Question 1

If aggregate output equals planned aggregate expenditure,then

Accepted Answer

A)  unplanned inventory investment is zero.
B)  unplanned inventory adjustment is negative.
C)  unplanned inventory adjustment is positive.
D)  actual investment is greater than planned investment.E) A) and B)
F) A) and C)

Question 2

Refer to the information provided in Table 8.4 below to answer the questions that follow.
Table 8.4 
-Refer to Table 8.4.The equilibrium level of aggregate output equals

Accepted Answer

A)  $400 billion.
B)  $600 billion.
C)  $800 billion.
D)  $1,000 billion.E) A) and D)
F) A) and C)

Question 3

If Logan received a $2,500 bonus and his MPS is 0.20,his consumption rises by $________ and his saving rises by $________.

Accepted Answer

A)  500;100
B)  2,500;200
C)  2,000;500
D)  2,500;20E) B) and C)
F) All of the above

Question 4

If Wanda's income is reduced to zero after she loses her job,her consumption will be ________ and her saving will be ________.

Accepted Answer

A)  less than zero;less than zero
B)  greater than zero;greater than zero
C)  less than zero;greater than zero
D)  greater than zero;less than zeroE) B) and D)
F) None of the above

Question 5

Refer to the information provided in Figure 8.4 below to answer the questions that follow.  Figure 8.4
-Refer to Figure 8.4.If income is Y2

Accepted Answer

A)  the society's saving is negative along C1,C2,and C3.
B)  the society's consumption is equal along C2 and C3.
C)  the society's saving is positive along C2 and C3.
D)  the society's savings is negative along C1.E) A) and B)
F) None of the above

Question 6

Refer to the information provided in Table 8.5 below to answer the questions that follow.
Table 8.5 
-Refer to Table 8.5.The equilibrium level of aggregate output equals

Accepted Answer

A)  $3,000 million.
B)  $4,000 million.
C)  $5,000 million.
D)  $6,000 million.E) A) and B)
F) C) and D)

Question 7

An increase in the MPC,reduces the multiplier.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the information provided in Figure 8.12 below to answer the questions that follow.  Figure 8.12
-Refer to Figure 8.12.What is the equation for aggregate expenditure AE1?

Accepted Answer

A)  AE1 = 1,000 + 0.5Y.
B)  AE1 = 600 + 0.4Y.
C)  AE1 = 1,000 + 0.6Y.
D)  AE1 = 400 + 0.4Y.E) All of the above
F) None of the above

Question 9

In practice,the actual size of the multiplier is about

Accepted Answer

A)  1.
B)  1.4.
C)  2.
D)  4.E) None of the above
F) A) and C)

Question 10

Refer to the information provided in Table 8.2 below to answer the questions that follow.
Table 8.2 
-Refer to Table 8.2.The equation for the aggregate saving function is

Accepted Answer

A)  S = -100 + 0.15Y.
B)  S = -100 + 0.1Y.
C)  S = -150 + 0.2Y.
D)  S = -150 + 0.85Y.E) None of the above
F) A) and C)

Question 11

Refer to the information provided in Table 8.5 below to answer the questions that follow.
Table 8.5 
-Refer to Table 8.5.The MPC in this economy is

Accepted Answer

A)  0.5.
B)  0.6.
C)  0.7.
D)  0.8.E) B) and D)
F) A) and C)

Question 12

Refer to the information provided in Figure 8.11 below to answer the questions that follow.  Figure 8.11
-Refer to Figure 8.11.A $20 million decrease in autonomous consumption

Accepted Answer

A)  changes equilibrium expenditure to $120 million.
B)  changes equilibrium output to $180 million.
C)  will change the MPC.
D)  will change the MPS.E) C) and D)
F) None of the above

Question 13

Refer to the information provided in Figure 8.2 below to answer the questions that follow.  Figure 8.2
-Refer to Figure 8.2.An increase in Jerry's income is represented by

Accepted Answer

A)  an upward shift in Jerry's consumption function.
B)  an increase in the slope of Jerry's consumption function.
C)  a movement from Point B to A.
D)  none of the aboveE) B) and C)
F) B) and D)

Question 14

Refer to the information provided in Figure 8.2 below to answer the questions that follow.  Figure 8.2
-Refer to Figure 8.2.Positive saving occurs along the line segment

Accepted Answer

A)  BC.
B)  DC.
C)  AC.
D)  BA.E) A) and D)
F) C) and D)

Question 15

As the MPS decreases,the multiplier will

Accepted Answer

A)  increase.
B)  decrease.
C)  remain constant.
D)  either increase or decrease depending on the size of the change in investment.E) C) and D)
F) B) and C)

Question 16

If C = 500 + 0.9Y and I = 400,then the equilibrium level of income is

Accepted Answer

A)  900.
B)  1,000.
C)  1,800.
D)  9,000.E) B) and C)
F) B) and D)

Question 17

Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25.When income increases to $100,000,consumption is

Accepted Answer

A)  $90,250.
B)  $85,000.
C)  $70,000.
D)  $67,500.E) A) and B)
F) B) and D)

Question 18

If the MPS is 0.1,then the multiplier is 10.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the information provided in Figure 8.8 below to answer the questions that follow.  Figure 8.8
-Refer to Figure 8.8.The amount of planned investment increases if the interest rate

Accepted Answer

A)  drops from 8% to 4%.
B)  rises from 4% to 8%.
C)  remains at 8%.
D)  remains at 4%.E) None of the above
F) A) and B)

Question 20

Higher interest rates are likely to

Accepted Answer

A)  have no effect on consumer spending or saving.
B)  decrease consumer spending and increase consumer saving.
C)  decrease both consumer spending and consumer saving.
D)  increase consumer spending and decrease consumer saving.E) All of the above
F) A) and C)

Exam 8: Aggregate Expenditure and Equilibrium Output

Suppose consumption is $60,000 when income is $90,000 and the MPS equals 0.25.When income increases to $100,000,consumption is

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If the MPS is 0.1,then the multiplier is 10.

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Refer to the information provided in Table 8.2 below to answer the questions that follow. Table 8.2 -Refer to Table 8.2.The equation for the aggregate saving function is

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An increase in the MPC,reduces the multiplier.

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Refer to the information provided in Figure 8.4 below to answer the questions that follow. Figure 8.4 -Refer to Figure 8.4.If income is Y2

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If Wanda's income is reduced to zero after she loses her job,her consumption will be ________ and her saving will be ________.

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Refer to the information provided in Table 8.4 below to answer the questions that follow. Table 8.4 -Refer to Table 8.4.The equilibrium level of aggregate output equals

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If C = 500 + 0.9Y and I = 400,then the equilibrium level of income is

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As the MPS decreases,the multiplier will

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Refer to the information provided in Figure 8.11 below to answer the questions that follow. Figure 8.11 -Refer to Figure 8.11.A $20 million decrease in autonomous consumption

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2.An increase in Jerry's income is represented by

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If aggregate output equals planned aggregate expenditure,then

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Refer to the information provided in Figure 8.8 below to answer the questions that follow. Figure 8.8 -Refer to Figure 8.8.The amount of planned investment increases if the interest rate

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Refer to the information provided in Figure 8.12 below to answer the questions that follow. Figure 8.12 -Refer to Figure 8.12.What is the equation for aggregate expenditure AE1?

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Refer to the information provided in Table 8.5 below to answer the questions that follow. Table 8.5 -Refer to Table 8.5.The MPC in this economy is

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If Logan received a $2,500 bonus and his MPS is 0.20,his consumption rises by $________ and his saving rises by $________.

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In practice,the actual size of the multiplier is about

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Refer to the information provided in Table 8.5 below to answer the questions that follow. Table 8.5 -Refer to Table 8.5.The equilibrium level of aggregate output equals

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Higher interest rates are likely to

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2.Positive saving occurs along the line segment

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If Wanda's income is reduced to zero after she loses her job,her consumption will be and her saving will be .

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If Logan received a $2,500 bonus and his MPS is 0.20,his consumption rises by $ and his saving rises by $.

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