Chapter 21.2

6) Refer to Table 21-3. The equilibrium level of national income ($billions) will be

$4000.

20) In a simple macro model with the price level assumed to be constant, a change in firms' level of desired investment is predicted to influence equilibrium national income by

shifting the aggregate expenditure function.

9) Refer to Table 21-3. At the equilibrium level of national income, desired saving ($billions) is

$100.

8) Refer to Table 21-3. At the equilibrium level of national income, desired investment ($billions) is

$100.

12) Refer to Table 21-4. At the equilibrium level of national income, desired consumption expenditure ($billions) will be

$240.

26) Refer to Table 21-5. At the equilibrium level of national income, the level of desired saving will be

$25.

11) Refer to Table 21-4. The equilibrium level of national income ($billions) will be

$280.

25) Refer to Table 21-5. At the equilibrium level of national income, what is the level of desired consumption expenditures?

$350

24) Refer to Table 21-5. The equilibrium level of national income is

$375.

7) Refer to Table 21-3. At the equilibrium level of national income, desired consumption expenditure ($billions) will be

$3900.

13) Refer to Table 21-4. At the equilibrium level of national income, desired saving ($billions) will be

$40.

29) Consider a simple macro model with a constant price level and demand-determined output. If the simple multiplier is 3 and there is a $2 million increase in autonomous investment spending, then the equilibrium level of income will increase by

$6 million.

5) Refer to Table 21-3. The correct expression for the aggregate expenditure function for this economy is

AE = $400 billion + 0.9Y

23) Consider a simple macro model with a constant price level and demand-determined output. If national income is above its equilibrium level, it is likely that inventories are ________, and so national income tends to ________.

accumulating; fall

18) Consider the simplest macro model with a constant price level and demand-determined output. If desired aggregate expenditure is less than actual national income, then

actual national income must be above the equilibrium level.

15) In a simple macro model with no government and no foreign trade, the equilibrium level of national income is the level of income at which

aggregate desired expenditure equals actual national income.

10) Refer to Table 21-3. Suppose this economy is in equilibrium. There is then a significant decline in house prices across the country. The likely effect is

autonomous consumption will fall below $300 billion and equilibrium national income will therefore fall.

22) Consider the simplest macro model with a constant price level and demand-determined output. If national income is less than its equilibrium level, it is likely that firms' inventories are ________, and so national income tends to ________.

being depleted; rise

19) Consider the simplest macro model with demand-determined output. If desired aggregate expenditure is greater than actual national income, then

both A and B are correct.

2) Refer to Figure 21-3. Consider the simplest macro model with no government and no foreign trade, and the aggregate expenditure function AE = C + I. If there was zero autonomous expenditure and the marginal propensity to consume was equal to one, then the AE function would be

coincident with the 45-degree line.

21) If national income is demand-determined, the condition for national income to be in equilibrium can be stated as

desired aggregate expenditure equals the actual level of national income.

14) Consider a simple macro model with demand-determined output. At the equilibrium level of national income,

desired aggregate expenditures will equal total output.

3) Consider the simplest macro model with demand-determined output, where AE = C + I. Suppose that actual national income is $900 billion and desired consumption plus desired investment is $920 billion. We can expect that

firms will see a decrease in inventories, and they will respond by increasing output, thereby increasing actual national income.

4) Consider the simplest macro model with demand-determined output, where AE = C + I. Suppose that actual national income is $900 billion and desired consumption plus desired investment is $890 billion. We can expect that

firms will see an increase in inventories, and they will respond by decreasing output, thereby decreasing actual national income.

27) Consider a simple macro model with a constant price level and demand-determined output. Suppose the level of actual national income is less than desired aggregate expenditure. In this case,

shortages of goods and reductions in inventories will cause producers to increase output and national income to rise.

28) Consider a simple macro model with a constant price level and demand-determined output. Suppose desired aggregate expenditures are less than the current level of national income. The vertical distance between the AE curve and the 45-degree line represents

the amount by which output exceeds desired expenditures.

1) Refer to Figure 21-3. All points along the 45-degree line represent

the equilibrium condition that desired aggregate expenditure equals actual national income.

16) In a simple model of the economy with demand-determined output, the equilibrium level of national income is at an income

where aggregate desired expenditure equals the value of total output.

17) In a simple macro model with demand-determined output, the equilibrium level of national income is at an income

where the AE curve intersects the 45-degree line.