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Homework 8
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Questions in this quiz (30)
1The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run, assuming ________ is constant.
- Atotal income; real GDP; the price level
- Btotal production; total income; real GDP
- Ctotal spending; real GDP; total income
- Dtotal spending; real GDP; the price level
2The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by
- Aexport spending.
- Bgovernment spending.
- Cthe level of aggregate expenditure.
- Dinvestment spending.
3A decrease in consumer confidence can put your job at risk if
- Aconsumers expect firms to increase investment in the future.
- Baggregate expenditures fall.
- Caggregate expenditures rise.
- Dconsumers expect their incomes to rise in the future.
4Household spending on goods and services is known as
- Aplanned investment spending.
- Bnet exports.
- Cconsumption spending.
- Dgovernment purchases.
5The aggregate expenditure model focuses on the ________ relationship between real spending and ________.
- Along-run; real GDP
- Bshort-run; real GDP
- Cshort-run; inflation
- Dlong-run; inflation
6Aggregate expenditure includes spending on
- AC + I + G
- BC + I + G -NX
- CC + I + depreciation - NX
- DC + I + G + NX
7Which is the largest component of aggregate expenditure?
- Aconsumption expenditures
- Bnet export expenditures
- Cgovernment expenditures
- Dplanned investment expenditures
8A decrease in Social Security payments will
- Adecrease investment spending.
- Bdecrease export spending.
- Cdecrease consumption spending.
- Ddecrease government spending.
9The marginal propensity to consume is defined as
- Adisposable income divided by consumption.
- Bconsumption divided by disposable income.
- Cthe change in disposable income divided by the change in consumption.
- Dthe change in consumption divided by the change in disposable income.
10If firms are more optimistic that future profits will rise and remain strong for the next few years, then
- Ainvestment spending will fall.
- Binvestment spending will rise and then fall.
- Cinvestment spending will remain unaffected.
- Dinvestment spending will rise.
11Refer to Figure 11-1. According to the figure above, at what point is aggregate expenditure greater than GDP?
- AJ
- BK
- CL
- Dnone of the above
12Refer to Figure 11-1. At point L in the figure above, which of the following is true?
- AAggregate expenditure is greater than GDP.
- BActual inventories are greater than planned inventories.
- CGDP will be increasing.
- DThe economy has achieved macroeconomic equilibrium.
13Which of the following leads to a decrease real GDP?
- Aan increase in interest rates
- Ban increase in government spending
- Chouseholds have increasingly optimistic expectations about future income
- Dan increase in the inflation rate in other countries, relative to the inflation in the United States
14Refer to Figure 11-3. Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP?
- A$9 million
- B$10 million
- C$90 million
- D$100 million
15Autonomous expenditure is a type of expenditure that does not depend on
- Awealth.
- BGDP.
- Cexpectations.
- Drates.
16If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP, then
- Athe MPC is 0.5.
- Bthe MPC is 0.75.
- Cthe MPC is 0.8.
- Dthe MPC is 0.9.
17A general formula for the multiplier is
- A1 / ( MPS-1 )
- B1 / ( 1- MPC )
- C1 / MPC
- D1 / ( 1 - MPS )
18Refer to Figure 11-2. If the U.S. economy is currently at point K, which of the following could cause it to move to point N?
- AThe interest rate rises.
- BHousehold wealth declines.
- CCongress passes investment tax incentives.
- DThe price level in the United States rises relative to the price level in other countries.
19The aggregate demand curve illustrates the relationship between ________ and the ________, holding constant all other factors that affect aggregate expenditure.
- Athe price level; quantity of planned investment expenditure
- Bthe price level; quantity of consumption expenditure
- Cthe price level; quantity of planned aggregate expenditure
- Dthe inflation rate; quantity of planned aggregate expenditure
20If firms reduce the rate at which inventories are rising,
- Afirms are less likely to reduce production when sales fall.
- Bfluctuations in GDP are likely to be more dramatic.
- Can increase in unplanned inventory investment becomes more likely.
- DAll of the above will occur if firms reduce the rate at which their inventories accumulate.
21A decrease in aggregate expenditure has what result on equilibrium GDP?
- AEquilibrium GDP may rise or fall depending on the size of the decrease in aggregate expenditure relative to the initial level of GDP.
- BEquilibrium GDP is not affected by a decrease in aggregate expenditure.
- CEquilibrium GDP rises.
- DEquilibrium GDP falls.
22Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP?
C = 1,000 + 0.8Y
I = 1,500
G=1,250
NX = 100- A$3,080
- B$3,850
- C$6,930
- D$19,250
23Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume?
C = 1,500 + (MPC)Y
I = 1,000
G = 2,000
NX = -200- A0.67
- B0.75
- C0.8
- D0.9
24U.S. net export spending rises when
- Athe price level in the United States rises relative to the price level in other countries.
- Bthe value of the U.S. dollar increases relative to other currencies.
- Cthe inflation rate is higher in the United States relative to other countries.
- Dthe growth rate of U.S. GDP is slower than the growth rate of GDP in other countries.
25The difference between GDP and disposable income is
- Aactual investment spending.
- Bunplanned investment spending.
- Cnet taxes.
- Dnational income.
26Investment spending will increase when
- Athe interest rate rises.
- Bfirms become more pessimistic about earning future profits.
- Cbusiness cash flow increases.
- Dthe corporate income tax increases.
27Investment spending ________ during a recession, and ________ during an expansion.
- Adeclines; declines
- Bincreases; declines
- Cincreases; increases
- Ddeclines; increases
28Which of the following is true?
- ANational income = Consumption - Savings + Taxes
- BNational income = Consumption + Savings - Taxes
- CNational income = Consumption + Savings + Taxes
- DNational income = Consumption - Savings - Taxes
29If the marginal propensity to consume is 0.75, the marginal propensity to save is
- A0.25.
- B0.5.
- C1.
- D3.
30Which of the following will raise consumer expenditures?
- Aan increase in the price level
- Ban increase in expected future income
- Ca general decline in housing prices
- Dan increase in interest rates
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- Quiz on Homework 8, created by Raul Neyra on 26/07/2018.
- Author
- Raul Neyra
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- English
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