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) B) and C)
G) None of the above

Question 2

The marginal propensity to save is calculated as

Accepted Answer

A)  saving divided by disposable income.
B)  saving divided by the change in disposable income.
C)  the change in saving divided by the change in consumption expenditure.
D)  the change in saving divided by the change in disposable income.
E)  the change in saving divided by disposable income.F) D) and E)
G) B) and D)

Question 3

The consumption functions for the Canadian economy covering the period from 1970 to 2010 indicate a marginal propensity to consume approximately equal to

Accepted Answer

A)  0.9.
B)  0.65.
C)  0.85.
D)  0.7.
E)  0.54.F) C) and D)
G) All of the above

Question 4

If the saving function is S = -25 + 0.4YD,then autonomous consumption is

Accepted Answer

A)  25.
B)  -25.
C)  15.
D)  10.
E)  0.6.F) A) and E)
G) B) and E)

Question 5

Use the table below to answer the following questions.
Table 27.1.3
 
-Refer to Table 27.1.3.The marginal propensity to consume is

Accepted Answer

A)  0.35.
B)  0.65.
C)  1.15.
D)  1.65.
E)  1.54.F) D) and E)
G) C) and E)

Question 6

A change in consumption,in response to a change in income,is

Accepted Answer

A)  unplanned consumption.
B)  autonomous consumption.
C)  induced consumption.
D)  equilibrium consumption.
E)  planned consumption.F) A) and D)
G) D) and E)

Question 7

As real GDP decreases

Accepted Answer

A)  induced consumption decreases.
B)  planned investment increases.
C)  exports increase.
D)  imports increase.
E)  induced consumption increases.F) A) and C)
G) D) and E)

Question 8

If aggregate planned expenditure exceeds real GDP then ________.

Accepted Answer

A)  inventories decrease, and the AE curve shifts downward
B)  inventories increase, and the AE curve shifts upward
C)  inventories decrease, and as real GDP increases a movement up along the AE curve occurs
D)  inventories increase, and as real GDP increases a movement up along the AE curve occurs
E)  inventories increase, and the short-run aggregate supply curve shifts rightwardF) C) and D)
G) A) and E)

Question 9

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 consume?

Accepted Answer

A)  0.75
B)  0.25
C)  1.33
D)  0.34
E)  0.67F) B) and E)
G) D) and E)

Question 10

In an economy,autonomous spending is $20 trillion and the slope of the AE curve is 0.8. The equation of the AE curve is ________.

Accepted Answer

A)  AE = 0.2Y-20
B)  AE = 20 + 0.2 Y
C)  AE = 20 + 0.8 Y
D)  AE = 0.8 Y - 20
E)  AE = 20 - 0.8 YF) A) and C)
G) A) and B)

Question 11

Which of the following events shifts the aggregate expenditure curve and also shifts the aggregate demand curve?
I. a decrease in investment
II. a change in the price level
III. an increase in exports

Accepted Answer

A)  I and II
B)  I and III
C)  II and III
D)  I, II, and III
E)  all of the aboveF) A) and B)
G) A) and C)

Question 12

Suppose real GDP increases by $1 billion and,as a result,consumption increases by $500 million.This change in consumption is

Accepted Answer

A)  unplanned.
B)  induced.
C)  autonomous.
D)  too little.
E)  planned.F) A) and B)
G) A) and C)

Question 13

Which one of the following variables has an induced component?

Accepted Answer

A)  investment
B)  consumption
C)  exports
D)  government expenditure on goods and services
E)  all of the aboveF) B) and E)
G) All of the above

Question 14

If the marginal propensity to consume is 0.85,what change in consumption expenditure would you expect if disposable income increases by $200 million?

Accepted Answer

A)  $20 million
B)  $170 million
C)  $180 million
D)  $1,800 million
E)  $18 millionF) A) and B)
G) B) and D)

Question 15

Use the information below to answer the following question.
Fact 27.5.1
The economy of Beverly Hills has a consumption function of C = 10 + 0.8Y, investment equal to 6, government expenditure equal to 10, exports equal to 10, and an import function of M = 0.1Y.
-Refer to Fact 27.5.1.What is the multiplier for this economy?

Accepted Answer

A)  1.43
B)  3.33
C)  0.3
D)  10
E)  5F) A) and C)
G) B) and D)

Question 16

A rise in the price level

Accepted Answer

A)  decreases aggregate expenditure and produces a movement along the aggregate demand curve.
B)  decreases aggregate expenditure and produces a rightward shift of the aggregate demand curve.
C)  decreases aggregate expenditure and produces a leftward shift of the aggregate demand curve.
D)  has no effect on aggregate expenditure.
E)  increases aggregate expenditure, but has no effect on the aggregate demand curve.F) A) and B)
G) A) and E)

Question 17

If investment increases by $200,and as a result income increases by $800,then the

Accepted Answer

A)  multiplier is 1/4.
B)  slope of the AE curve is 0.75.
C)  slope of the AE curve is 1/4.
D)  multiplier is 3.
E)  none of the above.F) A) and C)
G) A) and B)

Question 18

Suppose that investment increases by $10 billion.Which one of the following would reduce the effect of this increase in autonomous expenditure on equilibrium real GDP in the short run?

Accepted Answer

A)  an increase in the marginal propensity to consume.
B)  a decrease in the marginal propensity to import
C)  a decrease in the marginal tax rate
D)  a steeper short-run aggregate supply curve
E)  a flatter short-run aggregate supply curveF) None of the above
G) A) and B)

Question 19

Use the figure below to answer the following question(s) .
  
Figure 27.3.1
The economy shown in the graph does not engage in international trade and has no government. Planned aggregate expenditure equals the sum of consumption expenditure (C) and investment (I) .
-Refer to Figure 27.3.1.If investment increases by $25 billion,then real GDP increases by

Accepted Answer

A)  $25 billion.
B)  $125 billion.
C)  $50 billion.
D)  $100 billion.
E)  $75 billion.F) A) and B)
G) A) and C)

Question 20

Use the figure below to answer the following questions.
  
Figure 27.5.2
-Refer to Figure 27.5.2.The equation of the saving function that corresponds to the consumption function in this figure is

Accepted Answer

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

Exam 27: Expenditure Multipliers: the Keynesian Model

If the marginal propensity to consume is 0.85,what change in consumption expenditure would you expect if disposable income increases by $200 million?

Correct Answer
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If investment increases by $200,and as a result income increases by $800,then the

Correct Answer
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Which one of the following variables has an induced component?

Correct Answer
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Correct Answer
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If the saving function is S = -25 + 0.4YD,then autonomous consumption is

Correct Answer
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Which of the following events shifts the aggregate expenditure curve and also shifts the aggregate demand curve? I. a decrease in investment II. a change in the price level III. an increase in exports

Correct Answer
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A rise in the price level

Correct Answer
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If aggregate planned expenditure exceeds real GDP then ________.

Correct Answer
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Use the table below to answer the following questions. Table 27.1.3 -Refer to Table 27.1.3.The marginal propensity to consume is

Correct Answer
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The marginal propensity to save is calculated as

Correct Answer
verified

Use the figure below to answer the following questions. Figure 27.5.2 -Refer to Figure 27.5.2.The equation of the saving function that corresponds to the consumption function in this figure is

Correct Answer
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Suppose real GDP increases by $1 billion and,as a result,consumption increases by $500 million.This change in consumption is

Correct Answer
verified

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 consume?

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
verified

The consumption functions for the Canadian economy covering the period from 1970 to 2010 indicate a marginal propensity to consume approximately equal to

Correct Answer
verified

A change in consumption,in response to a change in income,is

Correct Answer
verified

Suppose that investment increases by $10 billion.Which one of the following would reduce the effect of this increase in autonomous expenditure on equilibrium real GDP in the short run?

Correct Answer
verified

As real GDP decreases

Correct Answer
verified

Correct Answer
verified

In an economy,autonomous spending is $20 trillion and the slope of the AE curve is 0.8. The equation of the AE curve is ________.

Correct Answer
verified

Exam 27: Expenditure Multipliers: the Keynesian Model

If the marginal propensity to consume is 0.85,what change in consumption expenditure would you expect if disposable income increases by $200 million?

Correct AnswerverifiedShow Answer

If investment increases by $200,and as a result income increases by $800,then the

Correct AnswerverifiedShow Answer

Which one of the following variables has an induced component?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the saving function is S = -25 + 0.4YD,then autonomous consumption is

Correct AnswerverifiedShow Answer

Which of the following events shifts the aggregate expenditure curve and also shifts the aggregate demand curve? I. a decrease in investment II. a change in the price level III. an increase in exports

Correct AnswerverifiedShow Answer

A rise in the price level

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If aggregate planned expenditure exceeds real GDP then ________.

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Use the table below to answer the following questions. Table 27.1.3 -Refer to Table 27.1.3.The marginal propensity to consume is

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The marginal propensity to save is calculated as

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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 saving function that corresponds to the consumption function in this figure is

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Suppose real GDP increases by $1 billion and,as a result,consumption increases by $500 million.This change in consumption 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 consume?

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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 consumption functions for the Canadian economy covering the period from 1970 to 2010 indicate a marginal propensity to consume approximately equal to

Correct AnswerverifiedShow Answer

A change in consumption,in response to a change in income,is

Correct AnswerverifiedShow Answer

Suppose that investment increases by $10 billion.Which one of the following would reduce the effect of this increase in autonomous expenditure on equilibrium real GDP in the short run?

Correct AnswerverifiedShow Answer

As real GDP decreases

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Correct AnswerverifiedShow Answer

In an economy,autonomous spending is $20 trillion and the slope of the AE curve is 0.8. The equation of the AE curve is ________.

Correct AnswerverifiedShow Answer

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