FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 23: Aggregate Expenditure and Output in the Short Run

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

From 1983-2013, net exports for the United States

A) grew and then declined.
B) were negative.
C) were positive.
D) increased as exports rose above imports.

E) A) and D)
F) B) and D)

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following will cause a direct increase in consumption spending?

A) an increase in planned investment
B) an increase in government spending
C) an increase in disposable income
D) a decrease in net export spending

E) B) and C)
F) A) and B)

Correct Answer

verified

C

Question 3

Multiple Choice

Review LaterAdd Note

Consumption spending is $5 million, planned investment spending is $8 million, unplanned investment spending is -$2 million, government purchases are $10 million, and net export spending is $2 million. What is GDP?

A rising price level decreases consumption by decreasing the real value of household wealth.

Figure 23-2 -Refer to Figure 23-2. Suppose that the level of GDP associated with point K is potential GDP. If the U.S. economy is currently at point N,

If consumption is defined as C = 1,350 + 0.6Y, then the marginal propensity to consume is 0.6.

The larger the MPS, the smaller the value of the multiplier.

What are the five main determinants of consumption spending? Which of these is the most important?

The aggregate demand curve illustrates the relationship between ________ and the ________, holding constant all other factors that affect aggregate expenditure.

________ consumption is consumption that does not depend upon the level of GDP.

Article Summary Although growing at only half the average rate following the seven previous recessions, consumer spending has increased 9 percent since the end of the 2007-2009 recession, and consumer confidence has been on the rise as household finances, the job market, and the housing market continue to improve. The Federal Reserve projects a 3% - 3.5% growth rate for the economy in 2014, up from the recent average of 2%. Debt payments have fallen to an average of 15.69% of after-tax income for households, the lowest level in 30 years, and lower debt payments leave households with more to spend on consumer goods. Source: Neil Shah, "Pocketbooks Begin to Open As Household Wealth Grows," Wall Street Journal, June 25, 2013. -Refer to the Article Summary. The increase in consumer spending discussed in the article summary was due in part to an improving housing market. This reason for the increase in consumer spending is most closely related to which of the following variables that determine the level of consumption?

Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume? C = 1,500 + (MPC) Y I = 1,000 G = 2,000 NX = -200

If the consumption function is defined as C = 7,250 + 0.8Y, what is the marginal propensity to save?

Table 23-15 -Refer to Table 23-15. Using the table above, answer the following questions. The numbers in the table are in billions of dollars. a. What is the equilibrium level of real GDP? b. What is the MPC? c. If investment spending declines by $10 billion, what will happen to equilibrium GDP?

Suppose the United States experiences a long period of relatively stable prices while other countries experience long periods of inflation. How will this affect U.S. net exports?

Intel is the world's largest semiconductor manufacturer and a major supplier of the microprocessors and memory chips found in most personal computers. During the recession of 2007-2009, Intel's revenues ________ and it ________ the size of its workforce.

Discuss the leading causes of the Great Depression. Use the 45-degree line diagram to show how they caused a decline in GDP.

Aggregate expenditure includes consumption spending, planned investment spending, government purchases, and net exports.

Table 23-14 -Refer to Table 23-14. Using the table above, answer the following questions. The numbers in the table are in billions of dollars. a. What is the equilibrium level of real GDP? b. What is the MPC? c. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? d. If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?

Consumption spending will ________ when disposable income ________.