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Exam 23: Aggregate Expenditure and Output in the Short Run

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Question 91

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Actual investment spending includes spending by consumers on

A) durable goods.
B) nondurable goods.
C) new houses.
D) services.

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Question 92

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If aggregate expenditure is less than GDP, then inventories rise and GDP falls.

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Question 93

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

Firms in a small economy anticipated that inventories would grow over the past year by $750,000, and over that year, inventories grew by exactly $750,000. This implies that

Table 23-5 Answer: When taxes are zero, saving is the difference between national income and consumption: Saving = national income - consumption. S = Y - C Using the table: Diff: 1 Page Ref: 784-786/400-402 Topic: Income, Consumption, and Saving *: Recurring Learning Outcome: Macro-2: Explain the relationship between expenditure and income AACSB: Analytical thinking -Given Table 23-6 below, fill in the values for saving. Assume taxes = $800.

If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years, then

Table 23-13 -Refer to Table 23-13. 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 $50 billion, what will happen to equilibrium GDP?

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?

An increase in the price level in the United States will reduce U.S. imports and increase U.S. exports.

An increase in the price level ________ real wealth, which causes consumption to ________.

On the 45 degree-line diagram, the 45 degree line shows points where real aggregate expenditure equals

If the consumption function is defined as C = 7,250 + 0.8Y, what is the value of the multiplier?

If economists forecast a decrease in aggregate expenditure, which of the following is likely to occur?

A general formula for the multiplier is

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

The recession of 2007-2009 resulted in falling revenues and large layoffs for a vast number of companies. By 2017, unemployment ________ and spending ________ in the economy.

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

What is the difference between aggregate expenditure and aggregate demand?

If planned aggregate expenditure equals GDP, the economy is in macroeconomic equilibrium.

Which of the following is not one of the four main categories of spending identified by John Maynard Keynes?