C)   exports increase.
D)   imports increase.E) C) and D)
F) A) and D)

Question 5

As disposable income increases,saving increases.

Accepted Answer

A) True 
 B)False

Question 6

If the price level increases,the AE curve shifts

Accepted Answer

A)   upward and the AD curve shifts leftward.
B)   downward and the AD curve shifts rightward.
C)   upward and we move along the AD curve.
D)   downward and we move along the AD curve.E) None of the above
F) B) and C)

Question 7

In an article regarding Bangladesh's economy,the author suggests that the government ..."[g]ive double tax breaks on investment dollars.Give tax break to R&D [research and development].Give tax break on donations to educational institutions." www.groundreport.com,March 24,2008
As a result of enacting the policies,the AE curve will shift ________ and the AD curve will shift ________.

Accepted Answer

A)   upward; leftward
B)   upward; rightward
C)   downward; rightward
D)   downward; leftwardE) B) and C)
F) C) and D)

Question 8

If consumption expenditures for a household increase from $1000 to $1800 when disposable income rises from $1000 to $2000,the marginal propensity to consume is

Accepted Answer

A)   0.8.
B)   0.18.
C)   0.3.
D)   0.2.E) All of the above
F) B) and C)

Question 9

Disposable  income  (dollars)   Consumption  expenditure (dollars)  100225200300300375400450500525600600\begin{array} { | c | c | } \hline \begin{array} { c } 	ext { Disposable } \	ext { income } \	ext { (dollars)  }\end{array} & \begin{array} { c } 	ext { Consumption } \	ext { expenditure (dollars)  }\end{array} \\hline 100 & 225 \\hline 200 & 300 \\hline 300 & 375 \\hline 400 & 450 \\hline 500 & 525 \\hline 600 & 600 \\hline\end{array} Disposable  income  (dollars)  ​100200300400500600​ Consumption  expenditure (dollars)  ​225300375450525600​​ 
-Using the data from the above table,the marginal propensity to save is

Accepted Answer

A)   falling as disposable income is rising.
B)   0 when disposable income is $600.
C)   constant at 0.25.
D)   constant at 0.75. E) A) and B)
F) B) and D)

Question 10

The Keynesian model of aggregate expenditure assumes that

Accepted Answer

A)   individual firms' prices are flexible but the price level is fixed.
B)   both individual firms' prices and the price level are flexible.
C)   both individual firms' prices and the price level are fixed.
D)   individual firms' prices are fixed but the price level is flexible.E) C) and D)
F) A) and D)

Question 11

Consumption expenditures equal disposable income

Accepted Answer

A)   at every point on the consumption function.
B)   at every point on the saving function.
C)   at every point on the 45-degree line.
D)   when saving equals disposable income.E) A) and B)
F) A) and C)

Question 12

Disposable  income  (thousands of  dollars)   Consumption  expenditure  (thousands of dollars)  200225300300400375500450\begin{array} { | c | c | } \hline \begin{array} { c } 	ext { Disposable } \	ext { income } \	ext { (thousands of } \	ext { dollars)  }\end{array} & \begin{array} { c } 	ext { Consumption } \	ext { expenditure } \	ext { (thousands of dollars)  }\end{array} \\hline 200 & 225 \\hline 300 & 300 \\hline 400 & 375 \\hline 500 & 450 \\hline\end{array} Disposable  income  (thousands of  dollars)  ​200300400500​ Consumption  expenditure  (thousands of dollars)  ​225300375450​​ 
-According to the data in the above table,at what level of disposable income is savings negative?

Accepted Answer

A)   200
B)   300
C)   400
D)   Never because saving cannot be negative. E) B) and D)
F) All of the above

Question 13

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000,the

Accepted Answer

A)   household is dissaving.
B)   slope of the consumption function is 0.2
C)   slope of the consumption function is 0.5
D)   slope of the consumption function is 1000.E) A) and C)
F) A) and D)

Question 14

Taking into account the upward-sloping short-run aggregate supply curve,the short-run effect of an increase in government expenditure on real GDP is that

Accepted Answer

A)   real GDP increases by more in the short run than in the long run.
B)   real GDP increases by the same amount in the short run as in the long run.
C)   real GDP increases by less in the short run than in the long run.
D)   real GDP does not change in the short run because the price level increases.E) C) and D)
F) All of the above

Question 15

Real GDP equals $20 billion and aggregate planned expenditure is $30 billion.There is an unplanned ________ in inventories of ________ and real GDP will ________.

Accepted Answer

A)   increase; $10 billion; increase
B)   increase; $50 billion; decrease
C)   decrease; $10 billion; increase
D)   decrease; $10 billion; decreaseE) C) and D)
F) B) and C)

Question 16

How does an increase in the price level affect the aggregate expenditure curve and the aggregate demand curve?

Accepted Answer

An increase in the price level...

Question 17

A change in which of the following changes the slope of the aggregate expenditure curve?

Accepted Answer

A)   an increase in autonomous government expenditures
B)   an increase in the marginal propensity to consume
C)   a decrease in autonomous consumption expenditures
D)   All of the above answers are correct because they all change the slope of the aggregate expenditure curve.E) A) and B)
F) A) and C)

Question 18

A fall in the price level shifts the AE curve ________ and ________ equilibrium expenditure.

Accepted Answer

A)   upward; increases
B)   upward; decreases
C)   downward; increases
D)   downward; decreasesE) B) and C)
F) A) and D)

Question 19

In the very short run,the components of aggregate planned expenditure that depend on the level of real GDP are

Accepted Answer

A)   planned consumption expenditure and planned imports.
B)   planned investment and planned imports.
C)   planned investment and planned exports.
D)   planned government expenditure on goods and services and planned imports.E) A) and B)
F) C) and D)

Question 20

Because the short-run aggregate expenditure model assumes that the price level is ________,its predicted effect of changes in autonomous expenditure on equilibrium output is ________ than the prediction of the AD/SAS model.

Accepted Answer

A)   fixed; greater
B)   fixed; less
C)   flexible; greater
D)   flexible; lessE) A) and D)
F) C) and D)

Exam 11: Expenditure Multipliers

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000,the

Correct Answer
verified

With consumption expenditure on the vertical axis and disposable income on the horizontal axis,the consumption function intersects the 45-degree line at $8 trillion.This result indicates that

Correct Answer
verified

If AE₀ is the aggregate planned expenditure curve,then equilibrium real GDP in the figure above is

Correct Answer
verified

If consumption expenditures for a household increase from $1000 to $1800 when disposable income rises from $1000 to $2000,the marginal propensity to consume is

Correct Answer
verified

A change in which of the following changes the slope of the aggregate expenditure curve?

Correct Answer
verified

Real GDP equals $20 billion and aggregate planned expenditure is $30 billion.There is an unplanned in inventories of and real GDP will .

Correct Answer
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________ consumption expenditure is greater than disposable income.

Correct Answer
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Because the short-run aggregate expenditure model assumes that the price level is ,its predicted effect of changes in autonomous expenditure on equilibrium output is than the prediction of the AD/SAS model.

Correct Answer
verified

In the very short run,the components of aggregate planned expenditure that depend on the level of real GDP are

Correct Answer
verified

Correct Answer
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Correct Answer
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As disposable income increases,saving increases.

Correct Answer
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Consumption expenditures equal disposable income

Correct Answer
verified

How does an increase in the price level affect the aggregate expenditure curve and the aggregate demand curve?

Correct Answer
verified
An increase in the price level...
View Answer

Taking into account the upward-sloping short-run aggregate supply curve,the short-run effect of an increase in government expenditure on real GDP is that

Correct Answer
verified

The Keynesian model of aggregate expenditure assumes that

Correct Answer
verified

As a nation's GDP increases,that nation's

Correct Answer
verified

A fall in the price level shifts the AE curve and equilibrium expenditure.

Correct Answer
verified

If the price level increases,the AE curve shifts

Correct Answer
verified

Correct Answer
verified

Exam 11: Expenditure Multipliers

If an increase in a household's disposable income from $10,000 to $12,000 boosts its consumption expenditure from $8,000 to $9,000,the

Correct AnswerverifiedShow Answer

With consumption expenditure on the vertical axis and disposable income on the horizontal axis,the consumption function intersects the 45-degree line at $8 trillion.This result indicates that

Correct AnswerverifiedShow Answer

If AE₀ is the aggregate planned expenditure curve,then equilibrium real GDP in the figure above is

Correct AnswerverifiedShow Answer

If consumption expenditures for a household increase from $1000 to $1800 when disposable income rises from $1000 to $2000,the marginal propensity to consume is

Correct AnswerverifiedShow Answer

A change in which of the following changes the slope of the aggregate expenditure curve?

Correct AnswerverifiedShow Answer

Real GDP equals $20 billion and aggregate planned expenditure is $30 billion.There is an unplanned ________ in inventories of ________ and real GDP will ________.

Correct AnswerverifiedShow Answer

________ consumption expenditure is greater than disposable income.

Correct AnswerverifiedShow Answer

Because the short-run aggregate expenditure model assumes that the price level is ________,its predicted effect of changes in autonomous expenditure on equilibrium output is ________ than the prediction of the AD/SAS model.

Correct AnswerverifiedShow Answer

In the very short run,the components of aggregate planned expenditure that depend on the level of real GDP are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As disposable income increases,saving increases.

Correct AnswerverifiedShow Answer

Consumption expenditures equal disposable income

Correct AnswerverifiedShow Answer

How does an increase in the price level affect the aggregate expenditure curve and the aggregate demand curve?

Correct AnswerverifiedAn increase in the price level...View AnswerShow Answer

Taking into account the upward-sloping short-run aggregate supply curve,the short-run effect of an increase in government expenditure on real GDP is that

Correct AnswerverifiedShow Answer

The Keynesian model of aggregate expenditure assumes that

Correct AnswerverifiedShow Answer

As a nation's GDP increases,that nation's

Correct AnswerverifiedShow Answer

A fall in the price level shifts the AE curve ________ and ________ equilibrium expenditure.

Correct AnswerverifiedShow Answer

If the price level increases,the AE curve shifts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Real GDP equals $20 billion and aggregate planned expenditure is $30 billion.There is an unplanned in inventories of and real GDP will .

Correct Answer
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Correct Answer
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Because the short-run aggregate expenditure model assumes that the price level is ,its predicted effect of changes in autonomous expenditure on equilibrium output is than the prediction of the AD/SAS model.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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An increase in the price level...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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A fall in the price level shifts the AE curve and equilibrium expenditure.

Correct Answer
verified

Correct Answer
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Correct Answer
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