CHAPTER 12-MACROECONOMICS QUIZ password to change answers HUMANITIES123

Suppose that an economy is in equilibrium at a real GDP of ​$15 trillion at a price level of 100. An increase in autonomous expenditures of ​$0.20 trillion takes place. The current multiplier is 10. If the​ short-run aggregate supply curve is​ horizontal, the new equilibrium value of real GDP will be Suppose that an economy is in equilibrium at a real GDP of ​$15 trillion at a price level of 100. The​ short-run aggregate supply curve is​ upward-sloping and there is an increase in autonomous expenditures of ​$0.20 trillion. This increase in expenditures enabled the real GDP to increase to ​$15.50 trillion. The change in the price level has changed the multiplier to

$17.00 9.80

Suppose that the economy of the United States has an investment schedule that is reflected in the graph shown. a. If the current rate of interest is 6​% the economy will have planned real investment this year totaling A. unknown since the expected rate of return is not given. B. approximately 2.0​%. C. just over​ $4 trillion. D. ​$2.0 trillion. b. Suppose production taxes increase. Using the line drawing tool​, draw the new investment function. Label this line ​'ID​'.

$2.0 Trillion Place it above the original line

The economy is depicted by the C​ + I​ + G​ + X curve at an equilibrium defined by point E0. The current price level is 100. a. The current equilibrium real GDP is ​$ nothing billion. ​(enter your response as a whole​ number) b. Assume that the economy experiences inflation of 10​% this period. The new price level is nothing. ​(enter your response as a whole​ number) c. Given the change in the price level experienced by this​ economy, show the effect on total expenditures. Using the line drawing tool​, draw a new representative Upper C plus Upper I plus Upper G plus Upper X curve. Properly label the new curve.

$60 110 Graph it at the point 110

Use the consumption function shown to answer the following questions. At what level of income is consumption equal to disposable ​ income? ​$ nothing billion. Which of the following statements is​ true? A. Consumption is ​$20 billion when the income level is​ $100 billion. B. At an income level of​ $0 billion there is dissaving equal to ​$30 billion. C. At an income of​ $100 billion there is dissaving of ​$20 billion. D. Saving equals consumption at an income level of ​$60 billion

$60 billion D. Saving equals consumption at an income level of ​$60 billion

Assume that the MPS in an economy is equal to 0.33. The multiplier must be equal to 3.03. You have established that the multiplier is 3.03. Now assume that autonomous real consumption is ​$3 trillion. There is no other autonomous spending presently taking place in the economy. At what level is consumption equal to real​ GDP? ​$ nothing trillion. ​(Round your answer to two decimal​ places) You have established that the multiplier is 3.03 and that autonomous real consumption is ​$3 trillion. There is autonomous investment of ​$2 trillion and autonomous net exports of ​$2 trillion. At what level are expenditures equal to real​ GDP? ​$ nothing trillion. ​(Round your answer to two decimal​ places)

$9.09 trillion $21.21 trillion

An​ economy's consumption function is depicted in the table below. Disposable Income Yd ​($, billions) Consumption C ​($, billions) 0 100 125 200 250 300 375 400 500 500 625 600 The​ economy's marginal propensity to save is A. 0.80. B. ​$negative 25 billion. C. negative 0.067. D. 0.20. The average propensity to consume when the disposable income is ​$625 billion is equal to A. 0.80. B. 0.040. C. 1.00. D. 0.96.

0.20 0.80

A consumption function is given by the following​ relationship: C​ = 100​ + 0.67​(Yd​). What is the multiplier in this​ model? 0.067 0.67 ​(Round your answer to two decimal​ places) Now suppose the consumption function changes​ to: C​ = 100​ + 0.75​(Yd​). What is the multiplier in this​ model? 0.75 0.75

0.67 0.75

Click on the icon below to view the market for investment funds. Use this diagram to add autonomous investment spending to the simple Keynesian model of the economy shown to the right. LOADING... On the diagram to the​ right, draw the​ following: ​1.) Using the line drawing tool​, draw the planned investment expenditure curve. Label it ​'​I'. ​2.) Using the line drawing tool​, draw the new expenditure function representing consumption and investment. Label it ​'C+I'. ​3.) Using the point drawing tool​, indicate the new equilibrium level of real GDP. Label it ​'​B'. Carefully follow the instructions​ above, and only draw the required objects.

I = 2 C+I starts at 6 and cross as 12 and 12 B = 12/12

The marginal propensity to consume is 0.90. At the market interest rate of 7 ​percent, planned investment spending is ​$50 billion. The slope of the C​ + I function is ▼ identical to greater than smaller than the slope of the consumption function because investment in this model is ▼ autonomous induced volatile endogenous . So as the amount of planned investment increases​, the slope of the C​ + I function ▼

Identical to Autonomous Remains Constant

Planned real investment is determined by the A. the marginal propensity to save. B. money supply. C. rate of interest. D. the marginal tax rate. The amount of planned real investment in the economy has ▼ an inverse a direct no relationship relationship with the rate of interest.

Rate of Interest an inverse

Current disposable income held to buy consumption goods in the future is referred to as Consumption is a ▼ flow stock variable.

Saving Flow

Nominal GDP is dependent on If the price level rises the multiplier effect on real GDP will be

The price level and output Weaker than if the price level were constant.

A Keynesian consumption function​ (C) is shown in the diagram to the right. Consider the full Keynesian model where expenditures include​ consumption, investment, government​ spending, and net exports. Suppose that investment is ​$3 ​trillion, government spending is ​$2 ​trillion, and net exports is ​$negative 2 trillion. ​1.) Using the line drawing tool​, draw the new expenditures​ function, and label it​ '(C + I​ + G​ + X)'. ​2.) Using the point drawing tool​, indicate the new equilibrium in the​ economy, and label it ​'​B'. Carefully follow the instructions​ above, and only draw the required objects.

add investment & government spending, then subtract net exports. (2+3-2 = 3), add 3 to current planned expenditures (example if 4), add 3+4=7, then line point graph at 7 to intersect the 45-degree reference line.

In economic​ terminology, personal disposable​ income, or income after​ taxes, can be either Suppose that disposable income increases in an economy. Which of the following relationships must always be​ true?

consumed or saved. The change in disposable income is equal to the change in saving plus the change in consumption

In the Keynesian model equilibrium national income If real GDP rises above total planned expenditures the economy will see

equals planned​ consumption, investment,​ government, and net export expenditures. production and employment decreases

The C​ + I​ + G​ + X curve intersects the​ 45-degree reference line at​ $4 trillion. If the price level falls

the equilibrium real national income rises because consumption rises​, investment rises​, and net exports increase​, shifting the C​ + I​ + G​ + X curve up.