Question 1

The consumption function shows

Accepted Answer

A)  the amount of consumption at each level of aggregate demand, holding all other determinants constant.
B)  the amount of consumption at each price level, holding all other determinants constant.
C)  the amount of consumption at each level of disposable income, holding all other determinants constant.
D)  the amount of consumption at each wage rate holding all other determinants constant.E) A) and B)
F) A) and C)

Question 2

Suppose at each price level, autonomous aggregate expenditures increase by $50 billion.As a result, the aggregate expenditures curve shifts

Accepted Answer

A)  downward at each price level and results in a leftward shift in aggregate demand.
B)  upward at each price level and results in a rightward shift in aggregate demand.
C)  downward at each price level and results in a movement down along a given aggregate demand.
D)  upward at each price level and results in a movement up along a given aggregate demand.E) A) and B)
F) None of the above

Question 3

The saving function expresses the relationship between

Accepted Answer

A)  personal saving and consumption.
B)  gross domestic income and saving.
C)  disposable personal income and saving.
D)  wage income and personal saving.E) B) and C)
F) C) and D)

Question 4

Use the following to answer questions 
Exhibit: Consumption Functions
Figure 13-3 1.What will cause an upward shift to curve C2? A) an increase in the amount consumed as disposable personal income increases. B) an increase in consumption at any level of disposable personal income C) an increase in the price level D) an increase in transfer payments" class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Consumption Functions) 
Suppose the consumption function is given by curve C1.What will cause an upward shift to curve C2?

Accepted Answer

A)  an increase in the amount consumed as disposable personal income increases.
B)  an increase in consumption at any level of disposable personal income
C)  an increase in the price level
D)  an increase in transfer paymentsE) B) and D)
F) All of the above

Question 5

An increase in the price level, all other things unchanged, shifts the aggregate expenditures
curve upwards.

Accepted Answer

A) True 
 B)False

Question 6

Personal saving equals

Accepted Answer

A)  gross domestic income − consumption.
B)  personal disposable income − consumption.
C)  gross domestic product − consumption.
D)  personal disposable income − taxes − consumption.E) C) and D)
F) None of the above

Question 7

Use the following to answer questions 
Exhibit: Real GDP and the Multiplier
 
-(Exhibit: Real GDP and the Multiplier) 
What is the equilibrium level of GDP?

Accepted Answer

A)  $6,000 billion
B)  $6,500 billion
C)  $7,000 billion
D)  $7,500 billionE) All of the above
F) C) and D)

Question 8

Use the following to answer questions 
Exhibit: Consumption Functions
Figure 13-3 1.Which of the following will cause a downward shift to curve C1? A) a stock market crash that decreases household wealth B) a decrease in price level C) an increase in withholding tax rate D) rising optimism about economic conditions" class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Consumption Functions) 
Suppose the consumption function is given by curve C1.Which of the following will cause a downward shift to curve C1?

Accepted Answer

A)  a stock market crash that decreases household wealth
B)  a decrease in price level
C)  an increase in withholding tax rate
D)  rising optimism about economic conditionsE) A) and D)
F) A) and C)

Question 9

Use the following to answer questions 
Exhibit: Aggregate Expenditures and Real GDP 1 P = Planned Investment.Suppose AE = C + IP, and IP is autonomous.If potential real GDP is $7,000 billion, what must happen to planned investment for the economy to reach its potential real GDP? A) IP must be decreased by $1,000 billion B) IP must be increased by $1,000 billion C) IP must be decreased by $500 billion D) IP must be increased by $500 billion" class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Aggregate Expenditures and Real GDP 1) 
Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment.Suppose AE = C + IP, and IP is autonomous.If potential real GDP is $7,000 billion, what must happen to planned investment for the economy to reach its potential real GDP?

Accepted Answer

A)  IP must be decreased by $1,000 billion
B)  IP must be increased by $1,000 billion
C)  IP must be decreased by $500 billion
D)  IP must be increased by $500 billionE) A) and B)
F) A) and C)

Question 10

The aggregate demand curve can be derived from the aggregate expenditures curves by

Accepted Answer

A)  changing the income level and observing the equilibrium real GDP associated at a given price level.
B)  changing the price level and observing the size of the vertical shift in the aggregate expenditures curve.
C)  changing the price level and observing the equilibrium real GDP associated with each price level.
D)  changing the autonomous expenditure and observing the equilibrium real GDP associated at a given price level.E) B) and C)
F) A) and D)

Question 11

The multiplier effect is triggered by a shift in the aggregate expenditures curve.

Accepted Answer

A) True 
 B)False

Question 12

The multiplier effect indicates that

Accepted Answer

A)  the aggregate demand curve is downward sloping.
B)  a change in any autonomous component of aggregate expenditure is buffered by the multiplier effect
C)  a change in income causes a magnified change in investment.
D)  a change in any autonomous component of aggregate expenditure brings about a magnified change in income.E) B) and D)
F) None of the above

Question 13

Let AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment,
G =Government Purchases.Consider a simple aggregate expenditures model, where
AE = C + IP + G, and all components of aggregate expenditures except consumption are autonomous.In this model, the multiplier is found using the formula

Accepted Answer

A)  ∆Y* ÷ initial ∆AE where Y* = equilibrium real GDP by the ∆ = change in, AE = aggregate expenditures.
B)  ∆AE ÷ ∆Y*.
C)  ∆Y* *MPC where MPC = marginal propensity to consume.
D)  1 ÷ MPC.E) A) and B)
F) B) and C)

Question 14

Use the following to answer questions 
Exhibit: Aggregate Expenditures and Real GDP 1 P = Planned Investment.Suppose AE = C + IP, and IP is autonomous.At a real GDP of $5,000 billion, A) planned investment is greater than actual investment. B) planned investment equals actual investment. C) planned investment is less than actual investment. D) there will be no unplanned investment." class="answers-bank-image d-inline" rel="preload" >
-(Exhibit: Aggregate Expenditures and Real GDP 1) 
Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment.Suppose AE = C + IP, and IP is autonomous.At a real GDP of $5,000 billion,

Accepted Answer

A)  planned investment is greater than actual investment.
B)  planned investment equals actual investment.
C)  planned investment is less than actual investment.
D)  there will be no unplanned investment.E) B) and D)
F) A) and B)

Question 15

Use the following to answer questions 
Exhibit: Income and Consumption
 
-(Exhibit: Income and Consumption) 
Calculate the marginal propensity to consume based on the information in the table.

Accepted Answer

A)  0.00
B)  0.20
C)  0.80
D)  1.40E) None of the above
F) B) and C)

Question 16

In the aggregate expenditures model, in equilibrium,

Accepted Answer

A)  consumption equals investment.
B)  unplanned inventory changes equal zero.
C)  inventory changes equal investment.
D)  aggregate expenditures equal consumption.E) A) and B)
F) A) and C)

Question 17

In the aggregate expenditures model, if aggregate expenditures are less than real GDP,

Accepted Answer

A)  actual real output is less than equilibrium real output.
B)  employment increases.
C)  aggregate output increases.
D)  there will be unplanned increases in inventories.E) A) and C)
F) All of the above

Question 18

The consumption function expresses the

Accepted Answer

A)  purposes of consumption.
B)  relationship between consumption and prices.
C)  relationship between consumption and saving.
D)  relationship between consumption and disposable personal income.E) All of the above
F) C) and D)

Question 19

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, suppose when autonomous aggregate expenditures rise by $500 billion, equilibrium real GDP increases by $2,500 billion.Which of the following statements is true?

Accepted Answer

A)  The MPS = 0.8.
B)  The MPC = 0.2
C)  The MPS = 0.2.
D)  The MPC = 5.E) B) and D)
F) B) and C)

Question 20

Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption.If the consumption function is
C = $500 + 0.8Y, planned investment = $200, government purchases = $300,
Net exports = $100, and real GDP = $1,000, what is the amount of aggregate expenditures?

Accepted Answer

A)  $800
B)  $1,000
C)  $1,100
D)  $1,900E) All of the above
F) None of the above

Exam 13: Consumption and the Aggregate Expenditures Model

In the aggregate expenditures model, in equilibrium,

Correct Answer
verified

The multiplier effect indicates that

Correct Answer
verified

Personal saving equals

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions Exhibit: Consumption Functions Figure 13-3 -(Exhibit: Consumption Functions) Suppose the consumption function is given by curve C₁.What will cause an upward shift to curve C₂?

Correct Answer
verified

The consumption function shows

Correct Answer
verified

Use the following to answer questions Exhibit: Real GDP and the Multiplier -(Exhibit: Real GDP and the Multiplier) What is the equilibrium level of GDP?

Correct Answer
verified

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, suppose when autonomous aggregate expenditures rise by $500 billion, equilibrium real GDP increases by $2,500 billion.Which of the following statements is true?

Correct Answer
verified

Use the following to answer questions Exhibit: Aggregate Expenditures and Real GDP 1 -(Exhibit: Aggregate Expenditures and Real GDP 1) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment.Suppose AE = C + I_P, and I_P is autonomous.At a real GDP of $5,000 billion,

Correct Answer
verified

An increase in the price level, all other things unchanged, shifts the aggregate expenditures curve upwards.

Correct Answer
verified

Suppose at each price level, autonomous aggregate expenditures increase by $50 billion.As a result, the aggregate expenditures curve shifts

Correct Answer
verified

The saving function expresses the relationship between

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions Exhibit: Consumption Functions Figure 13-3 -(Exhibit: Consumption Functions) Suppose the consumption function is given by curve C₁.Which of the following will cause a downward shift to curve C₁?

Correct Answer
verified

The aggregate demand curve can be derived from the aggregate expenditures curves by

Correct Answer
verified

The multiplier effect is triggered by a shift in the aggregate expenditures curve.

Correct Answer
verified

The consumption function expresses the

Correct Answer
verified

Use the following to answer questions Exhibit: Income and Consumption -(Exhibit: Income and Consumption) Calculate the marginal propensity to consume based on the information in the table.

Correct Answer
verified

Correct Answer
verified

In the aggregate expenditures model, if aggregate expenditures are less than real GDP,

Correct Answer
verified

Exam 13: Consumption and the Aggregate Expenditures Model

In the aggregate expenditures model, in equilibrium,

Correct AnswerverifiedShow Answer

The multiplier effect indicates that

Correct AnswerverifiedShow Answer

Personal saving equals

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the following to answer questions Exhibit: Consumption Functions Figure 13-3 -(Exhibit: Consumption Functions) Suppose the consumption function is given by curve C1.What will cause an upward shift to curve C2?

Correct AnswerverifiedShow Answer

The consumption function shows

Correct AnswerverifiedShow Answer

Use the following to answer questions Exhibit: Real GDP and the Multiplier -(Exhibit: Real GDP and the Multiplier) What is the equilibrium level of GDP?

Correct AnswerverifiedShow Answer

In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption, suppose when autonomous aggregate expenditures rise by $500 billion, equilibrium real GDP increases by $2,500 billion.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Use the following to answer questions Exhibit: Aggregate Expenditures and Real GDP 1 -(Exhibit: Aggregate Expenditures and Real GDP 1) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment.Suppose AE = C + IP, and IP is autonomous.At a real GDP of $5,000 billion,

Correct AnswerverifiedShow Answer

An increase in the price level, all other things unchanged, shifts the aggregate expenditures curve upwards.

Correct AnswerverifiedShow Answer

Suppose at each price level, autonomous aggregate expenditures increase by $50 billion.As a result, the aggregate expenditures curve shifts

Correct AnswerverifiedShow Answer

The saving function expresses the relationship between

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the following to answer questions Exhibit: Consumption Functions Figure 13-3 -(Exhibit: Consumption Functions) Suppose the consumption function is given by curve C1.Which of the following will cause a downward shift to curve C1?

Correct AnswerverifiedShow Answer

The aggregate demand curve can be derived from the aggregate expenditures curves by

Correct AnswerverifiedShow Answer

The multiplier effect is triggered by a shift in the aggregate expenditures curve.

Correct AnswerverifiedShow Answer

The consumption function expresses the

Correct AnswerverifiedShow Answer

Use the following to answer questions Exhibit: Income and Consumption -(Exhibit: Income and Consumption) Calculate the marginal propensity to consume based on the information in the table.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the aggregate expenditures model, if aggregate expenditures are less than real GDP,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions Exhibit: Consumption Functions Figure 13-3 -(Exhibit: Consumption Functions) Suppose the consumption function is given by curve C₁.What will cause an upward shift to curve C₂?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions Exhibit: Consumption Functions Figure 13-3 -(Exhibit: Consumption Functions) Suppose the consumption function is given by curve C₁.Which of the following will cause a downward shift to curve C₁?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified