Question 1

The figure shows planned aggregate expenditure and output for an economy. 1 B)  Y 2 C)  Y 3 D)  It does not occur at any output level in this graph." class="answers-bank-image d-inline" rel="preload" > The Keynesian equilibrium occurs at what output level?

Accepted Answer

A)   Y 1
B)   Y 2
C)   Y 3
D)   It does not occur at any output level in this graph.E) A) and B)
F) B) and C)

Question 2

In the long run, unplanned inventory expenditure will:

Accepted Answer

A)   equal zero, as planned inventories should equal actual inventories.
B)   increase, as firms struggle to figure out what consumers want.
C)   decrease, as firms are able to better match production with consumer preferences.
D)   become positive, as firms tend to be optimistic about sales.E) A) and B)
F) All of the above

Question 3

If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:

Accepted Answer

A)   increase from 4 to 5.
B)   decrease from 5 to 4.
C)   increase from 0.20 to 0.25.
D)   decrease from 1.25 to 1.20.E) A) and D)
F) B) and D)

Question 4

During the Great Depression, the banking industry was crippled so badly that _______ of the banks failed.

Accepted Answer

A)   nearly half
B)   a quarter
C)   almost all
D)   a majorityE) None of the above
F) C) and D)

Question 5

If PAE is greater than Y:

Accepted Answer

A)   production will eventually decrease.
B)   production will eventually increase.
C)   there will be no change in aggregate production.
D)   the government will intervene by decreasing taxes.E) A) and C)
F) B) and D)

Question 6

A government would choose to increase spending:

Accepted Answer

A)   if households are growing wealthier
B)   when interest rates increase.
C)   to stimulate the economy.
D)   when it expects tax revenues to increase.E) A) and B)
F) A) and C)

Question 7

If the MPC is 0.8, what must the spending multiplier be?

Accepted Answer

A)   5
B)   2
C)   1.2
D)   1.8E) All of the above
F) A) and C)

Question 8

The figure shows planned aggregate expenditure and output for an economy. 3, we would expect there to be: A)  a decrease in inventories. B)  an increase in inventories. C)  no change in inventories. D)  an increase in consumption spending." class="answers-bank-image d-inline" rel="preload" > If output in this economy is Y3, we would expect there to be:

Accepted Answer

A)   a decrease in inventories.
B)   an increase in inventories.
C)   no change in inventories.
D)   an increase in consumption spending.E) None of the above
F) A) and C)

Question 9

Wealth can be held as:

Accepted Answer

A)   checking accounts.
B)   credit card accounts.
C)   private jets.
D)   student loans.E) None of the above
F) A) and D)

Question 10

Suppose that Christina has a disposable annual income of $50,000 and an MPC of 0.8. She allocates $10,000 of her income for necessities, and the remaining money is both spent and saved. Based on this information, what is Christina's autonomous consumption?

Accepted Answer

A)   $10,000
B)   $40,000
C)   $32,000
D)   $50,000E) B) and C)
F) All of the above

Question 11

If a person's MPC is 0.75 it means they will:

Accepted Answer

A)   spend 75 cents of each new dollar they receive.
B)   invest 75 cents of every new dollar they receive.
C)   spend 25 cents and save 75 cents of each additional dollar they earn.
D)   spend 25 percent of any additional money earned.E) A) and C)
F) B) and C)

Question 12

The multiplier effect suggests that:

Accepted Answer

A)   spending $1 increases GDP by more than $1.
B)   spending $1 increases GDP by less than $1.
C)   saving $1 increases GDP by more than $1.
D)   spending $1 decreases GDP by more than $1.E) B) and D)
F) A) and D)

Question 13

When PAE is less than Y, firms will:

Accepted Answer

A)   decrease production.
B)   increase production.
C)   make no change in production.
D)   increase labor.E) B) and C)
F) A) and D)

Question 14

If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _______ its spending by _______ billion.

Accepted Answer

A)   increase; $240
B)   decrease; $240
C)   increase; $960
D)   decrease; $960E) B) and C)
F) A) and C)

Question 15

If spending increases by $100, and GDP increases by $400 as a result, what must the MPC be?

Accepted Answer

A)   0.70
B)   0.75
C)   4
D)   2E) A) and C)
F) None of the above

Question 16

The real exchange rate is the:

Accepted Answer

A)   value of goods in one nation relative to the value of a similar set of goods in another country.
B)   rate at which people exchange goods and services in a domestic market.
C)   rate at which firms in different nations would be willing to exchange goods.
D)   value of goods in one nation relative to the value of the same set of goods in another country.E) B) and C)
F) A) and C)

Question 17

Edgar, Angela, and Juan are coworkers who receive the same amount of money as a holiday bonus. Angela places most of her money in her 401k account and spends a small amount on stocking stuffers for her family. Edgar spends most of his money on a new smartwatch. Juan takes his wife out for a nice dinner and saves the remaining money. Who has the lowest marginal propensity to consume?

Accepted Answer

A)   Angela
B)   Juan
C)   Edgar
D)   There is not enough information to answer this question.E) None of the above
F) A) and C)

Question 18

An increase in interest rates would:

Accepted Answer

A)   decrease autonomous spending.
B)   increase spending dependent on income.
C)   increase autonomous spending.
D)   decrease spending dependent on income.E) A) and B)
F) A) and C)

Question 19

If consumers increase their preference for foreign goods and services, aggregate expenditure will likely:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   increase at first and then decrease.E) C) and D)
F) B) and C)

Question 20

If trade policies change, aggregate expenditure will likely:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   The effect on aggregate expenditure depends on the policy.E) B) and D)
F) B) and C)

Exam 11: Aggregateexpenditures

The real exchange rate is the:

Correct Answer
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If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _ its spending by _ billion.

Correct Answer
verified

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y₃, we would expect there to be:

Correct Answer
verified

If PAE is greater than Y:

Correct Answer
verified

Correct Answer
verified

If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:

Correct Answer
verified

If trade policies change, aggregate expenditure will likely:

Correct Answer
verified

If a person's MPC is 0.75 it means they will:

Correct Answer
verified

Wealth can be held as:

Correct Answer
verified

When PAE is less than Y, firms will:

Correct Answer
verified

If the MPC is 0.8, what must the spending multiplier be?

Correct Answer
verified

A government would choose to increase spending:

Correct Answer
verified

In the long run, unplanned inventory expenditure will:

Correct Answer
verified

If consumers increase their preference for foreign goods and services, aggregate expenditure will likely:

Correct Answer
verified

Suppose that Christina has a disposable annual income of $50,000 and an MPC of 0.8. She allocates $10,000 of her income for necessities, and the remaining money is both spent and saved. Based on this information, what is Christina's autonomous consumption?

Correct Answer
verified

The figure shows planned aggregate expenditure and output for an economy. The Keynesian equilibrium occurs at what output level?

Correct Answer
verified

If spending increases by $100, and GDP increases by $400 as a result, what must the MPC be?

Correct Answer
verified

During the Great Depression, the banking industry was crippled so badly that _______ of the banks failed.

Correct Answer
verified

The multiplier effect suggests that:

Correct Answer
verified

An increase in interest rates would:

Correct Answer
verified

Exam 11: Aggregateexpenditures

The real exchange rate is the:

Correct AnswerverifiedShow Answer

If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _______ its spending by _______ billion.

Correct AnswerverifiedShow Answer

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y3, we would expect there to be:

Correct AnswerverifiedShow Answer

If PAE is greater than Y:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the MPC were to increase from 0.75 to 0.8, then the spending multiplier would:

Correct AnswerverifiedShow Answer

If trade policies change, aggregate expenditure will likely:

Correct AnswerverifiedShow Answer

If a person's MPC is 0.75 it means they will:

Correct AnswerverifiedShow Answer

Wealth can be held as:

Correct AnswerverifiedShow Answer

When PAE is less than Y, firms will:

Correct AnswerverifiedShow Answer

If the MPC is 0.8, what must the spending multiplier be?

Correct AnswerverifiedShow Answer

A government would choose to increase spending:

Correct AnswerverifiedShow Answer

In the long run, unplanned inventory expenditure will:

Correct AnswerverifiedShow Answer

If consumers increase their preference for foreign goods and services, aggregate expenditure will likely:

Correct AnswerverifiedShow Answer

Suppose that Christina has a disposable annual income of $50,000 and an MPC of 0.8. She allocates $10,000 of her income for necessities, and the remaining money is both spent and saved. Based on this information, what is Christina's autonomous consumption?

Correct AnswerverifiedShow Answer

The figure shows planned aggregate expenditure and output for an economy. The Keynesian equilibrium occurs at what output level?

Correct AnswerverifiedShow Answer

If spending increases by $100, and GDP increases by $400 as a result, what must the MPC be?

Correct AnswerverifiedShow Answer

During the Great Depression, the banking industry was crippled so badly that _______ of the banks failed.

Correct AnswerverifiedShow Answer

The multiplier effect suggests that:

Correct AnswerverifiedShow Answer

An increase in interest rates would:

Correct AnswerverifiedShow Answer

Correct Answer
verified

If the government wishes to increase GDP by $1,200 billion, and the MPC is 0.8, it should _ its spending by _ billion.

Correct Answer
verified

The figure shows planned aggregate expenditure and output for an economy. If output in this economy is Y₃, we would expect there to be:

Correct Answer
verified

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