Question 1

If the marginal propensity to consume is 4/5,the simple multiplier is

Accepted Answer

A)   1/6
B)   6
C)   5/6
D)   6/5
E)   5F) A) and D)
G) None of the above

Question 2

Other things being equal,a decrease in an economy's exports will

Accepted Answer

A)   increase domestic aggregate expenditures and the equilibrium level of output
B)   decrease domestic aggregate expenditures and the equilibrium level of output
C)   have no impact on domestic aggregate expenditures or output
D)   decrease the marginal propensity to import
E)   change autonomous consumptionF) C) and E)
G) A) and B)

Question 3

Which of the following is true about the relationship between the aggregate demand curve and the aggregate expenditure line?

Accepted Answer

A)   If the aggregate expenditure line shifts while prices are constant,the resulting change in equilibrium output demanded can be depicted as a movement along the aggregate demand curve.
B)   If the aggregate expenditure line shifts while prices are constant,the resulting change in equilibrium output demanded can be depicted as a shift of the aggregate demand curve.
C)   Any time the aggregate expenditure line shifts,the aggregate demand curve shifts as well.
D)   Any time there is a movement along the aggregate expenditure curve,there is movement along the aggregate demand curve as well.
E)   Any time the price level changes,the aggregate demand curve shifts.F) A) and B)
G) A) and C)

Question 4

The smaller the marginal propensity to save,other things constant,

Accepted Answer

A)   the smaller the marginal propensity to consume
B)   the smaller the multiplier
C)   the flatter the consumption function
D)   the steeper the consumption function
E)   the steeper the saving functionF) A) and E)
G) A) and D)

Question 5

The aggregate demand curve illustrates a relationship between

Accepted Answer

A)   interest rates and income levels
B)   the price level and real GDP
C)   the price level and interest rates
D)   income levels and real GDP levels
E)   income levels and nominal income levelsF) B) and E)
G) C) and D)

Question 6

The economy will expand if

Accepted Answer

A)   leakages exceed injections
B)   injections exceed leakages
C)   leakages equal injections
D)   expenditures are less than output
E)   saving exceeds investmentF) B) and E)
G) A) and C)

Question 7

If the economy is currently at equilibrium at $1 trillion and the MPC is 0.6,a $100 decrease in government purchases of goods and services will result in a new equilibrium at

Accepted Answer

A)   $600 billion
B)   $400 billion
C)   $750 billion
D)   $1.4 trillion
E)   $1.6 trillionF) A) and B)
G) None of the above

Question 8

On the aggregate expenditure graph,if autonomous saving increases by $15 billion,

Accepted Answer

A)   the aggregate expenditure line shifts upward by $15 billion
B)   planned investment increases by $15 billion
C)   the aggregate expenditure line shifts downward by $15 billion
D)   planned investment decreases by $15 billion
E)   the equilibrium level of real GDP demanded decreases by $15 billionF) B) and E)
G) A) and B)

Question 9

A decrease in the price level will

Accepted Answer

A)   shift the aggregate expenditure line upward
B)   shift the aggregate expenditure line downward
C)   cause a movement up along the aggregate expenditure line
D)   cause a movement down along the aggregate expenditure line
E)   have no effect on the aggregate expenditure or the equilibrium level of real GDPF) B) and C)
G) D) and E)

Exam 10: Aggregate Expenditure and Aggregate Demand

The aggregate demand curve illustrates a relationship between

Correct Answer
verified

The economy will expand if

Correct Answer
verified

A decrease in the price level will

Correct Answer
verified

Other things being equal,a decrease in an economy's exports will

Correct Answer
verified

If the marginal propensity to consume is 4/5,the simple multiplier is

Correct Answer
verified

If the economy is currently at equilibrium at $1 trillion and the MPC is 0.6,a $100 decrease in government purchases of goods and services will result in a new equilibrium at

Correct Answer
verified

The smaller the marginal propensity to save,other things constant,

Correct Answer
verified

Which of the following is true about the relationship between the aggregate demand curve and the aggregate expenditure line?

Correct Answer
verified

On the aggregate expenditure graph,if autonomous saving increases by $15 billion,

Correct Answer
verified

Exam 10: Aggregate Expenditure and Aggregate Demand

The aggregate demand curve illustrates a relationship between

Correct AnswerverifiedShow Answer

The economy will expand if

Correct AnswerverifiedShow Answer

A decrease in the price level will

Correct AnswerverifiedShow Answer

Other things being equal,a decrease in an economy's exports will

Correct AnswerverifiedShow Answer

If the marginal propensity to consume is 4/5,the simple multiplier is

Correct AnswerverifiedShow Answer

If the economy is currently at equilibrium at $1 trillion and the MPC is 0.6,a $100 decrease in government purchases of goods and services will result in a new equilibrium at

Correct AnswerverifiedShow Answer

The smaller the marginal propensity to save,other things constant,

Correct AnswerverifiedShow Answer

Which of the following is true about the relationship between the aggregate demand curve and the aggregate expenditure line?

Correct AnswerverifiedShow Answer

On the aggregate expenditure graph,if autonomous saving increases by $15 billion,

Correct AnswerverifiedShow Answer

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