Question 1

Use the table below to answer the following question(s) .
Table 27.3.1
The following table shows the relationship between aggregate planned
expenditure and real GDP in the hypothetical economy of Econoworld.
 
-Refer to Table 27.3.1.The multiplier

Accepted Answer

A)  is 5.
B)  is 2.5.
C)  is 4.
D)  is 1.8.
E)  cannot be determined without more information.F) A) and D)
G) B) and E)

Question 2

The marginal propensity to consume is the

Accepted Answer

A)  fraction of the first dollar of disposable income received that is saved.
B)  fraction of the first dollar of disposable income received that is consumed.
C)  fraction of the last dollar of disposable income received that is saved.
D)  fraction of a change in disposable income that is spent on consumption.
E)  total amount of consumption divided by the total amount of disposable income.F) B) and E)
G) All of the above

Question 3

The fraction of a change in disposable income that is saved is the

Accepted Answer

A)  marginal propensity to consume.
B)  marginal propensity to save.
C)  marginal propensity to dispose.
D)  marginal tax rate.
E)  saving function.F) A) and B)
G) B) and D)

Question 4

Use the table below to answer the following questions.
Table 27.1.2
 
-Refer to Table 27.1.2.What is the value of the marginal propensity to save?

Accepted Answer

A)  0.27
B)  0.25
C)  0.67
D)  0.33
E)  1.33F) B) and C)
G) A) and B)

Question 5

Use the table below to answer the following question.
Table 27.1.1
The following table shows the relationship between consumption
expenditure (C) and disposable income (YD) for a hypothetical economy.
 
-Refer to Table 27.1.1.If YD is $400,then saving is

Accepted Answer

A)  -$50.
B)  $50.
C)  zero.
D)  $100.
E)  -$125.F) A) and B)
G) A) and C)

Question 6

Use the figure below to answer the following questions.
  
Figure 27.1.1
This figure describes the relationship between consumption expenditure and disposable income for a model economy.
-Refer to Figure 27.1.1.The marginal propensity to consume for this economy is

Accepted Answer

A)  0.5.
B)  1.
C)  0.2.
D)  0.8.
E)  0.6.F) All of the above
G) A) and C)

Question 7

In an economy,autonomous spending is $20 trillion and the slope of the AE curve is 0.8.
Equilibrium expenditure is ________.With a fixed price level,the multiplier is ________.

Accepted Answer

A)  $25 trillion;1.25
B)  $100 trillion;1.25
C)  $25 trillion;5
D)  $20 trillion;4
E)  $100 trillion;5F) B) and E)
G) A) and B)

Question 8

If AE = 100 + 0.7Y and Y = 300,then unplanned inventories

Accepted Answer

A)  increase by 10.
B)  increase by 200.
C)  decrease by 10.
D)  decrease by 200.
E)  do not change and equilibrium exists.F) A) and E)
G) A) and D)

Question 9

Use the figure below to answer the following questions.
  
Figure 27.5.2
-Refer to Figure 27.5.2.The equation of the consumption function is

Accepted Answer

A)  C = 200 + 0.8YD.
B)  C = 200 + 800YD.
C)  C = 200 + 0.75YD.
D)  C = 200 + 0.25YD.
E)  C = 200 + 200YD.F) C) and D)
G) A) and E)

Question 10

The aggregate expenditure curve will become steeper if

Accepted Answer

A)  people become thriftier.
B)  people show an increased preference for foreign-made products.
C)  firms expect an increase in future profit.
D)  income tax rates are lowered.
E)  income tax rates are raised.F) A) and D)
G) None of the above

Question 11

Use the figure below to answer the following questions.
  
Figure 27.2.1
There are no exports or imports in this economy.
-Refer to Figure 27.2.1.When real GDP is equal to Yb,then

Accepted Answer

A)  actual expenditure is less than planned expenditure.
B)  actual expenditure is greater than planned expenditure.
C)  planned expenditure is equal to actual expenditure.
D)  real GDP increases.
E)  real GDP decreases.F) All of the above
G) D) and E)

Question 12

Dissaving occurs when a household

Accepted Answer

A)  spends less than it receives in disposable income.
B)  spends more than it saves.
C)  saves more than it spends.
D)  consumes more than it receives in disposable income.
E)  borrows.F) A) and B)
G) A) and C)

Question 13

Everything else remaining the same,an increase in the marginal propensity to consume ________ the slope of the AE curve and ________ equilibrium expenditure.

Accepted Answer

A)  decreases;increases
B)  increases;increases
C)  decreases;decreases
D)  increases;decreases
E)  does not change;does not changeF) A) and B)
G) A) and C)

Question 14

Use the table below to answer the following question(s) .
Table 27.3.1
The following table shows the relationship between aggregate planned
expenditure and real GDP in the hypothetical economy of Econoworld.
 
-Refer to Table 27.3.1.If investment increases by $25 billion,the real GDP becomes

Accepted Answer

A)  $525 billion.
B)  $625 billion.
C)  $725 billion.
D)  $600 billion.
E)  $675 billion.F) B) and C)
G) B) and E)

Question 15

Use the table below to answer the following question(s) .
Table 27.3.1
The following table shows the relationship between aggregate planned
expenditure and real GDP in the hypothetical economy of Econoworld.
 
-Refer to Table 27.3.1.The equilibrium level of real GDP is

Accepted Answer

A)  $525 billion.
B)  $550 billion.
C)  $450 billion
D)  $500 billion
E)  none of the above.F) A) and E)
G) None of the above

Question 16

The components of aggregate expenditure that are influenced by real GDP are ________.

Accepted Answer

A)  investment, exports, and imports
B)  consumption expenditure, government expenditure, investment, and imports
C)  consumption expenditure, investment, and imports
D)  consumption expenditure and imports
E)  wages, transfer payments, and government expenditureF) A) and B)
G) D) and E)

Question 17

The slope of the AE curve equals

Accepted Answer

A)  aggregate expenditure divided by real GDP.
B)  the change in aggregate expenditure divided by the change in real GDP.
C)  the change in consumption divided by the change in real GDP.
D)  the change in consumption plus government expenditure divided by the change in aggregate income.
E)  the change in income divided by the change in autonomous expenditure.F) A) and C)
G) A) and B)

Question 18

Use the figure below to answer the following questions.
  
Figure 27.2.2
The economy depicted does not engage in international trade and has no government.Planned aggregate expenditure (AE) is equal to the sum of consumption expenditure (C) and investment (I) .
-Refer to Figure 27.2.2.When real GDP is $100 billion,

Accepted Answer

A)  real GDP is less than aggregate planned expenditure, and firms increase production.
B)  aggregate planned expenditure is greater than real GDP, and firms decrease production.
C)  real GDP is greater than aggregate planned expenditure, and firms decrease production.
D)  aggregate planned expenditure equals real GDP, and the economy is in equilibrium.
E)  aggregate planned expenditure is less than real GDP, and firms increase production.F) A) and B)
G) All of the above

Question 19

Use the table below to answer the following questions.
Table 27.1.2
 
-Refer to Table 27.1.2.When saving is zero,what is the level of disposable income?

Accepted Answer

A)  $325
B)  $400
C)  $475
D)  $550
E)  $625F) A) and B)
G) None of the above

Question 20

The difference in the influence of a multiplier between the short run and the long run,is that

Accepted Answer

A)  the multiplier effect is larger in the long run.
B)  the multiplier effect is zero in the long run.
C)  the multiplier effect is zero in the short run.
D)  there is no multiplier effect in the short run.
E)  the multiplier effect depends on potential GDP in the long run.F) B) and E)
G) A) and B)

Exam 27: Expenditure Multipliers: The Keynesian Model

Use the table below to answer the following question(s) . Table 27.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 27.3.1.If investment increases by $25 billion,the real GDP becomes

Correct Answer
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The slope of the AE curve equals

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The marginal propensity to consume is the

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If AE = 100 + 0.7Y and Y = 300,then unplanned inventories

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The components of aggregate expenditure that are influenced by real GDP are ________.

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Use the figure below to answer the following questions. Figure 27.1.1 This figure describes the relationship between consumption expenditure and disposable income for a model economy. -Refer to Figure 27.1.1.The marginal propensity to consume for this economy is

Correct Answer
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The aggregate expenditure curve will become steeper if

Correct Answer
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Dissaving occurs when a household

Correct Answer
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Use the figure below to answer the following questions. Figure 27.2.1 There are no exports or imports in this economy. -Refer to Figure 27.2.1.When real GDP is equal to Yb,then

Correct Answer
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Use the table below to answer the following question(s) . Table 27.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 27.3.1.The multiplier

Correct Answer
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The difference in the influence of a multiplier between the short run and the long run,is that

Correct Answer
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The fraction of a change in disposable income that is saved is the

Correct Answer
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Use the figure below to answer the following questions. Figure 27.5.2 -Refer to Figure 27.5.2.The equation of the consumption function is

Correct Answer
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Use the table below to answer the following question(s) . Table 27.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 27.3.1.The equilibrium level of real GDP is

Correct Answer
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Use the table below to answer the following questions. Table 27.1.2 -Refer to Table 27.1.2.What is the value of the marginal propensity to save?

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Use the table below to answer the following question. Table 27.1.1 The following table shows the relationship between consumption expenditure (C) and disposable income (YD) for a hypothetical economy. -Refer to Table 27.1.1.If YD is $400,then saving is

Correct Answer
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Use the table below to answer the following questions. Table 27.1.2 -Refer to Table 27.1.2.When saving is zero,what is the level of disposable income?

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Everything else remaining the same,an increase in the marginal propensity to consume the slope of the AE curve and equilibrium expenditure.

Correct Answer
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In an economy,autonomous spending is $20 trillion and the slope of the AE curve is 0.8. Equilibrium expenditure is .With a fixed price level,the multiplier is .

Correct Answer
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Exam 27: Expenditure Multipliers: The Keynesian Model

Use the table below to answer the following question(s) . Table 27.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 27.3.1.If investment increases by $25 billion,the real GDP becomes

Correct AnswerverifiedShow Answer

The slope of the AE curve equals

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The marginal propensity to consume is the

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Correct AnswerverifiedShow Answer

If AE = 100 + 0.7Y and Y = 300,then unplanned inventories

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The components of aggregate expenditure that are influenced by real GDP are ________.

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Use the figure below to answer the following questions. Figure 27.1.1 This figure describes the relationship between consumption expenditure and disposable income for a model economy. -Refer to Figure 27.1.1.The marginal propensity to consume for this economy is

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The aggregate expenditure curve will become steeper if

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Dissaving occurs when a household

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Use the figure below to answer the following questions. Figure 27.2.1 There are no exports or imports in this economy. -Refer to Figure 27.2.1.When real GDP is equal to Yb,then

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Use the table below to answer the following question(s) . Table 27.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 27.3.1.The multiplier

Correct AnswerverifiedShow Answer

The difference in the influence of a multiplier between the short run and the long run,is that

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The fraction of a change in disposable income that is saved is the

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Use the figure below to answer the following questions. Figure 27.5.2 -Refer to Figure 27.5.2.The equation of the consumption function is

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Use the table below to answer the following question(s) . Table 27.3.1 The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld. -Refer to Table 27.3.1.The equilibrium level of real GDP is

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Use the table below to answer the following questions. Table 27.1.2 -Refer to Table 27.1.2.What is the value of the marginal propensity to save?

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Use the table below to answer the following question. Table 27.1.1 The following table shows the relationship between consumption expenditure (C) and disposable income (YD) for a hypothetical economy. -Refer to Table 27.1.1.If YD is $400,then saving is

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Use the table below to answer the following questions. Table 27.1.2 -Refer to Table 27.1.2.When saving is zero,what is the level of disposable income?

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Everything else remaining the same,an increase in the marginal propensity to consume ________ the slope of the AE curve and ________ equilibrium expenditure.

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In an economy,autonomous spending is $20 trillion and the slope of the AE curve is 0.8. Equilibrium expenditure is ________.With a fixed price level,the multiplier is ________.

Correct AnswerverifiedShow Answer

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Everything else remaining the same,an increase in the marginal propensity to consume the slope of the AE curve and equilibrium expenditure.

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In an economy,autonomous spending is $20 trillion and the slope of the AE curve is 0.8. Equilibrium expenditure is .With a fixed price level,the multiplier is .

Correct Answer
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