Question 1

If the MPC is 0.8 and disposable income shrinks by $100 million.Consumption would

Accepted Answer

A)   rise by $8 million
B)   rise by $80 million
C)   fall by $80 million
D)   fall by $8 million
E)   fall by $20 millionF) A) and B)
G) D) and E)

Question 2

If autonomous consumption is $5,000,the MPC is 0.7,net taxes are $2,000,investment spending is $4,000,and government purchases equal $2,500,and NX = $0,what is equilibrium GDP?

Accepted Answer

A)   $14,428.6
B)   $33,666.7
C)   $40,800
D)   $43,000
E)   $45,000F) B) and E)
G) A) and B)

Question 3

If the expenditure multiplier is 2.5 and investment spending increases by $2,000 billion,what will be the change in GDP?

Accepted Answer

A)   $2,000 billion
B)   $5,000 billion
C)   $571.4 billion
D)   $3,500 billion
E)   $7,000 billionF) C) and E)
G) A) and B)

Question 4

If real disposable income increased by $10,000 and real consumption spending increased by $7,500,what is the marginal propensity to consume (MPC) ?

Accepted Answer

A)   0.25
B)   1.0
C)   0.75
D)   1.75
E)   1.25F) B) and C)
G) D) and E)

Question 5

The expenditure multiplier acts on changes in investment spending,government purchases,net exports,and autonomous consumption.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following describes the relationship among income,disposable income,taxes,and transfer payments?

Accepted Answer

A)   Taxes plus transfers equal income plus disposable income
B)   Disposable income equals income divided by the sum of taxes and transfers
C)   Disposable income equals income minus taxes plus transfers
D)   Disposable income equals income plus taxes plus transfers
E)   Taxes plus transfers equal disposable income minus income.F) A) and E)
G) B) and D)

Question 7

The largest component of aggregate expenditure is

Accepted Answer

A)   consumption spending
B)   government purchases
C)   net exports
D)   capital expenditures
E)   investment spendingF) A) and B)
G) C) and E)

Question 8

Approximately how long does it take for the successive increases in spending and output to be completed after an initial increase in investment spending?

Accepted Answer

A)   Two years
B)   Ten years
C)   Six years
D)   One year
E)   Five yearsF) B) and E)
G) A) and B)

Question 9

Renee plans to graduate and enter the job market in the spring.Economists are forecasting a recession during the spring.As a result,she

Accepted Answer

A)   is happy because unemployment rates are low during a recession
B)   is happy because salaries are usually higher during a recession
C)   does not care because the availability of jobs is not affected by whether there is a recession
D)   is unhappy because it is generally difficult to find a job during a recession
E)   favors increasing taxes to help head off the recessionF) C) and D)
G) None of the above

Question 10

Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion.Inventories will

Accepted Answer

A)   increase by $250 billion
B)   increase by $375 billion
C)   increase by $400 billion
D)   decrease by $250 billion
E)   decrease by $375 billionF) A) and E)
G) A) and C)

Exam 11: The Short-run Macro Model

Approximately how long does it take for the successive increases in spending and output to be completed after an initial increase in investment spending?

Correct Answer
verified

If autonomous consumption is $5,000,the MPC is 0.7,net taxes are $2,000,investment spending is $4,000,and government purchases equal $2,500,and NX = $0,what is equilibrium GDP?

Correct Answer
verified

Renee plans to graduate and enter the job market in the spring.Economists are forecasting a recession during the spring.As a result,she

Correct Answer
verified

If the expenditure multiplier is 2.5 and investment spending increases by $2,000 billion,what will be the change in GDP?

Correct Answer
verified

Which of the following describes the relationship among income,disposable income,taxes,and transfer payments?

Correct Answer
verified

If the MPC is 0.8 and disposable income shrinks by $100 million.Consumption would

Correct Answer
verified

The largest component of aggregate expenditure is

Correct Answer
verified

The expenditure multiplier acts on changes in investment spending,government purchases,net exports,and autonomous consumption.

Correct Answer
verified

If real disposable income increased by $10,000 and real consumption spending increased by $7,500,what is the marginal propensity to consume (MPC) ?

Correct Answer
verified

Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion.Inventories will

Correct Answer
verified

Exam 11: The Short-run Macro Model

Approximately how long does it take for the successive increases in spending and output to be completed after an initial increase in investment spending?

Correct AnswerverifiedShow Answer

If autonomous consumption is $5,000,the MPC is 0.7,net taxes are $2,000,investment spending is $4,000,and government purchases equal $2,500,and NX = $0,what is equilibrium GDP?

Correct AnswerverifiedShow Answer

Renee plans to graduate and enter the job market in the spring.Economists are forecasting a recession during the spring.As a result,she

Correct AnswerverifiedShow Answer

If the expenditure multiplier is 2.5 and investment spending increases by $2,000 billion,what will be the change in GDP?

Correct AnswerverifiedShow Answer

Which of the following describes the relationship among income,disposable income,taxes,and transfer payments?

Correct AnswerverifiedShow Answer

If the MPC is 0.8 and disposable income shrinks by $100 million.Consumption would

Correct AnswerverifiedShow Answer

The largest component of aggregate expenditure is

Correct AnswerverifiedShow Answer

The expenditure multiplier acts on changes in investment spending,government purchases,net exports,and autonomous consumption.

Correct AnswerverifiedShow Answer

If real disposable income increased by $10,000 and real consumption spending increased by $7,500,what is the marginal propensity to consume (MPC) ?

Correct AnswerverifiedShow Answer

Suppose GDP is $4,000 billion and aggregate expenditure is $3,750 billion.Inventories will

Correct AnswerverifiedShow Answer

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