Question 1

If planned investment is equal to actual investment,then aggregate expenditure is equal to GDP.

Accepted Answer

A) True 
 B)False

Question 2

When Jack's income increases by $1,000,he spends an additional $850 dollars.This implies that his marginal propensity to consume is 0.85.

Accepted Answer

A) True 
 B)False

Question 3

From 1983-2017,net exports for the United States

Accepted Answer

A)  grew and then declined.
B)  were negative.
C)  were positive.
D)  increased as exports rose above imports.E) B) and C)
F) B) and D)

Question 4

________ describes the relationship between consumption spending and disposable income.

Accepted Answer

A)  Household wealth
B)  The liquidity trap
C)  The consumption function
D)  The paradox of thriftE) A) and B)
F) A) and C)

Question 5

The ________ model focuses on the relationship between total spending and real GDP in the short run,assuming the price level is constant.

Accepted Answer

A)  supply and demand
B)  national income
C)  aggregate expenditure
D)  business cycleE) B) and D)
F) A) and B)

Question 6

Consumer spending ________ and investment spending ________.

Accepted Answer

A)  is very volatile and subject to fluctuations; follows a smooth trend
B)  follows a smooth trend; is more volatile and subject to fluctuations
C)  follows a smooth trend; is the most stable component of aggregate expenditure
D)  is very erratic; is also erratic,but less erratic than consumer spendingE) A) and C)
F) A) and B)

Question 7

The sum of the marginal propensity to consume and the marginal propensity to save is always equal to

Accepted Answer

A)  zero.
B)  0.5.
C)  1.
D)  100.E) A) and B)
F) All of the above

Question 8

If firms find that consumers are purchasing more than expected,which of the following would you expect?

Accepted Answer

A)  Aggregate expenditure will likely be greater than GDP.
B)  Aggregate expenditure will likely be less than GDP.
C)  The economy will adjust to macroeconomic equilibrium as inventories rise,and production and employment fall.
D)  The economy will adjust to macroeconomic equilibrium as inventories fall,and production and employment fall.E) None of the above
F) A) and B)

Question 9

The Apple iPhone is sold in a box labeled "Made in China." A study by economists at the Asian Development Bank found the value of the iPhone components China ________ U.S.firms is ________ the value of assembling the iPhones in Chinese factories.

Accepted Answer

A)  exports to; equal to
B)  exports to; greater than
C)  imports from; less than
D)  imports from; greater thanE) All of the above
F) A) and B)

Question 10

An increase in the real interest rate will

Accepted Answer

A)  cause consumers to spend more and save less.
B)  most likely lower consumers' purchases of durable goods.
C)  most likely lower the reward to savings.
D)  most likely lower the cost of borrowing.E) A) and B)
F) A) and C)

Question 11

If economists forecast an increase in aggregate expenditure,which of the following is likely to occur?

Accepted Answer

A)  GDP will rise.
B)  GDP will fall.
C)  Wages will fall.
D)  Inventories will rise.E) A) and D)
F) All of the above

Question 12

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is -$2 million,government purchases are $10 million,and net export spending is $2 million.What is GDP?

Accepted Answer

A)  $15 million
B)  $23 million
C)  $25 million
D)  $27 millionE) A) and D)
F) A) and C)

Question 13

The recession of 2007-2009 resulted in falling revenues and large layoffs for a vast number of companies.By 2017,unemployment ________ and spending ________ in the economy.

Accepted Answer

A)  fell; decreased
B)  rose; increased
C)  fell; increased
D)  rose; decreasedE) B) and D)
F) C) and D)

Question 14

Planned aggregate expenditure is equal to

Accepted Answer

A)  consumption spending only.
B)  consumption spending plus planned investment spending.
C)  planned investment spending only.
D)  consumption spending plus planned investment spending plus government purchases plus net exports.E) B) and D)
F) None of the above

Question 15

If the marginal propensity to consume is 0.6,the marginal propensity to save is

Accepted Answer

A)  0.4.
B)  0.6.
C)  1.
D)  1.5.E) A) and B)
F) A) and C)

Question 16

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) A) and C)
F) B) and C)

Question 17

Figure 12-2 
-Refer to Figure 12-2.If the U.S.economy is currently at point K,which of the following could cause it to move to point N?

Accepted Answer

A)  The price level in the United States rises relative to the price level in other countries.
B)  Congress passes investment tax incentives.
C)  The interest rate rises.
D)  Household wealth declines.E) B) and D)
F) All of the above

Question 18

Actual investment spending includes spending by consumers on

Accepted Answer

A)  durable goods.
B)  nondurable goods.
C)  new houses.
D)  services.E) C) and D)
F) B) and C)

Question 19

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

Accepted Answer

A)  0.1
B)  0.9
C)  9
D)  10E) None of the above
F) All of the above

Question 20

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to ________ and real GDP to ________.

Accepted Answer

A)  increase; increase
B)  decrease; increase
C)  increase; decrease
D)  decrease; decreaseE) C) and D)
F) B) and D)

Exam 12: Aggregate Expenditure and Output in the Short Run

Actual investment spending includes spending by consumers on

Correct AnswerverifiedShow Answer

If planned investment is equal to actual investment,then aggregate expenditure is equal to GDP.

Correct AnswerverifiedShow Answer

When Jack's income increases by $1,000,he spends an additional $850 dollars.This implies that his marginal propensity to consume is 0.85.

Correct AnswerverifiedShow Answer

The Apple iPhone is sold in a box labeled "Made in China." A study by economists at the Asian Development Bank found the value of the iPhone components China ________ U.S.firms is ________ the value of assembling the iPhones in Chinese factories.

Correct AnswerverifiedShow Answer

If economists forecast an increase in aggregate expenditure,which of the following is likely to occur?

Correct AnswerverifiedShow Answer

________ describes the relationship between consumption spending and disposable income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The recession of 2007-2009 resulted in falling revenues and large layoffs for a vast number of companies.By 2017,unemployment ________ and spending ________ in the economy.

Correct AnswerverifiedShow Answer

The sum of the marginal propensity to consume and the marginal propensity to save is always equal to

Correct AnswerverifiedShow Answer

Figure 12-2 -Refer to Figure 12-2.If the U.S.economy is currently at point K,which of the following could cause it to move to point N?

Correct AnswerverifiedShow Answer

Planned aggregate expenditure is equal to

Correct AnswerverifiedShow Answer

The ________ model focuses on the relationship between total spending and real GDP in the short run,assuming the price level is constant.

Correct AnswerverifiedShow Answer

Consumer spending ________ and investment spending ________.

Correct AnswerverifiedShow Answer

If the marginal propensity to consume is 0.6,the marginal propensity to save is

Correct AnswerverifiedShow Answer

If firms find that consumers are purchasing more than expected,which of the following would you expect?

Correct AnswerverifiedShow Answer

An increase in the real interest rate will

Correct AnswerverifiedShow Answer

From 1983-2017,net exports for the United States

Correct AnswerverifiedShow Answer

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

Correct AnswerverifiedShow Answer

Consumption spending is $5 million,planned investment spending is $8 million,unplanned investment spending is -$2 million,government purchases are $10 million,and net export spending is $2 million.What is GDP?

Correct AnswerverifiedShow Answer

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to ________ and real GDP to ________.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The Apple iPhone is sold in a box labeled "Made in China." A study by economists at the Asian Development Bank found the value of the iPhone components China U.S.firms is the value of assembling the iPhones in Chinese factories.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The recession of 2007-2009 resulted in falling revenues and large layoffs for a vast number of companies.By 2017,unemployment and spending in the economy.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Consumer spending and investment spending .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to and real GDP to .

Correct Answer
verified