Answer b If the slope of the aggregate expenditure curve is 075 the multiplier

Answer b if the slope of the aggregate expenditure

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Answer: b If the slope of the aggregate expenditure curve is 0.75, the multiplier is equal to a. 0.25. b. 0.75. c. 1.33. d. 4.00. Answer: d As the economy turns the corner into a recession, the level of unplanned inventories ____ and firms begin to ____ production. a. increases; decrease b. increases; increase c. decreases; decrease d. decreases; increase Answer: a The 45-degree line on a graph relating consumption and income shows: a. all points where the MPC is constant. b. all points at which saving and income are equal. c. all the points at which consumption and income are equal. d. the amounts households will plan to save at each possible level of income. Answer: c As disposable income goes up the: a. APC falls. b. APS falls.
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c. volume of consumption declines absolutely. d. volume of investment diminishes. Answer: a The APC is calculated as: a. change in consumption / change in income b. consumption / income c. change in income / change in consumption d. income / consumption Answer: b Which of the following is correct? A. APC + APS = 1. b. APC + MPS = 1. c. APS + MPC = 1. d. APS + MPS = 1. The MPC for an economy is: a. the slope of the consumption schedule or line. b. the slope of the savings schedule or line. c. 1 divided by the slope of the consumption schedule or line. d. 1 divided by the slope of the savings schedule or line. Answer: a The aggregate expenditure model explains a. adjustments in prices. b. changes in potential GDP. c. changes in the interest rate. d. what determines the quantity of real GDP demanded. Answer: d Induced expenditure is any expenditure that a. is fixed for all levels of real GDP. b. is fixed for all price levels. c. is fixed for all levels of the interest rate. d. changes when real GDP changes. Answer: d As disposable income ____ planned consumption expenditure ____. a. increases; decreases b. decreases; increases c. decreases; remains the same, since it is autonomous expenditure d. increases; increases Answer: d If the slope of the aggregate expenditure (AE) curve is 0.5, then the multiplier is equal to a. 5.
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b. 4. c. 3. d. 2. Answer: d Over time, the value of the multiplier changes for all of the following reasons EXCEPT for changes in the a. marginal propensity to consume. b. autonomous expenditure. c. marginal propensity to import. d. marginal income tax rate. Answer: b The ____ the marginal tax rate, the ____ the multiplier. a. smaller; smaller b. smaller; larger c. larger; larger d. None of the above is correct, because the multiplier is not related to the marginal tax rate. Answer: b
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