Question 1

An unplanned decrease in inventories results in

Accepted Answer

A)  a decrease in planned investment.
B)  an increase in planned investment.
C)  actual investment that is greater than planned investment.
D)  actual investment that is less than planned investment.
E)  an increase in unemployment.F) All of the above
G) A) and D)

Question 2

Figure 8.1  Alt text for Figure 8.1: In figure 8.1,a graph comparing real GDP and real aggregate expenditure.
Long description for Figure 8.1: The x-axis is labelled,real GDP,Y (trillions of 2002 dollars) .The y-axis is labelled,real aggregate expenditure,AE (trillions of 2002 dollars) .A line,labelled Y = AE,originates at the vertex and slopes up to the top right corner.Another line,labelled AE1,begins a little less than half way along the x-axis and slopes up to the end of the x-axis.Both these lines intersect at point K,approximately three quarters of the way along both lines.Point J is plotted a little less than half way along the line AE1,to the left of point K.Point L is plotted close to the right end of the line AE1,to the right of point K.
-Refer to Figure 8.1.If the economy is at point L,what will happen?

Accepted Answer

A)  Inventories have fallen below their desired level,and firms decrease production.
B)  Inventories have fallen below their desired level,and firms increase production.
C)  Inventories have risen above their desired level,and firms decrease production.
D)  Inventories have risen above their desired level,and firms increase production.E) None of the above
F) All of the above

Question 3

If the multiplier is 10,the marginal propensity to consume must be 0.1.

Accepted Answer

A) True 
 B)False

Question 4

C = 2,550 + (MPC)Y
I = 800
G = 1,100
NX = 50
If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Accepted Answer

Y = C + I + G + NX 11,250 = 2,...

Question 5

What are inventories? What usually happens to inventories at the beginning of a recession,and what usually happens to inventories at the beginning of an expansion?

Accepted Answer

Inventories are goods that hav...

Question 6

Table 8.2
 
-Refer to Table 8.2.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

Accepted Answer

The macroeconomic equilibrium is determi...

Question 7

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Accepted Answer

A)  0.2
B)  0.8
C)  1.25
D)  5
E)  10F) B) and D)
G) B) and E)

Question 8

An increase in the price level in Canada will reduce imports and increase exports.

Accepted Answer

A) True 
 B)False

Question 9

The change in consumption divided by the change in disposable income is equal to

Accepted Answer

A)  the slope of the consumption function.
B)  aggregate expenditure.
C)  household saving.
D)  real GDP.
E)  marginal propensity to save.F) A) and D)
G) All of the above

Question 10

Which of the following is most likely to decrease due to a recession?

Accepted Answer

A)  households' purchases of snowmobiles
B)  households' purchases of winter clothing
C)  firms' purchases of printer paper
D)  government purchases of computer equipment
E)  military spendingF) C) and D)
G) A) and B)

Question 11

Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP

Accepted Answer

A)  in the 1950s.
B)  during the Great Depression.
C)  at the end of the Civil War.
D)  during the Industrial Revolution.
E)  during the Great Recession.F) None of the above
G) A) and E)

Question 12

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

Accepted Answer

A)  the MPC is 0.2.
B)  the MPC is 0.5.
C)  the MPC is 0.75.
D)  the MPC is 0.8.
E)  the MPC is 0.9.F) B) and E)
G) A) and D)

Question 13

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Accepted Answer

A)  consumer confidence
B)  the natural rate of unemployment
C)  the inflation rate
D)  the length of a business cycle
E)  income taxationF) D) and E)
G) A) and B)

Question 14

In 2007-2008,exports from Canada to the United States fell dramatically.Based on the multiplier effect,we would expect

Accepted Answer

A)  the economy to shrink by less than the drop in exports.
B)  the economy to grow by less than the drop in exports.
C)  the economy to grow by more than the drop in exports.
D)  the economy to shrink by more than the drop in exports.
E)  the economy to be unaffected due to a corresponding drop in imports.F) A) and D)
G) C) and D)

Question 15

If the marginal propensity to save is 0.4,the multiplier is 2.5.

Accepted Answer

A) True 
 B)False

Question 16

A decrease in consumer confidence can put your job at risk if

Accepted Answer

A)  aggregate expenditures fall.
B)  consumers expect their incomes to rise in the future.
C)  aggregate expenditures rise.
D)  consumers expect firms to increase investment in the future.
E)  your firm produces inferior goods.F) A) and D)
G) C) and E)

Question 17

Firms in a small economy anticipated that inventories would grow over the past year by $500,000.Over that year,inventories actually grew by only $400,000.This implies that

Accepted Answer

A)  aggregate expenditure that year was greater than GDP that year.
B)  there was an unplanned increase in inventories that year.
C)  there was a planned increase in inventories that year.
D)  aggregate expenditure that year was equal to GDP that year.
E)  there was a rise in the unemployment rate.F) None of the above
G) B) and C)

Question 18

What impact does a higher price level have on interest rates,wealth,and investment spending?

Accepted Answer

A higher price level reduces t...

Question 19

When aggregate expenditure is more than GDP,which of the following is true?

Accepted Answer

A)  There was an unplanned decrease in inventories.
B)  Firms spent less on capital goods than they planned.
C)  Households bought fewer new homes than they planned.
D)  All of the above must be true when aggregate expenditure is more than GDP.E) A) and C)
F) A) and B)

Question 20

Increases in consumer confidence

Accepted Answer

A)  decrease consumption in direct proportion to the increase in consumer confidence.
B)  directly increase consumption.
C)  tend to increase consumption spending.
D)  increase consumption only when the overall price level decreases in the economy.
E)  tend to increase household saving.F) None of the above
G) A) and B)

Exam 8: Aggregate Expenditure and Output in the Short Run

Which of the following is most likely to decrease due to a recession?

Correct Answer
verified

A decrease in consumer confidence can put your job at risk if

Correct Answer
verified

When aggregate expenditure is more than GDP,which of the following is true?

Correct Answer
verified

Increases in consumer confidence

Correct Answer
verified

Correct Answer
verified

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

Correct Answer
verified

Table 8.2 -Refer to Table 8.2.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

Correct Answer
verified
The macroeconomic equilibrium is determi...
View Answer

If the multiplier is 10,the marginal propensity to consume must be 0.1.

Correct Answer
verified

In 2007-2008,exports from Canada to the United States fell dramatically.Based on the multiplier effect,we would expect

Correct Answer
verified

If the marginal propensity to save is 0.4,the multiplier is 2.5.

Correct Answer
verified

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Correct Answer
verified
Y = C + I + G + NX 11,250 = 2,...
View Answer

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Correct Answer
verified

The change in consumption divided by the change in disposable income is equal to

Correct Answer
verified

An increase in the price level in Canada will reduce imports and increase exports.

Correct Answer
verified

What are inventories? What usually happens to inventories at the beginning of a recession,and what usually happens to inventories at the beginning of an expansion?

Correct Answer
verified
Inventories are goods that hav...
View Answer

Firms in a small economy anticipated that inventories would grow over the past year by $500,000.Over that year,inventories actually grew by only $400,000.This implies that

Correct Answer
verified

Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP

Correct Answer
verified

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Correct Answer
verified

An unplanned decrease in inventories results in

Correct Answer
verified

What impact does a higher price level have on interest rates,wealth,and investment spending?

Correct Answer
verified
A higher price level reduces t...
View Answer

Exam 8: Aggregate Expenditure and Output in the Short Run

Which of the following is most likely to decrease due to a recession?

Correct AnswerverifiedShow Answer

A decrease in consumer confidence can put your job at risk if

Correct AnswerverifiedShow Answer

When aggregate expenditure is more than GDP,which of the following is true?

Correct AnswerverifiedShow Answer

Increases in consumer confidence

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP,then

Correct AnswerverifiedShow Answer

Table 8.2 -Refer to Table 8.2.Using the table above,compute aggregate expenditure and identify the macroeconomic equilibrium.

Correct AnswerverifiedThe macroeconomic equilibrium is determi...View AnswerShow Answer

If the multiplier is 10,the marginal propensity to consume must be 0.1.

Correct AnswerverifiedShow Answer

In 2007-2008,exports from Canada to the United States fell dramatically.Based on the multiplier effect,we would expect

Correct AnswerverifiedShow Answer

If the marginal propensity to save is 0.4,the multiplier is 2.5.

Correct AnswerverifiedShow Answer

C = 2,550 + (MPC)Y I = 800 G = 1,100 NX = 50 If the equilibrium level of GDP is $11,250,using the equations for C,I,G,and NX shown above,find the value of the marginal propensity to consume.

Correct AnswerverifiedY = C + I + G + NX 11,250 = 2,...View AnswerShow Answer

A decrease in ________ can put your job at risk if aggregate expenditures fall.

Correct AnswerverifiedShow Answer

The change in consumption divided by the change in disposable income is equal to

Correct AnswerverifiedShow Answer

An increase in the price level in Canada will reduce imports and increase exports.

Correct AnswerverifiedShow Answer

What are inventories? What usually happens to inventories at the beginning of a recession,and what usually happens to inventories at the beginning of an expansion?

Correct AnswerverifiedInventories are goods that hav...View AnswerShow Answer

Firms in a small economy anticipated that inventories would grow over the past year by $500,000.Over that year,inventories actually grew by only $400,000.This implies that

Correct AnswerverifiedShow Answer

Economists first began studying the relationship between changes in aggregate expenditures and changes in GDP

Correct AnswerverifiedShow Answer

If the consumption function is defined as C = 7,250 + 0.8Y,what is the value of the multiplier?

Correct AnswerverifiedShow Answer

An unplanned decrease in inventories results in

Correct AnswerverifiedShow Answer

What impact does a higher price level have on interest rates,wealth,and investment spending?

Correct AnswerverifiedA higher price level reduces t...View AnswerShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
The macroeconomic equilibrium is determi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Y = C + I + G + NX 11,250 = 2,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Inventories are goods that hav...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A higher price level reduces t...
View Answer