Question 1

If aggregate planned expenditure equals GDP,then

Accepted Answer

A)  firms' inventories exceed planned inventories.
B)  firms' inventories equal planned inventories.
C)  firms' inventories are less than planned inventories.
D)  firms' actual investment has no relationship to its planned investment.
E)  firms do not have any inventories.F) B) and E)
G) A) and E)

Question 2

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The equilibrium expenditure is

Accepted Answer

A)  $15 billion.
B)  $30 billion.
C)  $10 billion.
D)  $20 billion.
E)  $25 billion.F) B) and D)
G) C) and E)

Question 3

Which of the following affects the magnitude of the multiplier?
i.Marginal propensity to consume
ii.Marginal propensity to invest
iii.Marginal tax rate

Accepted Answer

A)  i only
B)  ii only
C)  iii only
D)  i and iii
E)  i,ii and iiiF) C) and D)
G) B) and D)

Question 4

In Germany,expected future income increased during 2014.This increase led to

Accepted Answer

A)  a downward shift of the consumption function.
B)  no movement along the consumption function and no shift of the consumption function.
C)  a movement upward along the consumption function.
D)  a movement downward along the consumption function.
E)  an upward shift of the consumption function.F) D) and E)
G) B) and D)

Question 5

-The table above gives data for the nation of Mosh.In Mosh,equilibrium expenditure equals

Accepted Answer

A)  $4 trillion.
B)  $9 trillion.
C)  $6 trillion.
D)  $10 trillion.
E)  $7 trillion.F) A) and E)
G) A) and D)

Question 6

-The above table has data from the nation of Atlantica.Based on these data,when disposable income equals 8.0 there is

Accepted Answer

A)  savings of $0.5 trillion.
B)  dissavings of $15.5 trillion.
C)  dissavings of $7.5 trillion.
D)  dissavings of $0.5 trillion.
E)  savings of $15.5 trillion.F) A) and D)
G) A) and C)

Question 7

-The above table has data from the nation of Media.Based on these data,the marginal propensity to consume is

Accepted Answer

A)  0.67.
B)  1.33.
C)  0.25.
D)  0.75.
E)  1.50.F) A) and E)
G) A) and C)

Question 8

The quantity of Australian exports is determined by

Accepted Answer

A)  political factors.
B)  Australian aggregate expenditure.
C)  Australian consumption expenditure.
D)  Australian real GDP.
E)  aggregate incomes in the rest of the world.F) B) and E)
G) B) and C)

Question 9

When the AE line lies above the 45° line,

Accepted Answer

A)  there are unplanned increases in inventories.
B)  there are unplanned decreases in inventories.
C)  real GDP exceeds aggregate planned expenditure.
D)  aggregate planned expenditure is less than real GDP.
E)  the price level is rising.F) A) and D)
G) C) and D)

Question 10

If the MPC is 0.6 and there are no imports or income taxes,the multiplier is

Accepted Answer

A)  1.7.
B)  6.
C)  0.4.
D)  0.6.
E)  2.5.F) All of the above
G) A) and B)

Question 11

________ can trigger a recession.

Accepted Answer

A)  Equality between aggregate expenditure and real GDP
B)  An increase in the expenditure multiplier
C)  An increase in autonomous expenditure
D)  A decrease in autonomous expenditure
E)  An increase in induced expenditureF) D) and E)
G) B) and D)

Question 12

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The marginal propensity to consume in Syldavia is equal to

Accepted Answer

A)  5.00.
B)  0.20.
C)  0.40.
D)  0.80.
E)  0.75.F) C) and D)
G) A) and D)

Question 13

During 2015,a country reports aggregate planned expenditures of $5 trillion and an actual real GDP of $4 trillion.During 2015,

Accepted Answer

A)  inventories are unaffected.
B)  actual aggregate expenditures are greater than real GDP.
C)  actual aggregate expenditures are less than real GDP.
D)  inventories are less than planned.
E)  inventories are greater than planned.F) A) and B)
G) A) and E)

Question 14

-The above table gives data for the nation of Mouseville.There are no imports into or exports from Mouseville.Unplanned inventory changes equal $50 billion when real GDP equals

Accepted Answer

A)  $900 billion.
B)  $300 billion.
C)  $700 billion.
D)  $500 billion.
E)  $800 billion.F) A) and B)
G) None of the above

Question 15

An increase in the price level shifts the AE curve

Accepted Answer

A)  downward and does not shift the AD curve.
B)  downward and shifts the AD curve rightward.
C)  upward and shifts the AD curve rightward.
D)  downward and shifts the AD curve leftward.
E)  upward and shifts the AD curve leftward.F) C) and D)
G) A) and E) A

Question 16

-The table above gives data for the nation of Mosh.If real GDP is $6 trillion,then

Accepted Answer

A)  firms decrease production because inventories exceed their target levels.
B)  firms increase production because inventories exceed their target levels.
C)  firms increase production because inventories are less than their target levels.
D)  the economy has reached equilibrium and no change in production will occur.
E)  We need more information to determine whether firms increase,decrease or do not change their production.F) A) and E)
G) C) and E)

Question 17

-The above table gives data for the nation of Mojo.At what level of real GDP is the unplanned inventory change equal to $1.75 trillion?

Accepted Answer

A)  $6.0 trillion
B)  $0.0 trillion
C)  $12.0 trillion
D)  $3.0 trillion
E)  $9.0 trillionF) C) and D)
G) A) and B) E

Question 18

If the price level increases,the AE curve shifts

Accepted Answer

A)  upward and there is a movement along the AD curve.
B)  upward and the AD curve shifts leftward.
C)  downward and there is a movement along the AD curve.
D)  upward and the AD curve shifts rightward.
E)  downward and the AD curve shifts rightward.F) D) and E)
G) A) and D)

Question 19

Disposable income equals aggregate income

Accepted Answer

A)  minus net taxes.
B)  plus saving minus net taxes.
C)  plus net taxes.
D)  minus saving.
E)  minus saving and minus net taxes.F) C) and D)
G) A) and B)

Question 20

The multiplier means that an increase in investment results in ________ aggregate expenditure that is ________ the increase in investment.

Accepted Answer

A)  decreased;larger than
B)  increased;smaller than
C)  decreased;smaller than
D)  increased;larger than
E)  increased;the same size asF) All of the above
G) C) and E) D

Exam 12: Aggregate Expenditure Multiplier

If aggregate planned expenditure equals GDP,then

Correct AnswerverifiedShow Answer

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The equilibrium expenditure is

Correct AnswerverifiedShow Answer

Which of the following affects the magnitude of the multiplier? i.Marginal propensity to consume ii.Marginal propensity to invest iii.Marginal tax rate

Correct AnswerverifiedShow Answer

In Germany,expected future income increased during 2014.This increase led to

Correct AnswerverifiedShow Answer

-The table above gives data for the nation of Mosh.In Mosh,equilibrium expenditure equals

Correct AnswerverifiedShow Answer

-The above table has data from the nation of Atlantica.Based on these data,when disposable income equals 8.0 there is

Correct AnswerverifiedShow Answer

-The above table has data from the nation of Media.Based on these data,the marginal propensity to consume is

Correct AnswerverifiedShow Answer

The quantity of Australian exports is determined by

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When the AE line lies above the 45° line,

Correct AnswerverifiedShow Answer

If the MPC is 0.6 and there are no imports or income taxes,the multiplier is

Correct AnswerverifiedShow Answer

________ can trigger a recession.

Correct AnswerverifiedShow Answer

-The above table contains information about the nation of Syldavia.There are no income taxes or imports in this nation.The marginal propensity to consume in Syldavia is equal to

Correct AnswerverifiedShow Answer

During 2015,a country reports aggregate planned expenditures of $5 trillion and an actual real GDP of $4 trillion.During 2015,

Correct AnswerverifiedShow Answer

-The above table gives data for the nation of Mouseville.There are no imports into or exports from Mouseville.Unplanned inventory changes equal $50 billion when real GDP equals

Correct AnswerverifiedShow Answer

An increase in the price level shifts the AE curve

Correct AnswerverifiedA

-The table above gives data for the nation of Mosh.If real GDP is $6 trillion,then

Correct AnswerverifiedShow Answer

-The above table gives data for the nation of Mojo.At what level of real GDP is the unplanned inventory change equal to $1.75 trillion?

Correct AnswerverifiedE

If the price level increases,the AE curve shifts

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Disposable income equals aggregate income

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The multiplier means that an increase in investment results in ________ aggregate expenditure that is ________ the increase in investment.

Correct AnswerverifiedD

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A

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E

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The multiplier means that an increase in investment results in aggregate expenditure that is the increase in investment.

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D