Econ 202 Final
When autonomous expenditure decreases,A)there is a movement down along the AE curve.B)the AE curve shifts upward.C)the AE curve shifts downward.D)the AE curve becomes less steep.
C
When disposable income is 0, consumption is $2,000. ThenA)saving = $2,000.B)the MPC = 0.2.C)saving =-$2,000.D)saving = $0.
C
When real GDP exceeds potential GDP, then the economy hasA)a below-full-employment equilibrium.B)a recessionary gap.C)an inflationary gap.D)None of the above answers are correct.
C
According to the intertemporal substitution effect, a fall in the price level willA)cause the interest rate to fall so that investment increases and the quantity of real GDPdemanded increases.B)increase the real value of wealth, which raises the interest rate so that the quantity of realGDP demanded decreases.C)decrease the real value of wealth, which increases the quantity of real GDP demanded.D)increase net exports, which causes the quantity of real GDP demanded to increase.
A
Between 2013 and 2014 the government estimates that disposable income in the United States decreased. Consequently, as a result of this change, consumption expenditureA)decreased.B)remained constant.C)increased.D)More information is needed about how taxes changed between 2013 and 2014.
A
Demand-pull inflation results from continually increasing the quantity of money, which leads to acontinuallyA)increasing aggregate demand.B)decreasing aggregate demand.C)decreasing long-run aggregate supply.D)increasing aggregate supply.
A
If investment decreases, the AE curve shiftsA)downward and the AD curve shifts leftward.B)downward and there is a movement along the AD curve.C)upward and there is a movement along the AD curve.D)upward and the AD curve shifts rightward.
A
In the long runA)real GDP is equal to potential GDP.B)the aggregate supply curve is upward sloping.C)aggregate supply depends on the price level.D)All of the above answers are correct.
A
One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,A)people substitute toward more imported goods and services.B)firms produce more goods and services.C)peoples' wealth increases.D)firms produce fewer goods and services.
A
The AD curve slopesA)downward due to the wealth and substitution effects.B)upward due to the price and substitution effects.C)downward due to the wealth and price effects.D)upward due to the wealth and substitution effects.
A
The Federal Reserve lowers interest rates. As a result, in the short run, real GDP ________ and theprice level ________.A)increases; risesB)increases; fallsC)decreases; risesD)decreases; falls
A
The long-run aggregate supply curve is the relationship between the quantity of real GDPsupplied and ________ when ________A)the price level; real GDP equals potential GDPB)real GDP demanded; the price level does not changeC)the price level; real GDP equals nominal GDPD)real GDP demanded; the wage rate is constant
A
The multiplier effectA)magnifies small changes in spending into larger changes in real GDP.B)generates instability in autonomous expenditure.C)promotes stability of the general price level.D)increases the MPC.
A
The part of aggregate planned expenditure that does not vary with real GDPA)is autonomous expenditure.B)equals equilibrium expenditure.C)is induced expenditure.D)equals zero.
A
The short-run aggregate supply curve is upward sloping because in the short run theA)price level changes but the money wage rate does not.B)neither the money wage rate nor the price level can change.C)both the money wage rate and the price level change.D)money wage rate changes but the price level does not.
A
When autonomous expenditure increases, equilibrium aggregate expenditureA)increases by a greater amount due to the multiplier.B)increases by an equal amount.C)decreases by a greater amount due to the multiplier.D)decreases by an equal amount.
A
Which of the following events will increase long-run aggregate supply?A)an advance in technologyB)a decrease in expected profitC)an increase in the interest rateD)an increase in resource prices
A
Which of the following statements is FALSE?A)An increase in disposable income leads to a decrease in aggregate demand.B)Taxes and transfer payments affect aggregate demand by changing disposable income.C)Government expenditure affects aggregate demand directly because government expenditureis a component of aggregate demand.D)Fiscal policy is the attempt to influence the economy using taxes, transfer payments, andgovernment expenditures.
A
the long-run aggregate supply curve illustrates theA)relationship between the price level and real GDP when the economy is at full employment.B)amount of products producers offer at various prices when money wages and other resourceprices are fixed.C)relationship between the price level and real GDP when the economy is at zerounemployment.D)surpluses, shortages and equilibrium level of GDP.
A
A recessionary gap means that the level of real GDP at the short-run macroeconomic equilibriumA)equals full-employment GDP.B)is less than full-employment GDP.C)is more than full-employment GDP.D)may be less than, more than, or the same as full-employment GDP depending on the level ofpotential GDP.
B
Consumers divide disposable income intoA)saving and taxes.B)consumption and saving.C)consumption, saving, and taxes.D)consumption and taxes.
B
Disposable income isA)income plus transfer payments minus consumption expenditure.B)income minus taxes plus transfer payments.C)income minus saving.D)total income divided by the price level.
B
DissavingA)is equal to the amount of saving when consumption is less than disposable income.B)occurs when consumption is greater than disposable income.C)is equal to taxation when disposable income is zero.D)is equal to consumption expenditure when disposable income is greater than zero.
B
Equilibrium expenditure is defined as the level of aggregate expenditure whereA)total inventories equal zero.B)aggregate planned expenditure equals real GDP.C)spending equals output.D)actual aggregate expenditure equals real GDP.
B
If aggregate demand grows only slightly faster than potential GDP, then the economy willA)experience recession.B)experience economic growth with low inflation.C)be at a business-cycle peak.D)experience economic growth with high inflation.
B
If consumption expenditures for a household increase from $1,000 to $1,800 when disposableincome rises from $1,000 to $2,000, the marginal propensity to consume isA)80.B)0.8.C)1.25.
B
If real GDP is $19 trillion and planned aggregate expenditure is $19.5 trillion, inventories will beA)below their target and real GDP will decrease.B)below their target and real GDP will increase.C)above their target and real GDP will decrease.D)above their target and real GDP will increase.
B
If there are no taxes or imports and MPC= 0.5, the multiplier equalsA)5.0.B)2.0.C)0.5.D)6.0.
B
In the macroeconomic short runA)the unemployment rate is zero.B)actual real GDP may be less than or more than potential GDP.C)actual real GDP always equals potential GDP.D)by definition, the economy is always moving away from full employment.
B
Suppose that the slope of the AE curve is 0.75. Then a $100 decrease in autonomous spending means equilibrium expenditure willA)increase by $400.B)decrease by $400.C)increase by $750.D)decrease by $750.
B
The U.S. aggregate demand curve shifts leftward ifA)there is a tax cut.B)the Federal Reserve increases the interest rate.C)the exchange rate falls.D)the economic conditions in Europe improve so that European incomes increase.
B
The long-run aggregate supply curve is ________ because along it, as prices rise, the money wagerate ________.A)vertical; fallsB)vertical; risesC)upward sloping; stays constantD)upward sloping; falls
B
The positive slope of the consumption function indicates thatA)the amount of household wealth is subject to change.B)consumers increase their total consumption expenditure when disposable income increases.C)consumers spend less out of each extra dollar of income.D)when prices fall consumers spend more.
B
The slope of the aggregate expenditure curve equals the change inA)autonomous expenditure divided by the change in real GDP.B)planned expenditure divided by the change in real GDP.C)government expenditure divided by the change in real GDP.D)real GDP divided by the change in planned expenditure.
B
Which of the following does NOT shift the aggregate demand curve?A)an increase in people's expected future incomesB)an increase in the price levelC)an increase in current foreign incomeD)a decrease in the quantity of money
B
f the price level increases, the AE curve shiftsA)downward and the AD curve shifts rightward.B)downward and there is movement along the AD curve.C)upward and the AD curve shifts leftward.D)upward and there is movement along the AD curve.
B
All of the following shift the LAS curve EXCEPTA)a change in the capital stock.B)technological progress.C)an increase in the money wage rate.D)an increase in the stock of human capital.
C
As the price level falls and other things remain the same, real wealth ________ and ________.10)A)decreases; the short-run aggregate supply decreasesB)increases; aggregate demand increasesC)increases; the quantity of real GDP demanded increasesD)decreases; the quantity of real GDP demanded decreases
C
At long-run macroeconomic equilibrium,A)an inflationary gap exists.B)real GDP is less than potential GDP but is as close as it is possible to be.C)real GDP equals potential GDP.D)a recessionary gap exists.
C
Autonomous consumption is that portion of consumption expenditure that is not influenced byA)the legal authorities.B)prices.C)income.D)preferences.
C
Autonomous expenditure is not influenced byA)the interest rate.B)the price level.C)real GDP.D)any other variable.
C
Business cycles are the result ofA)regular shifts of both the AD and SAS curves.B)regular shifts of the AD curve only.C)irregular shifts of both the AD and SAS curves.D)irregular shifts of the SAS curve only.
C
Economic growth is best defined asA)rightward shifts of the AD curve.B)rightward shifts of the SAS curve.C)increases in potential GDP.D)decreases in potential GDP.
C
For a household, the marginal propensity to save plus the marginal propensity to consumeA)equals a number that is larger the larger the household's disposable income.B)equals the household's disposable income.C)equals 1.D)equals 0.
C
If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150billion, then the multiplier must beA)$225 billion.B)0.5.C)2.D)$75 billion.
C
In a change to immigration policy during 2012, "people younger than 30 who came to the UnitedStates before the age of 16, pose no criminal or security threat, and were successful students orserved in the military can get a two-year deferral from deportation", then-Homeland SecuritySecretary Janet Napolitano said, according to CNN, 06/16/2012. If many of these immigrants hadpreviously been afraid to work, now as a result of being able to work legallyA)the short-run aggregate supply curve shifts rightward but potential GDP does not increase.B)the long-run aggregate supply curve shifts leftward and potential GDP decreases.C)the long-run aggregate supply curve shifts rightward and potential GDP increases.D)neither the short-run nor the long-run supply curve shifts.
C
In the short-run macroeconomic equilibriumA)real GDP is always less than potential GDP.B)real GDP equals potential GDP and aggregate demand determines the price level.C)real GDP and the price level are determined by short-run aggregate supply and aggregatedemand.D)the price level is fixed and short-run aggregate supply determines real GDP.
C
The INITIAL factors that can create a cost-push inflation do NOT includeA)increases in the money prices of raw materials.B)increases in money wage rates.C)increases in the quantity of money.D)None of the above answers is correct because all of the above could be the initial cause of acost-push inflation.
C
The expenditure multiplier equalsA)1/(slope of AE curve).B)APC-APS where APC is the average propensity to consume and APS is the averagepropensity to save.C)1/(1 - slope of AE curve).D)MPC-MPS where MPC is the marginal propensity to consume and MPS is the marginalpropensity to consume.
C
When there is unplanned inventory investment, aggregate planned expenditure is ________ realGDP and actual investment is ________ planned investment.A)greater than; less thanB)greater than; greater thanC)less than; greater thanD)less than; less than
C
Which of the following shifts the aggregate demand curve rightward?A)an increase in tax ratesB)an increase in the exchange rateC)an increase in government expenditureD)an increase in imports
C
Which of the following shifts the short-run aggregate supply curve?I.changes in the size of the labor forceII.changes in the money wage rateA)I onlyB)II onlyC)both I and IID)neither I nor II
C
Moving along the aggregate demand curve, a decrease in the quantity of real GDP demanded is aresult ofA)an increase in income.B)a decrease in the price level.C)a decrease in income.D)an increase in the price level.
D
Read the two statements below and indicate if they are true or false.I.Autonomous expenditures change when GDP changes.II.Aggregate planned expenditure is the sum of planned consumption expenditure, investment,government expenditure, and net exports.A)I and II are both true.B)I and II are both false.C)I is true and II is falseD)I is false and II is true.
D
Aggregate demand increases whenA)the exchange rate rises.B)foreign incomes fall.C)interest rates rise.D)None of the above answers is correct.
D
An increase in real GDP leads toA)a change in aggregate planned expenditure but whether the change is an increase or a decrease depends on whether nominal GDP increases or decreases.B)a decrease in aggregate planned expenditure.C)no change in aggregate planned expenditure.D)an increase in aggregate planned expenditure.
D
As disposable income increases, consumption expendituresA)increase by a larger amount.B)remain constant.C)increase by the same amount.D)increase by a smaller amount.
D
Equilibrium expenditure is defined as the level of aggregate expenditure whereA)spending equals output.B)actual aggregate expenditure equals real GDP.C)total inventories equal zero.D)aggregate planned expenditure equals real GDP.
D
For movements along the short-run aggregate supply curveA)the real wage rate changes.B)potential GDP remains constant.C)the money wage rate is constant.D)All of the above are correct.
D
If an economy at potential GDP experiences a demand shock that shifts the aggregate demand curve rightward, there will beA)an eventual leftward shift in the short-run aggregate supply curve.B)upward pressure on money wage rates.C)unemployment below the natural rate.D)All of the above answers are correct.
D
If real disposable income increases by $1,500, consumption expenditures willA)stay constant.B)increase by more than $1,500.C)decrease by less than $1,500.D)increase by less than $1,500.
D
If the MPC increases from 0.75 to 0.80 and there are no income taxes or importsA)the multiplier becomes smaller.B)the slope of the savings function becomes larger.C)the slope of the consumption function becomes smaller.D)the multiplier becomes larger.
D
Substitution effects help explain the slope of the aggregate demand curve. One substitution effect refers to the16)A)direct relationship between the interest rate and the real value of wealth.B)inverse relationship between the interest rate and the price level.C)change in wealth that results from a change in the interest rate.D)effect on investment expenditures that result from a change in interest rates produced by a change in the price level.
D
Suppose the equilibrium level of expenditure is $18 trillion. If real GDP is $17 trillion, theninventories are ________ their target levels and real GDP will ________.A)below; decreaseB)above; increaseC)above; decreaseD)below; increase
D
Technological progress willA)shift the SAS curve rightward but will not shift the LAS curve.B)shift the LAS curve rightward but will not shift the SAS curve.C)not shift either the LAS or the SAS curve.D)shift both the LAS and SAS curves rightward.
D
The marginal propensity to consume refers toA)the ratio of total consumption expenditure to total disposable income.B)the additional consumption expenditure that occurs out of an additional dollar of investment.C)the additional saving that occurs out of an additional dollar of disposable income.D)the additional consumption expenditure that occurs out of an additional dollar of disposableincome.
D
The quantity of real GDP supplied depends on theA)quantity of capital, bonds, and stocks.B)price level, the unemployment rate, and the quantity of government expenditures on goodsand services.C)level of aggregate demand.D)quantity of labor, the quantity of capital, and the state of technology.
D
The short-run aggregate supply curve shifts whenI.the full-employment quantity of capital changes.II.technology advances.A)I is true and II is falseB)I is false and II is trueC)I and II are both falseD)I and II are both true
D
The smaller the slope of the AE curve,A)the steeper is the consumption function.B)the smaller is slope of the saving function.C)the greater is the value of the multiplier.D)the smaller is the value of the multiplier.
D
When the quantity of capital increases, then theA)SAS curve shifts rightward and the LAS curve shifts leftward.B)SAS curve shifts rightward and the LAS curve does not shift.C)LAS curve shifts rightward and the SAS curve does not shift.D)SAS curve shifts rightward and the LAS curve shifts rightward.
D
An aggregate supply curve depicts the relationship betweenA)the money wage rate and the quantity of real GDP supplied.B)the price level and the quantity of nominal GDP supplied.C)the price level and the quantity of real GDP supplied.D)household expenditures and household income.
c
