Aggregate Expenditures Model and AD Model

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Posted on

March 13th, 2023

question

If the consumption and disposable income are equal at a particular level of income and spending then...

answer

Saving must be zero at this point

question

All else equal, if the interest rate rises:

answer

planned investment spending will decrease

question

If inventories are declining unexpectedly at the current price level of GDP and spending then...

answer

current expenditures exceed the level of GDP and GDP in the future must decrease

question

On a graph of a public open economy, the equilibrium real GDP is found at the intersection of the Keynesian 45 degree line (disposable income) and

answer

the aggregate expenditures curve (C+Ig+G+Xn)

question

At equilibrium GDP

answer

savings equal planned investment and there are no unplanned inventory changes

question

Other things remaining constant, which of the following would increase an economy's real GDP and employment?

answer

An increase in net exports to the countries that this nation trades with

question

Savings, imports, and tax payments are all considered

answer

leakages

question

The slope of the consumption line or schedule is the

answer

marginal propensity to consume

question

An inflationary spending (expenditure) gap will cause

answer

demand-pull inflation

question

An inflationary spending (expenditure) gap will cause

answer

Positive GDP gap

question

Increases in government spending (G), in the Keynesian model,

answer

shifts aggregate expenditures upward result in a higher equilibrium GDP

question

Increase in government spending (G), in the aggregate economic model,

answer

shifts the AD curve to the right

question

The aggregate demand curve:

answer

is down-sloping and shows the amount of real output that will be purchased at each possible price level

question

The interest-rate effect suggests that:

answer

an increase in the price level will increase the demand for money, increase interest rates, and decrease interest-sensitive consumption and investment spending.

question

The real-balances effect indicates that:

answer

a higher price level will decrease the real value of many financial assets and therefore reduce spending

question

Which one of the following would not shift the aggregate demand curve?

answer

a change in the price level

question

Other things equal, a decrease in the real interest rate will:

answer

expand investment and shift the AD curve to the right.

question

An increase in input productivity will:

answer

reduce the equilibrium price level, assuming downward flexible prices

question

In which of the following sets of circumstances can we confidently expect inflation?

answer

Aggregate supply decreases and aggregate demand increases.

1 of 19

question

If the consumption and disposable income are equal at a particular level of income and spending then...

answer

Saving must be zero at this point

question

All else equal, if the interest rate rises:

answer

planned investment spending will decrease

question

If inventories are declining unexpectedly at the current price level of GDP and spending then...

answer

current expenditures exceed the level of GDP and GDP in the future must decrease

question

On a graph of a public open economy, the equilibrium real GDP is found at the intersection of the Keynesian 45 degree line (disposable income) and

answer

the aggregate expenditures curve (C+Ig+G+Xn)

question

At equilibrium GDP

answer

savings equal planned investment and there are no unplanned inventory changes

question

Other things remaining constant, which of the following would increase an economy's real GDP and employment?

answer

An increase in net exports to the countries that this nation trades with

question

Savings, imports, and tax payments are all considered

answer

leakages

question

The slope of the consumption line or schedule is the

answer

marginal propensity to consume

question

An inflationary spending (expenditure) gap will cause

answer

demand-pull inflation

question

An inflationary spending (expenditure) gap will cause

answer

Positive GDP gap

question

Increases in government spending (G), in the Keynesian model,

answer

shifts aggregate expenditures upward result in a higher equilibrium GDP

question

Increase in government spending (G), in the aggregate economic model,

answer

shifts the AD curve to the right

question

The aggregate demand curve:

answer

is down-sloping and shows the amount of real output that will be purchased at each possible price level

question

The interest-rate effect suggests that:

answer

an increase in the price level will increase the demand for money, increase interest rates, and decrease interest-sensitive consumption and investment spending.

question

The real-balances effect indicates that:

answer

a higher price level will decrease the real value of many financial assets and therefore reduce spending

question

Which one of the following would not shift the aggregate demand curve?

answer

a change in the price level

question

Other things equal, a decrease in the real interest rate will:

answer

expand investment and shift the AD curve to the right.

question

An increase in input productivity will:

answer

reduce the equilibrium price level, assuming downward flexible prices

question

In which of the following sets of circumstances can we confidently expect inflation?

answer

Aggregate supply decreases and aggregate demand increases.

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