The aggregate expenditure model focuses on the relationship between and in the

# The aggregate expenditure model focuses on the

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28) The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run, assuming ________ is constant. A) total income; real GDP; the price level B) total spending; real GDP; total income C) total production; total income; real GDP D) total spending; real GDP; the price level 29) The Bureau of Labor Statistics would categorize a retiree who is not working as
Fall 2013 Midterm 2 Version A 30) Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure? Table 9-4Base Year (2006) 2011ProductQuantityPriceQuantityPrice Meat100\$10120\$12 Potatoes20021803 31) Refer to Table 9-4. Assume the market basket for the consumer price index has two products meat and potatoes with the following values in 2006 and 2011 for price and quantity: If 2006 is the base year, the Consumer Price Index for 2011 equals A) 125. B) 129. C) 135. D) 141. 32) Suppose that an increase in capital per hour worked from \$15,000 to \$20,000 increases real GDP per hour worked by \$500. If capital per hour worked increases further to \$25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns? NOT THE END OF THE EXAM…TURN THE PAGE.
Fall 2013 Midterm 2 Version A Figure 12-333) Refer to Figure 12-3.Suppose that investment spending increases by \$10 million, shifting up the aggregate expenditure function and GDP increases from GDP1to GDP2. If the MPCis 0.9, then what is the change in GDP? A) \$9 million B) \$10 million C) \$90 million D) \$100 million 34) Which of the following will raise consumer expenditures? 35) Which of the following would you expect to result in faster economic growth? 36) What happens in the secondary market? ***END OF TEST***
Fall 2013 Midterm 2 Version A