ch 12 (aggregate expenditure)

The​ ________ model focuses on the relationship between total spending and real GDP in the short​ run, assuming the price level is constant. A. supply and demand B. business cycle C. aggregate expenditure D. national income

aggregate expenditure

If the marginal propensity to save is​ 0.25, then a​ $10 million decrease in disposable income will A. decrease consumption by​ $2.5 million. B. increase consumption by​ $7.5 million. C. increase consumption by​ $2.5 million. D. decrease consumption by​ $7.5 million.

decrease consumption by​ $7.5 million

MPC​ + MPS​ = A. 0. B. 0.5. C. 1. D. 100.

1.

Consumption spending is​ $22 million, planned investment spending is​ $7 million, actual investment spending is​ $7 million, government purchases are​ $9 million, and net export spending is​ $3 million. Based on this​ information, which of the following is​ true? A. Aggregate expenditure is less than GDP. B. There was an unplanned change in inventories. C. Aggregate expenditure is equal to GDP. D. Aggregate expenditure is greater than GDP.

Aggregate expenditure is equal to GDP.

If firms find that consumers are purchasing more than​ expected, which of the following would you​ expect? A. The economy will adjust to macroeconomic equilibrium as inventories​ fall, and production and employment fall. B. The economy will adjust to macroeconomic equilibrium as inventories​ rise, and production and employment fall. C. Aggregate expenditure will likely be greater than GDP. D. Aggregate expenditure will likely be less than GDP.

Aggregate expenditure will likely be greater than GDP.

If aggregate expenditure is greater than​ GDP, how will the economy reach macroeconomic​ equilibrium? A. Inventories will​ rise, and GDP and employment will rise. B. Inventories will​ rise, and GDP and employment will decline. C. Inventories will​ decline, and GDP and employment will decline. D. Inventories will​ decline, and GDP and employment will rise.

Inventories will​ decline, and GDP and employment will rise.

When aggregate expenditure is less than​ GDP, which of the following is​ true? A. Households bought more new homes than they anticipated. B. There was an unplanned increase in inventories. C. Firms spent more on capital goods than they anticipated. D. All of the above must be true when aggregate expenditure is less than GDP.

There was an unplanned increase in inventories.

Which of the following will decrease aggregate expenditure in the United​ States? A. a decrease in the price level B. a decrease in the value of the dollar C. a decrease in government purchases D. a decrease in interest rates

a decrease in government purchases

All of the following are components of aggregate expenditure except A. government spending. B. consumption spending. C. actual investment spending. D. net export spending.

actual investment spending.

An unplanned decrease in inventories results in A. actual investment that is less than planned investment. B. an increase in planned investment. C. a decrease in planned investment. D. actual investment that is greater than planned investment.

actual investment that is less than planned investment.

Firms in a small economy anticipated that inventories would grow over the past year by​ $500,000. Over that​ year, inventories actually grew by only​ $400,000. This implies that A. there was a planned increase in inventories that year. B. aggregate expenditure that year was greater than GDP that year. C. there was an unplanned increase in inventories that year. D. aggregate expenditure that year was equal to GDP that year.

aggregate expenditure that year was greater than GDP that year.

Firms in a small economy planned that inventories would grow over the past year by​ $300,000. Over that​ year, inventories actually grew by​ $400,000. This implies that A. aggregate expenditure that year was less than GDP that year. B. there was a planned decrease in inventories that year. C. there was an unplanned decrease in inventories that year. D. aggregate expenditure that year was equal to GDP that year.

aggregate expenditure that year was less than GDP that year

When aggregate expenditure​ = GDP, A. net exports equal zero. B. saving equals zero. C. the federal budget is balanced. D. macroeconomic equilibrium occurs.

macroeconomic equilibrium occurs.

Decreases in the price level will A. lower consumption because goods and services are less affordable. B. raise consumption because real wealth increases. C. raise consumption because goods and services are more affordable. D. lower consumption because real wealth decreases.

raise consumption because real wealth increases.

The marginal propensity to consume is defined as A. consumption divided by disposable income. B. the change in disposable income divided by the change in consumption. C. the change in consumption divided by the change in disposable income. D. disposable income divided by consumption.

the change in consumption divided by the change in disposable income.

The slope of the consumption function is equal to A. the change in disposable income divided by the change in consumption. B. the change in national income divided by the change in consumption. C. the change in consumption divided by the change in disposable income. D. the change in consumption divided by the change in personal income.

the change in consumption divided by the change in disposable income.

U.S. net export spending rises when A. the inflation rate is higher in the U.S. relative to other countries. B. the price level in the U.S. rises relative to the price level in other countries. C. the value of the U.S. dollar increases relative to other currencies. D. the growth rate of U.S. GDP is slower than the growth rate of GDP in other countries.

the growth rate of U.S. GDP is slower than the growth rate of GDP in other countries.

Consumption spending is​ $5 million, planned investment spending is​ $8 million, unplanned investment spending is minus−​$2 ​million, government purchases are​ $10 million, and net export spending is​ $2 million. What is​ GDP? A. ​$15 million B. ​$23 million C. ​$25 million D. ​$27 million

​$23 million

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 aggregate​ expenditure? A. ​$15 million B. ​$23 million C. ​$25 million D. ​$27 million

​$25 million

Examples of assets that are included in household wealth would be A. ​stocks, bonds, and mortgages. B. ​stocks, bonds, and savings accounts. C. ​stocks, loans​ owed, and savings accounts. D. ​stocks, credit​ cards, and savings accounts.

​stocks, bonds, and savings accounts.