Final- review chapter 11 - Assignment Essays

question

The aggregate demand curve slopes downward because of:

answer

wealth and substitution effects

question

An increase in the price level decreases planned expenditures because:

answer

current prices rise relative to future prices, decreasing expenditure

question

When the economy is at full employment and investment increases, in the long run the price level will ________ and, if potential GDP does not change, in the long run real GDP will ________.

answer

increase; not change

question

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

answer

upward;increases

question

The short-run multiplier is equal to 3, real GDP equals potential GDP of $8,000, and the price level is equal to 100. Suppose that government expenditure decreases by $200. The long-run effect of the decrease in government expenditure changes real GDP by:

answer

nothing; that is, in the long run real GDP equals $8,000

question

An increase in ________ shifts the AE curve ________ and an increase in ________ shifts the aggregate demand curve ________.

answer

the price level; downward; autonomous expenditure; rightward

question

in the long run, the multiple:

answer

is zero

question

the multiplier effect is smallest

answer

in the long run

question

the money multiplier measures the:

answer

horizontal shift in the aggregate demand curve from an increase in autonomous spending

question

In general, an increase in autonomous expenditure that is NOT created by a change in the price level results in a:

answer

rightward shift of the AD curve

question

a fall in the price level

answer

shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

question

The slope of the aggregate expenditure curve increases when the marginal propensity to consume ________ or the marginal propensity to import ________.

answer

increases; decreases

question

business cycle turning points are:

answer

brought about by changes in autonomous expenditures that are then subject to the multiplier effect

question

if the marginal propensity to save is .25 in an economy with no imports or taxes, the money multiplier equals

answer

question

The multiplier is greater than 1 because the change in autonomous expenditure leads to ________.

answer

more induced expenditure

question

In the figure above, if income taxes increase:

answer

the AE curve becomes flatter.

question

The presence of income taxes and imports make the slope of the aggregate expenditure curve:

answer

flatter than it would be without income taxes and exports

question

in the above figure, equilibrium expenditure along AE1 is:

answer

$12 trillion

question

in the above table, there are no taxes and no imports or exports. the change in unplanned inventories when real GDP is $7,000 is:

answer

$500

question

An economy has no imports and no taxes. The marginal propensity to save is 0.2. The multiplier is ________ so a ________ increase in autonomous expenditure increases equilibrium expenditure by:

answer

5; $12 billion

question

Suppose that the slope of the AE curve is 0.67. Then a $100 increase in autonomous spending means equilibrium expenditure will:

answer

increase by 300

question

in the figure above, the multiple equals:

answer

1.67

question

if the slope of the AE curve is 0.60, the value of the multiplier is:

answer

2.5

question

If there are no taxes or imports and MPC = 0.67, the multiplier is

answer

question

If prices are fixed, when aggregate planned expenditure exceeds real GDP, then:

answer

inventories decrease, signaling firms to increase production and increase real GDP

question

Expenditure that does NOT depend on real GDP is called:

answer

autonomous expenditure

question

in the above figure, equilibrium real GDP is equal to:

answer

$16 trillion

question

In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would:

answer

increase

question

When aggregate planned expenditure is less than real GDP, unplanned:

answer

investment occurs

question

If aggregate planned expenditure is less than real GDP then:

answer

firms' inventories will increase and real GDP will decrease as production falls

question

In the above figure, if real GDP is greater than $15 trillion, inventories will be:

answer

above target levels so firms will decrease production

question

In the above table, C is consumption expenditure, I is investment, G is government expenditure, X is exports, and M is imports. All entries are in dollars. What is the level of aggregate planned expenditure when real GDP is equal to $900 billion?

answer

$796

question

If planned expenditures equal $16 trillion when real GDP is $16.5 trillion, then:

answer

actual investment will exceed planned investment.

question

Suppose the equilibrium level of expenditure is $13 trillion. If real GDP is $14 trillion, then planned expenditures:

answer

are less than real GDP, and real GDP will decrease

question

At equilibrium expenditure, unplanned changes in inventory:

answer

must be zero

question

When there is unplanned inventory investment, aggregate planned expenditure is ________ real GDP and actual investment is ________ planned investment.

answer

less than; greater than

question

Between 2013 and 2014 the government estimates that disposable income in the United States decreased. Consequently, as a result of this change, consumption expenditure:

answer

decreased

question

the MPS equals the ratio of:

answer

none of the above answers are correct

question

In the above figure, at a disposable income level of $2 trillion, saving equals:

answer

zero

question

dissaving:

answer

occurs when consumption is greater than disposable income

question

The Keynesian model of aggregate expenditure describes the economy in:

answer

the short run

question

An increase in disposable income shifts:

answer

neither the consumption function or the savings function because it leads to a movement along both the consumption and savings function

question

A movement along the consumption function to higher levels of consumption expenditure arises because:

answer

the level of disposable income increases

question

the marginal property to consume measures:

answer

the fraction of a change in disposable income that is spent on consumption expenditure

question

As disposable income increases, there is a ________ the saving function.

answer

movement along

question

If the MPC equals 0.75, then:

answer

for every $100 increase in disposable income, saving increases by $25

question

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:

answer

consumption spending is $8 trillion when disposable income is $8 trillion.

question

There is a movement along the consumption function if there is ________.

answer

an increase in disposable income

question

the marginal propensity to consume is:

answer

never greater than 1

1 of 49

question

The aggregate demand curve slopes downward because of:

answer

wealth and substitution effects

question

An increase in the price level decreases planned expenditures because:

answer

current prices rise relative to future prices, decreasing expenditure

question

When the economy is at full employment and investment increases, in the long run the price level will ________ and, if potential GDP does not change, in the long run real GDP will ________.

answer

increase; not change

question

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

answer

upward;increases

question

answer

nothing; that is, in the long run real GDP equals $8,000

question

An increase in ________ shifts the AE curve ________ and an increase in ________ shifts the aggregate demand curve ________.

answer

the price level; downward; autonomous expenditure; rightward

question

in the long run, the multiple:

answer

is zero

question

the multiplier effect is smallest

answer

in the long run

question

the money multiplier measures the:

answer

horizontal shift in the aggregate demand curve from an increase in autonomous spending

question

In general, an increase in autonomous expenditure that is NOT created by a change in the price level results in a:

answer

rightward shift of the AD curve

question

a fall in the price level

answer

shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

question

The slope of the aggregate expenditure curve increases when the marginal propensity to consume ________ or the marginal propensity to import ________.

answer

increases; decreases

question

business cycle turning points are:

answer

brought about by changes in autonomous expenditures that are then subject to the multiplier effect

question

if the marginal propensity to save is .25 in an economy with no imports or taxes, the money multiplier equals

answer

question

The multiplier is greater than 1 because the change in autonomous expenditure leads to ________.

answer

more induced expenditure

question

In the figure above, if income taxes increase:

answer

the AE curve becomes flatter.

question

The presence of income taxes and imports make the slope of the aggregate expenditure curve:

answer

flatter than it would be without income taxes and exports

question

in the above figure, equilibrium expenditure along AE1 is:

answer

$12 trillion

question

in the above table, there are no taxes and no imports or exports. the change in unplanned inventories when real GDP is $7,000 is:

answer

$500

question

An economy has no imports and no taxes. The marginal propensity to save is 0.2. The multiplier is ________ so a ________ increase in autonomous expenditure increases equilibrium expenditure by:

answer

5; $12 billion

question

Suppose that the slope of the AE curve is 0.67. Then a $100 increase in autonomous spending means equilibrium expenditure will:

answer

increase by 300

question

in the figure above, the multiple equals:

answer

1.67

question

if the slope of the AE curve is 0.60, the value of the multiplier is:

answer

2.5

question

If there are no taxes or imports and MPC = 0.67, the multiplier is

answer

question

If prices are fixed, when aggregate planned expenditure exceeds real GDP, then:

answer

inventories decrease, signaling firms to increase production and increase real GDP

question

Expenditure that does NOT depend on real GDP is called:

answer

autonomous expenditure

question

in the above figure, equilibrium real GDP is equal to:

answer

$16 trillion

question

In the above figure, if the marginal propensity to consume increases, the slope of the AE curve would:

answer

increase

question

When aggregate planned expenditure is less than real GDP, unplanned:

answer

investment occurs

question

If aggregate planned expenditure is less than real GDP then:

answer

firms' inventories will increase and real GDP will decrease as production falls

question

In the above figure, if real GDP is greater than $15 trillion, inventories will be:

answer

above target levels so firms will decrease production

question

answer

$796

question

If planned expenditures equal $16 trillion when real GDP is $16.5 trillion, then:

answer

actual investment will exceed planned investment.

question

Suppose the equilibrium level of expenditure is $13 trillion. If real GDP is $14 trillion, then planned expenditures:

answer

are less than real GDP, and real GDP will decrease

question

At equilibrium expenditure, unplanned changes in inventory:

answer

must be zero

question

When there is unplanned inventory investment, aggregate planned expenditure is ________ real GDP and actual investment is ________ planned investment.

answer

less than; greater than

question

Between 2013 and 2014 the government estimates that disposable income in the United States decreased. Consequently, as a result of this change, consumption expenditure:

answer

decreased

question

the MPS equals the ratio of:

answer

none of the above answers are correct

question

In the above figure, at a disposable income level of $2 trillion, saving equals:

answer

zero

question

dissaving:

answer

occurs when consumption is greater than disposable income

question

The Keynesian model of aggregate expenditure describes the economy in:

answer

the short run

question

An increase in disposable income shifts:

answer

neither the consumption function or the savings function because it leads to a movement along both the consumption and savings function

question

A movement along the consumption function to higher levels of consumption expenditure arises because:

answer

the level of disposable income increases

question

the marginal property to consume measures:

answer

the fraction of a change in disposable income that is spent on consumption expenditure

question

As disposable income increases, there is a ________ the saving function.

answer

movement along

question

If the MPC equals 0.75, then:

answer

for every $100 increase in disposable income, saving increases by $25

question

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:

answer

consumption spending is $8 trillion when disposable income is $8 trillion.

question

There is a movement along the consumption function if there is ________.

answer

an increase in disposable income

question

the marginal propensity to consume is:

answer

never greater than 1

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