b movement downward along the consumption function c upward shift of the

B movement downward along the consumption function c

This preview shows page 3 - 6 out of 7 pages.

b. movement downward along the consumption function. c. upward shift of the consumption function. d. downward shift of the consumption function. Answer: c
Image of page 3

Subscribe to view the full document.

If real GDP exceeds aggregate planned expenditure, then the change in unplanned inventories is ____ and firms will ____ production. a. positive; increase b. positive; decrease c. negative; increase d. negative; decrease Answer: b Equilibrium expenditure is the level of aggregate expenditure when a. aggregate production equals real GDP. b. aggregate actual expenditure equals real GDP. c. aggregate planned expenditure equals real GDP. d. aggregate private expenditure equals real GDP. Answer: c Points where the aggregate expenditure (AE) curve lie above the 45º line are points where aggregate planned expenditure is a. greater than real GDP. b. less than real GDP. c. equal to real GDP. d. the inverse of real GDP. Answer: a The expenditure multiplier explains how a change in a. real GDP leads to a change in autonomous expenditures. b. induced expenditure leads to a change in real GDP. c. autonomous expenditure leads to a change in real GDP. d. real GDP leads to a change in induced expenditure. Answer: c When investment increases, the multiplier points out that a. consumption decreases by a greater amount. b. real GDP increases by a greater amount. c. consumption increases by the same amount. d. real GDP decreases by a greater amount. Answer: b In an economy with no income taxes or imports, the expenditure multiplier is a. less than 1. b. greater than 1 if the MPC is greater than 1. c. equal to 1 if the MPC is greater than 1. d. greater than 1 if the MPC is less than 1. Answer: d An economy has no imports or income taxes. The MPC is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The multiplier is ____ and the change in real GDP from the increase in investment is ____ billion. a. 5; $25 b. 4; $16 c. 5; $16
Image of page 4
d. 4; $25 Answer: b An economy has no imports or income taxes. The MPC is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The new level of real GDP is a. $124 billion. b. $128 billion. c. $132 billion. d. $136 billion. Answer: d Which of the following reduces the magnitude of the expenditure multiplier? a. higher marginal tax rates b. decrease in imports c. decrease in saving d. decrease in government purchases of goods and services Answer: a The smaller the slope of the aggregate planned expenditure (AE) curve, the a. larger the multiplier. b. smaller the multiplier. c. larger is the marginal tax rate. d. larger are imports.
Image of page 5

Subscribe to view the full document.

Image of page 6
  • Fall '18

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes