Macro test ch 8! - Assignment Essays

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The MPC is

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The change in consumption divided by the change in income

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The MPS is

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The change in savings divided by the change in income

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Saving equals

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Y- C

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If you earn additional $500 in disposable income one week for painting your neighbors house

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The total of your consumption and savings will increase by $500

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If Logan received a $2,500 bonus and his MPS is 0.20, his consumption rises by $________ and his saving rises by $________.

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2,000; 500

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Uncertainty about the future is likely to

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Decrease current spending

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Higher interest rates are likely to

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Decrease consumer spending and increase consumer saving

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Consumption is

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Positively related to household income and wealth and households expectations about the future, but negatively related to interest rates

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In a closed economy with no government, aggregate expenditure is

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Consumption plus investment

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If Wanda's income is reduced to zero after she loses her job, her consumption will be ________ and her saving will be ________.

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greater than zero; less than zero

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Refer to figure 8.1 the MPS for this household is ______ and the MPC is ______

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0.5, 0.5

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Refer to figure 8.1 the equation for this households saving function is

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S= -500 + 0.5y

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Refer to figure 8.1. At income level $1,500, this households savings is _______ than (to) zero and this households consumption is ______ zero

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Greater than ; greater than

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Refer to figure 8.1. This household's consumption function is

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C = 500 + 0.5y

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Refer to figure 8.1. This household saves -$300 at an income level of

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$400

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Refer to figure 8.1. This household consumes $2,000 at an income level of

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3,000

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Refer to figure 8.1. An increase in the amount of consumption this household makes when this households income is zero

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Shifts the saving function downward

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Refer to figure 8.1. An increase in the MPC

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Makes the saving function flatter

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Refer to figure 8.2. The line segment BD represents Jerry's

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Consumption when income equals zero

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Refer to figure 8.2. Jerry's consumption equals his income at Point

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Jerry's saving equals zero at income level

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Along the line segment AC, Jerry's

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Saving is positive

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Along the segment AB, Jerry's

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Saving is negative

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Positive saving occurs along the line segment

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An increase in Jerry's income is represented by

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A movement from point B to A

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Suppose Jerry's MPC increases, and the vertical intercept of the consumption function does not change. At income y1 Jerry's

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Consumption will be greater than his income

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The fraction of a change in income that is consumed or spent is called

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marginal propensity to consume

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If you save $80 when you experience a $400 rise in your income,

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your MPC is 0.80

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If consumption is 30,000 when income is $35,000, and consumption increases to 36,000 when income increases to 43,000, the MPC is

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0.75

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If consumption is 10,000 when income is 10,000, and consumption increases to 11,000 when income increases to 12,000, the MPS is

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0.50

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Suppose consumption is 5,000 when income is $8,000 and the MPC equals 0.9. When income creases to 10,000, consumption is

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$6,800

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Suppose saving is $1,400 when income is 10,000 and the MPC equals 0.8. When income increases to $12,000 savings is

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$1,800

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Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25. When income increases to $100,000 consumption is

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$67,500

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If the MPS is 0.22, the MPC is

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0.78

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If the MPS is 0.05, the MPC is

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0.95

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If the consumption function is of the form C = 80 + 0.4y, the MPS equals

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0.6

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If the saving function is of the form S = -20 + 0.3y, the consumption at an income level of 200 is

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160

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If Lily's consumption function is of the form C = 100 + 0.8y, her saving equals zero at an income level of

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500

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If Zander's saving function is of the form S = -150 + 0.5y, his consumption equals his income at an income level of

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300

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The equation for the aggregate consumption function

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C = 80 + 0.9y

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Society's MPC is

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0.90

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Society's MPS is

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0.10

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At an aggregate income level of $100, aggregate savings would be

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-$70

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Assuming good society's MPC is constant at an aggregate of income of $300, aggregate consumption would be

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$350

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Refer to table 8.2 the equation for the aggregate saving function is

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S = -100 + 0.1y

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Refer to table 8.2. Society's MPC is

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0.9

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Refer to table 8.2. Society's MPs is

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0.1

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Refer to table 8.2. Assuming good society's MPC is constant, at an aggregate income level of $900, aggregate consumption would be

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$910

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Refer to table 8.2. Assuming society's MPC is constant at an aggregate income of $1,200 aggregate saving would be

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$20

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The equation for the aggregate consumption function

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C = 60 + 0.7y

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refer to figure 8.3. The equation for the aggregate saving function is

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S = -60 + 0.3y

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Refer to figure 8.3., in this economy, aggregate saving will be zero if income is

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$200 billion

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Refer to figure 8.3. For this society, aggregate saving is positive if aggregate income is

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Above $200 billion

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Refer to figure 8.3., if aggregate income is 1,000 billion, then in this society aggregate saving is _____ billion

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$240

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Refer to figure 8.3. Which of the following statements is FALSE?

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Aggregate saving is negative for all income levels below $400 billion

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Refer to figure 8.4. The aggregate consumption function c1 and c2

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Have the same MPC values

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Refer to figure 8.4. Which consumption function has the largest MPC

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Refer to figure 8.4. Suppose the consumption function for c1 = 10 + 0.8y, the consumption function that best fits c2 is

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C2 = 20 + 0.8y

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Refer to figure 8.4. Suppose the consumption function for c1 = 20 + 0.5y, the consumption function that best fits c3 is

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C3= 20 + 0.8y

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If income is y1, aggregate consumption is the greatest when the aggregate consumption function is

answer

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Refer to figure 8.4. If income is y2

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The society's consumption is equal along c2 and c3

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If the consumption function is below the 45 degree line

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Consumption is less than income and saving is positive

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Refer to figure 8.5. The MPS for this saving function is

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0.25

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Refer to figure 8.5. If aggregate income is $900 billion, aggregate consumption

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Is $875 billion

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Refer to figure 8.6. If aggregate income is $800, aggregate saving is

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$20

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Refer to figure 8.6. If aggregate income is $1,000 aggregate consumption is

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$960

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As interest rates fall, spending decreases

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FALSE

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An expected permanent tax increase is likely to increase current spending

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FALSE

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The marginal propensity to consume is the change in consumption per change in income

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TRUE

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If the marginal propensity to consume is 0.8, the marginal propensity to save is 8

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False

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The Tiny Tots Toy Company manufactures sleds, but sold only 8,000 sleds. In 2012 tiny tots change in inventory was

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2,000 sleds

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The Jackson stool Company manufactures only tools. In 2012 Jackson Tools manufactures 20,000 tools but sold 21,000 tools. In 2012 Jackson Tools inventory was

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-1000 tools

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Which of the following is NOT considered investment?

answer

The purchase of government bonds

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Which of the following is an investment?

answer

the purchase of a new printing press by a business

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Over which component of investment do firms have the least amount of control?

answer

changes in inventories

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Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is

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-$20 billion

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Assume that in Jabara, planned investment is $30 billion, but in actual investment is $45 billion. Unplanned inventory investment is

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-$20 billion

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Assume that in Jabara, planned investment is $30 billion, but actual investment is $45 billion. Unplanned inventory investment is

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$15 billion

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If unplanned business investment is $20 million and planned investment is $20 million, then actual investment is

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40 million

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If 2012 Happyland's planned investment was $90 billion and its actual investment was $140 billion. In 2012 Happyland's unplanned inventory change was

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$50 billion

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If planned investment exceeds actual investment,

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there will be a decline in inventories

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If Inventory investment is higher than firms planned

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actual investment is greater than planned investment

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Refer to figure 8.7. In Azora, planned investment does not vary with income. Azora's planned investment function is represented by

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Panel B

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Refer to figure 8.7. In Farley, planned investment varied inversely with income. Farley's planned investment function is represented by

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Panel D

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Without the government of the foreign sector in the income expenditure model, planned aggregate expenditure equals

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Consumption plus planned investment

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Related to the economics practice on p. 464: A recent study by economists at Yale University and the University of Chicago suggests that changing retirement plan enrollment options from "opt- in" systems to "opt- out" systems increased pension plan enrollment after three months of work from _____ percent of workers to _______ percent of workers

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65; 98

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Related to economics practice on p. 464: early results from the Save More Tomorrow retirement plans have shown ______ in the savings rates of the enrolled

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Dramatic increases

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If actual investment is greater than planned investment, unplanned inventories decline

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FALSE

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Firms react to unplanned inventory investment by increasing output

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FALSE

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Firms react to negative inventory investment by increasing output

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TRUE

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If planned investment increases, equilibrium will be restored only when saving has increased by exactly the amount of the initial increase in planned investment, assuming there is no government or foreign sector

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TRUE

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If planned investment is perfectly unresponsive to changes in the interest rate, the planned investment schedule

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Is vertical

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If planned investment is perfectly responsive to changes in the interest rate the planned investment schedule

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Is horizontal

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Refer to figure 8.8. The amount of planned investment increases if the interest rate

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Drops from 8% to 4%

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Refer to figure 8.8. The amount of planned investment decreases if the interest rate

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Rises from 4% to 8%

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Refer to table 8.3. If the interest rate dropped from 15% to 6%, planned investment would _____ by $____ billion

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Increase; 120

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Keynes used the phrase animal spirits to describe the feelings of entrepreneurs, and he argued that these feelings affect investment decisions

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True

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In macroeconomics, equilibrium is defined as that point at which

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planned aggregate expenditure equals aggregate output

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The economy can be in equilibrium if, and only if,

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planned investment equals actual investment

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If aggregate output is greater than planned spending, then

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unplanned inventory investment is positive

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If unplanned inventory investment is positive, then

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planned aggregate spending must be less than aggregate output

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If aggregate output equals planned aggregate expenditure, then

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unplanned inventory investment is zero

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Refer to table 8.4. At an aggregate output level of $400 billion, planned expenditure equals

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$550 billion

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Refer to table 8.4. At an aggregate output level of $800 billion, aggregate saving

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Equals 50 billion

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Refer to table 8.4. At an aggregate output level of $200 billion, the unplanned inventory change is

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-$200 billion

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Refer to table 8.4. At an aggregate output level of $600 billion, the unplanned inventory change is

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-$100 billion

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Refer to table 8.4. If aggregate output equals _____ there will be a $100 billion unplanned decrease in inventories

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$600 billion

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Refer to table 8.4. The equilibrium level of aggregate output equals

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$1,000 billion

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Refer to table 8.4. Planned saving equals planned investment at an aggregate output level

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Of $1,000 billion

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Refer to table 8.4. Planned investment equals actual investment at

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$1,000 billion

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Refer to Table 8.5. At an aggregate output level of $3,000 million, planned expenditure equals

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$3,600

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Refer to table 8.5. The MPC in this economy is

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0.8

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Refer to table 8.5. At an aggregate output level of $4,000 million, the unplanned inventory change is

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-$400 million

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Refer to table 8.5. At an aggregate output level of $7,000 million, the unplanned inventory change is

answer

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Refer to table 8.5. If aggregate output equals _____, there will be a $200 million unplanned decrease in inventories

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$5,000 million

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Refer to table 8.5. Which of the following statements is FALSE ?

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If aggregate output equals $4,000 million, then aggregate savings equals $1000 million.

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Refer to table 8.5. Planned saving equals planned investment at an aggregate output level of

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$6,000 million

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Refer to table 8.5. planned investment equals actual investment at

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An income level of $6,000 million

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If C = 100 + 0.8Y and I = 50, then the equilibrium level of income is

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750

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If C = 500 + 0.9y and I = 400, then the equilibrium level of income is

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9,000

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If S = -200 + 0.2Y and I = 100, then the equilibrium level of income is

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1,500

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If C = 1,500 + 0.75y and I = 500, then planned saving equals planned investment at aggregate output level of

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8,000

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Refer to figure 8.9. What is the equation for the aggregate expenditure function (AE)?

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AE = 150 + 0.25y

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Refer to figure 8.9. Equilibrium output equals

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200

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Refer to figure 8.9. At aggregate output level $100 million, there is a

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$75 million unplanned decrease in inventories

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Refer to figure 8.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of s decrease in investment by $20 million?

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AE line shifts down, decreasing equilibrium output and equilibrium expenditure

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Refer to figure 8.10. What is the equation for the aggregate expenditure function (AE)?

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AE= 2"0 + 0.8y

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Refer to figure 8.10. At an aggregate output level of 500 million, there is a

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$100 million unplanned decrease in inventories

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Refer to figure 8.10. At aggregate output level above $1,000 million, there are

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Unplanned increases in inventories and output decreases

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Refer to figure 8.10. At aggregate output level below $1,000 million, there are

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Unplanned decreases in inventories and output increases

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Using the saving/ investment approach to equilibrium, the equilibrium condition can be written as

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C + I = C + S

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Firms react to unplanned inventory reductions by

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increasing output

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Firms react to unplanned increases in inventories by

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reducing output

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Aggregate output will increase if there is an

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Unplanned fall in inventories

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A decrease in planned investment causes

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output to decrease, but by a larger amount than the decrease in investment.

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When aggregate expenditure is greater than aggregate output, there will be an unplanned build up of inventories

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FALSE

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When the is an unplanned draw down of inventories, firms will increase production

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TRUE

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Actual investment equals planned investment plus unplanned changes in inventories

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True

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When the economy is in equilibrium, savings equals planned investment

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True

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If aggregate expenditure decreases, then equilibrium output increases

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False

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Assuming their is no government or foreign sector, the economy will be in equilibrium if, and only if, planned investment equals actual investment

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True

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The ratio of the change in the equilibrium level of output to a change in some autonomous variable is the

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multiplier

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Refer to figure 8.11. The equation for the aggregate expenditure function AEo is

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AEo= 50 + 0.75y

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Refer to figure 8.11. The value of the multiplier is

answer

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Refer to figure 8.11. A $20 million decrease in autonomous consumption

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Changes equilibrium expenditure to $120 million

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Refer to figure 8.11. If MPC increases to 0.8, equilibrium aggregate output

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Increase to $250 million

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Assuming no government or foreign sector, if the MPC is 0.9, the multiplier is

answer

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Assuming no government or foreign sector, the formula for the multiplier is

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1/MPS

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Assuming there is no government or foreign sector the formula for the multiplier is

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1/(1-MPC)

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Assuming there is no government or foreign sector, if the multiplier is 10, the MPC is

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0.9

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Assume there is no government or foreign sector. If the MPS is 0.05, the multiplier is

answer

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Assume there is no government or foreign sector. If the multiplier is 10, a $10 billion increase in planned investment will cause aggregate output to increase by

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$100 billion

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Assume there is no government or foreign sector. If the MPS is 0.2, a $40 billion decrease in planned investment will cause aggregate output to decrease by

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$200 billion

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Assume there is no government or foreign sector. If the multiplier is 4, a $20 billion increase in investment will cause aggregate output to increase by

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$80 billion

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Refer to figure 8.12. What is the equation for aggregate expenditure ae1?

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Ae1 = 600 + 0.4y

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Refer to figure 8.12. Suppose AE1, ae2, and ae3, are parallel. What is the value of Point b?

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$900 million

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Refer to figure 8.12. Suppose ae1, ae2, ae3 are parallel. What is the value of point a?

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$450 million

1 of 157

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The MPC is

answer

The change in consumption divided by the change in income

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The MPS is

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The change in savings divided by the change in income

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Saving equals

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Y- C

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If you earn additional $500 in disposable income one week for painting your neighbors house

answer

The total of your consumption and savings will increase by $500

question

If Logan received a $2,500 bonus and his MPS is 0.20, his consumption rises by $________ and his saving rises by $________.

answer

2,000; 500

question

Uncertainty about the future is likely to

answer

Decrease current spending

question

Higher interest rates are likely to

answer

Decrease consumer spending and increase consumer saving

question

Consumption is

answer

Positively related to household income and wealth and households expectations about the future, but negatively related to interest rates

question

In a closed economy with no government, aggregate expenditure is

answer

Consumption plus investment

question

If Wanda's income is reduced to zero after she loses her job, her consumption will be ________ and her saving will be ________.

answer

greater than zero; less than zero

question

Refer to figure 8.1 the MPS for this household is ______ and the MPC is ______

answer

0.5, 0.5

question

Refer to figure 8.1 the equation for this households saving function is

answer

S= -500 + 0.5y

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Refer to figure 8.1. At income level $1,500, this households savings is _______ than (to) zero and this households consumption is ______ zero

answer

Greater than ; greater than

question

Refer to figure 8.1. This household's consumption function is

answer

C = 500 + 0.5y

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Refer to figure 8.1. This household saves -$300 at an income level of

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$400

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Refer to figure 8.1. This household consumes $2,000 at an income level of

answer

3,000

question

Refer to figure 8.1. An increase in the amount of consumption this household makes when this households income is zero

answer

Shifts the saving function downward

question

Refer to figure 8.1. An increase in the MPC

answer

Makes the saving function flatter

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Refer to figure 8.2. The line segment BD represents Jerry's

answer

Consumption when income equals zero

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Refer to figure 8.2. Jerry's consumption equals his income at Point

answer

question

Jerry's saving equals zero at income level

answer

question

Along the line segment AC, Jerry's

answer

Saving is positive

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Along the segment AB, Jerry's

answer

Saving is negative

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Positive saving occurs along the line segment

answer

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An increase in Jerry's income is represented by

answer

A movement from point B to A

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Suppose Jerry's MPC increases, and the vertical intercept of the consumption function does not change. At income y1 Jerry's

answer

Consumption will be greater than his income

question

The fraction of a change in income that is consumed or spent is called

answer

marginal propensity to consume

question

If you save $80 when you experience a $400 rise in your income,

answer

your MPC is 0.80

question

If consumption is 30,000 when income is $35,000, and consumption increases to 36,000 when income increases to 43,000, the MPC is

answer

0.75

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If consumption is 10,000 when income is 10,000, and consumption increases to 11,000 when income increases to 12,000, the MPS is

answer

0.50

question

Suppose consumption is 5,000 when income is $8,000 and the MPC equals 0.9. When income creases to 10,000, consumption is

answer

$6,800

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Suppose saving is $1,400 when income is 10,000 and the MPC equals 0.8. When income increases to $12,000 savings is

answer

$1,800

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Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25. When income increases to $100,000 consumption is

answer

$67,500

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If the MPS is 0.22, the MPC is

answer

0.78

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If the MPS is 0.05, the MPC is

answer

0.95

question

If the consumption function is of the form C = 80 + 0.4y, the MPS equals

answer

0.6

question

If the saving function is of the form S = -20 + 0.3y, the consumption at an income level of 200 is

answer

160

question

If Lily's consumption function is of the form C = 100 + 0.8y, her saving equals zero at an income level of

answer

500

question

If Zander's saving function is of the form S = -150 + 0.5y, his consumption equals his income at an income level of

answer

300

question

The equation for the aggregate consumption function

answer

C = 80 + 0.9y

question

Society's MPC is

answer

0.90

question

Society's MPS is

answer

0.10

question

At an aggregate income level of $100, aggregate savings would be

answer

-$70

question

Assuming good society's MPC is constant at an aggregate of income of $300, aggregate consumption would be

answer

$350

question

Refer to table 8.2 the equation for the aggregate saving function is

answer

S = -100 + 0.1y

question

Refer to table 8.2. Society's MPC is

answer

0.9

question

Refer to table 8.2. Society's MPs is

answer

0.1

question

Refer to table 8.2. Assuming good society's MPC is constant, at an aggregate income level of $900, aggregate consumption would be

answer

$910

question

Refer to table 8.2. Assuming society's MPC is constant at an aggregate income of $1,200 aggregate saving would be

answer

$20

question

The equation for the aggregate consumption function

answer

C = 60 + 0.7y

question

refer to figure 8.3. The equation for the aggregate saving function is

answer

S = -60 + 0.3y

question

Refer to figure 8.3., in this economy, aggregate saving will be zero if income is

answer

$200 billion

question

Refer to figure 8.3. For this society, aggregate saving is positive if aggregate income is

answer

Above $200 billion

question

Refer to figure 8.3., if aggregate income is 1,000 billion, then in this society aggregate saving is _____ billion

answer

$240

question

Refer to figure 8.3. Which of the following statements is FALSE?

answer

Aggregate saving is negative for all income levels below $400 billion

question

Refer to figure 8.4. The aggregate consumption function c1 and c2

answer

Have the same MPC values

question

Refer to figure 8.4. Which consumption function has the largest MPC

answer

question

Refer to figure 8.4. Suppose the consumption function for c1 = 10 + 0.8y, the consumption function that best fits c2 is

answer

C2 = 20 + 0.8y

question

Refer to figure 8.4. Suppose the consumption function for c1 = 20 + 0.5y, the consumption function that best fits c3 is

answer

C3= 20 + 0.8y

question

If income is y1, aggregate consumption is the greatest when the aggregate consumption function is

answer

question

Refer to figure 8.4. If income is y2

answer

The society's consumption is equal along c2 and c3

question

If the consumption function is below the 45 degree line

answer

Consumption is less than income and saving is positive

question

Refer to figure 8.5. The MPS for this saving function is

answer

0.25

question

Refer to figure 8.5. If aggregate income is $900 billion, aggregate consumption

answer

Is $875 billion

question

Refer to figure 8.6. If aggregate income is $800, aggregate saving is

answer

$20

question

Refer to figure 8.6. If aggregate income is $1,000 aggregate consumption is

answer

$960

question

As interest rates fall, spending decreases

answer

FALSE

question

An expected permanent tax increase is likely to increase current spending

answer

FALSE

question

The marginal propensity to consume is the change in consumption per change in income

answer

TRUE

question

If the marginal propensity to consume is 0.8, the marginal propensity to save is 8

answer

False

question

The Tiny Tots Toy Company manufactures sleds, but sold only 8,000 sleds. In 2012 tiny tots change in inventory was

answer

2,000 sleds

question

The Jackson stool Company manufactures only tools. In 2012 Jackson Tools manufactures 20,000 tools but sold 21,000 tools. In 2012 Jackson Tools inventory was

answer

-1000 tools

question

Which of the following is NOT considered investment?

answer

The purchase of government bonds

question

Which of the following is an investment?

answer

the purchase of a new printing press by a business

question

Over which component of investment do firms have the least amount of control?

answer

changes in inventories

question

Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is

answer

-$20 billion

question

Assume that in Jabara, planned investment is $30 billion, but in actual investment is $45 billion. Unplanned inventory investment is

answer

-$20 billion

question

Assume that in Jabara, planned investment is $30 billion, but actual investment is $45 billion. Unplanned inventory investment is

answer

$15 billion

question

If unplanned business investment is $20 million and planned investment is $20 million, then actual investment is

answer

40 million

question

If 2012 Happyland's planned investment was $90 billion and its actual investment was $140 billion. In 2012 Happyland's unplanned inventory change was

answer

$50 billion

question

If planned investment exceeds actual investment,

answer

there will be a decline in inventories

question

If Inventory investment is higher than firms planned

answer

actual investment is greater than planned investment

question

Refer to figure 8.7. In Azora, planned investment does not vary with income. Azora's planned investment function is represented by

answer

Panel B

question

Refer to figure 8.7. In Farley, planned investment varied inversely with income. Farley's planned investment function is represented by

answer

Panel D

question

Without the government of the foreign sector in the income expenditure model, planned aggregate expenditure equals

answer

Consumption plus planned investment

question

answer

65; 98

question

Related to economics practice on p. 464: early results from the Save More Tomorrow retirement plans have shown ______ in the savings rates of the enrolled

answer

Dramatic increases

question

If actual investment is greater than planned investment, unplanned inventories decline

answer

FALSE

question

Firms react to unplanned inventory investment by increasing output

answer

FALSE

question

Firms react to negative inventory investment by increasing output

answer

TRUE

question

answer

TRUE

question

If planned investment is perfectly unresponsive to changes in the interest rate, the planned investment schedule

answer

Is vertical

question

If planned investment is perfectly responsive to changes in the interest rate the planned investment schedule

answer

Is horizontal

question

Refer to figure 8.8. The amount of planned investment increases if the interest rate

answer

Drops from 8% to 4%

question

Refer to figure 8.8. The amount of planned investment decreases if the interest rate

answer

Rises from 4% to 8%

question

Refer to table 8.3. If the interest rate dropped from 15% to 6%, planned investment would _____ by $____ billion

answer

Increase; 120

question

Keynes used the phrase animal spirits to describe the feelings of entrepreneurs, and he argued that these feelings affect investment decisions

answer

True

question

In macroeconomics, equilibrium is defined as that point at which

answer

planned aggregate expenditure equals aggregate output

question

The economy can be in equilibrium if, and only if,

answer

planned investment equals actual investment

question

If aggregate output is greater than planned spending, then

answer

unplanned inventory investment is positive

question

If unplanned inventory investment is positive, then

answer

planned aggregate spending must be less than aggregate output

question

If aggregate output equals planned aggregate expenditure, then

answer

unplanned inventory investment is zero

question

Refer to table 8.4. At an aggregate output level of $400 billion, planned expenditure equals

answer

$550 billion

question

Refer to table 8.4. At an aggregate output level of $800 billion, aggregate saving

answer

Equals 50 billion

question

Refer to table 8.4. At an aggregate output level of $200 billion, the unplanned inventory change is

answer

-$200 billion

question

Refer to table 8.4. At an aggregate output level of $600 billion, the unplanned inventory change is

answer

-$100 billion

question

Refer to table 8.4. If aggregate output equals _____ there will be a $100 billion unplanned decrease in inventories

answer

$600 billion

question

Refer to table 8.4. The equilibrium level of aggregate output equals

answer

$1,000 billion

question

Refer to table 8.4. Planned saving equals planned investment at an aggregate output level

answer

Of $1,000 billion

question

Refer to table 8.4. Planned investment equals actual investment at

answer

$1,000 billion

question

Refer to Table 8.5. At an aggregate output level of $3,000 million, planned expenditure equals

answer

$3,600

question

Refer to table 8.5. The MPC in this economy is

answer

0.8

question

Refer to table 8.5. At an aggregate output level of $4,000 million, the unplanned inventory change is

answer

-$400 million

question

Refer to table 8.5. At an aggregate output level of $7,000 million, the unplanned inventory change is

answer

question

Refer to table 8.5. If aggregate output equals _____, there will be a $200 million unplanned decrease in inventories

answer

$5,000 million

question

Refer to table 8.5. Which of the following statements is FALSE ?

answer

If aggregate output equals $4,000 million, then aggregate savings equals $1000 million.

question

Refer to table 8.5. Planned saving equals planned investment at an aggregate output level of

answer

$6,000 million

question

Refer to table 8.5. planned investment equals actual investment at

answer

An income level of $6,000 million

question

If C = 100 + 0.8Y and I = 50, then the equilibrium level of income is

answer

750

question

If C = 500 + 0.9y and I = 400, then the equilibrium level of income is

answer

9,000

question

If S = -200 + 0.2Y and I = 100, then the equilibrium level of income is

answer

1,500

question

If C = 1,500 + 0.75y and I = 500, then planned saving equals planned investment at aggregate output level of

answer

8,000

question

Refer to figure 8.9. What is the equation for the aggregate expenditure function (AE)?

answer

AE = 150 + 0.25y

question

Refer to figure 8.9. Equilibrium output equals

answer

200

question

Refer to figure 8.9. At aggregate output level $100 million, there is a

answer

$75 million unplanned decrease in inventories

question

Refer to figure 8.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of s decrease in investment by $20 million?

answer

AE line shifts down, decreasing equilibrium output and equilibrium expenditure

question

Refer to figure 8.10. What is the equation for the aggregate expenditure function (AE)?

answer

AE= 2"0 + 0.8y

question

Refer to figure 8.10. At an aggregate output level of 500 million, there is a

answer

$100 million unplanned decrease in inventories

question

Refer to figure 8.10. At aggregate output level above $1,000 million, there are

answer

Unplanned increases in inventories and output decreases

question

Refer to figure 8.10. At aggregate output level below $1,000 million, there are

answer

Unplanned decreases in inventories and output increases

question

Using the saving/ investment approach to equilibrium, the equilibrium condition can be written as

answer

C + I = C + S

question

Firms react to unplanned inventory reductions by

answer

increasing output

question

Firms react to unplanned increases in inventories by

answer

reducing output

question

Aggregate output will increase if there is an

answer

Unplanned fall in inventories

question

A decrease in planned investment causes

answer

output to decrease, but by a larger amount than the decrease in investment.

question

When aggregate expenditure is greater than aggregate output, there will be an unplanned build up of inventories

answer

FALSE

question

When the is an unplanned draw down of inventories, firms will increase production

answer

TRUE

question

Actual investment equals planned investment plus unplanned changes in inventories

answer

True

question

When the economy is in equilibrium, savings equals planned investment

answer

True

question

If aggregate expenditure decreases, then equilibrium output increases

answer

False

question

Assuming their is no government or foreign sector, the economy will be in equilibrium if, and only if, planned investment equals actual investment

answer

True

question

The ratio of the change in the equilibrium level of output to a change in some autonomous variable is the

answer

multiplier

question

Refer to figure 8.11. The equation for the aggregate expenditure function AEo is

answer

AEo= 50 + 0.75y

question

Refer to figure 8.11. The value of the multiplier is

answer

question

Refer to figure 8.11. A $20 million decrease in autonomous consumption

answer

Changes equilibrium expenditure to $120 million

question

Refer to figure 8.11. If MPC increases to 0.8, equilibrium aggregate output

answer

Increase to $250 million

question

Assuming no government or foreign sector, if the MPC is 0.9, the multiplier is

answer

question

Assuming no government or foreign sector, the formula for the multiplier is

answer

1/MPS

question

Assuming there is no government or foreign sector the formula for the multiplier is

answer

1/(1-MPC)

question

Assuming there is no government or foreign sector, if the multiplier is 10, the MPC is

answer

0.9

question

Assume there is no government or foreign sector. If the MPS is 0.05, the multiplier is

answer

question

Assume there is no government or foreign sector. If the multiplier is 10, a $10 billion increase in planned investment will cause aggregate output to increase by

answer

$100 billion

question

Assume there is no government or foreign sector. If the MPS is 0.2, a $40 billion decrease in planned investment will cause aggregate output to decrease by

answer

$200 billion

question

Assume there is no government or foreign sector. If the multiplier is 4, a $20 billion increase in investment will cause aggregate output to increase by

answer

$80 billion

question

Refer to figure 8.12. What is the equation for aggregate expenditure ae1?

answer

Ae1 = 600 + 0.4y

question

Refer to figure 8.12. Suppose AE1, ae2, and ae3, are parallel. What is the value of Point b?

answer

$900 million

question

Refer to figure 8.12. Suppose ae1, ae2, ae3 are parallel. What is the value of point a?

answer

$450 million

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