Econ202 -Final

In the above table, C is consumption expenditure, I is investment, G is government expenditure,and X - M is net exports. All entries are in dollars. The equilibrium level of real GDP is A)$2,400. B)$2,300. C)$2,200. D)$2,500

A)$2,400.

Disposable income(billions of dollars)4006008001,0001,200 Based upon the above table, the MPS is equal to A)0.25. B)1. C)0.75. D)Cannot be determined from the information given.

A)0.25.

In the above figure, the shift from AE0 to AE1 might have been caused by A)an increase in government expenditures. B)an increase in the price level. C)an increase in the real interest rate. D)All of the above answers are correct.

A)an increase in government expenditures.

If investment decreases, the AE curve shifts A)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)downward and the AD curve shifts leftward.

When autonomous expenditure increases, equilibrium aggregate expenditure A)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)increases by a greater amount due to the multiplier.

Demand-pull inflation results from continually increasing the quantity of money, which leads to acontinually A)increasing aggregate demand. B)decreasing aggregate demand. C)decreasing long-run aggregate supply. D)increasing aggregate supply.

A)increasing aggregate demand.

The part of aggregate planned expenditure that does not vary with real GDP A)is autonomous expenditure. B)equals equilibrium expenditure. C)is induced expenditure. D)equals zero.

A)is autonomous expenditure.

In the above figure, the economy is at point A. Then the price level falls to 90 while the money wagerate does not change. Firms will be willing to supply output equal to A)less than $18.0 trillion. B)$18.0 trillion. C)more than $18.0 trillion. D)Without more information, it is impossible to determine which of the above answers iscorrect.

A)less than $18.0 trillion.

The multiplier effect A)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)magnifies small changes in spending into larger changes in real GDP.

In the above figure, an increase in autonomous expenditure is depicted by the movement frompoint E to A)point F. B)point G. C)point H. D)point I.

A)point F.

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 GDP B)real GDP demanded; the price level does not change C)the price level; real GDP equals nominal GDP D)real GDP demanded; the wage rate is constant

A)the price level; real GDP equals potential GDP

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 is A)80. B)0.8. C)1.25. D)0.2.

B)0.8.

If there are no taxes or imports and MPC= 0.5, the multiplier equals A)5.0. B)2.0. C)0.5. D)6.0.

B)2.0.

If real GDP is $19 trillion and planned aggregate expenditure is $19.5 trillion, inventories will be A)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)below their target and real GDP will increase.

The positive slope of the consumption function indicates that A)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)consumers increase their total consumption expenditure when disposable income increases.

Consumers divide disposable income into A)saving and taxes. B)consumption and saving. C)consumption, saving, and taxes. D)consumption and taxes.

B)consumption and saving.

If the price level increases, the AE curve shifts34) A)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)downward and there is movement along the AD curve.

Disposable income is A)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)income minus taxes plus transfer payments.

In the above figure, point d represents the point where planned expenditures are ________ realGDP. A)greater than B)less than C)equal to D)There is not enough information to answer the question.

B)less than

Dissaving A)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)occurs when consumption is greater than disposable income.

The expenditure multiplier equals A)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)1/(1 - slope of AE curve).

If a $75 billion increase in autonomous expenditure increases equilibrium expenditure by $150billion, then the multiplier must be A)$225 billion. B)0.5. C)2. D)$75 billion.

C)2.

In the above figure, the short-run aggregate supply curve is SAS1. If the money wage rate increases, there is A)an upward movement along SAS1. B)a downward movement along SAS1. C)a shift to SAS0. D)a shift to SAS2.

C)a shift to SAS0.

For a household, the marginal propensity to save plus the marginal propensity to consume A)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)equals 1.

6)Autonomous consumption is that portion of consumption expenditure that is not influenced by A)the legal authorities. B)prices. C)income. D)preferences.

C)income.

The INITIAL factors that can create a cost-push inflation do NOT include A)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)increases in the quantity of money.

When there is unplanned inventory investment, aggregate planned expenditure is ________ realGDP and actual investment is ________ planned investment. A)greater than; less than B)greater than; greater than C)less than; greater than D)less than; less than

C)less than; greater than

When disposable income is 0, consumption is $2,000. Then A)saving = $2,000. B)the MPC = 0.2. C)saving =-$2,000. D)saving = $0.

C)saving =-$2,000.

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)the AE curve shifts downward.

In the above figure the economy is initially at point A on the aggregate expenditure curve AE0.Suppose firms expect profits to increase and decide to increase investment. As a result A)the AE curve shifts downward to a curve such as AE1. B)there is a movement along AE0 to a point such as C. C)the AE curve shifts upward to a curve such as AE2. D)there is a movement along AE0 to a point such as B.

C)the AE curve shifts upward to a curve such as AE2.

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 legally A)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)the long-run aggregate supply curve shifts rightward and potential GDP increases

An aggregate supply curve depicts the relationship between A)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)the price level and the quantity of real GDP supplied.

In the above figure, at a disposable income level of $2 trillion, saving equals (CF representsConsumption Function and B represents the 45 degree line) A)$4 trillion. B)consumption expenditure. C)zero. D)disposable income.

C)zero.

If an economy at potential GDP experiences a demand shock that shifts the aggregate demandcurve rightward, there will be A)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)All of the above answers are correct.

For movements along the short-run aggregate supply curve A)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)All of the above are correct.

When the quantity of capital increases, then the A)SAS curve shifts rightward and the LAS curve shifts leftward. 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)SAS curve shifts rightward and the LAS curve shifts rightward.

Equilibrium expenditure is defined as the level of aggregate expenditure where A)spending equals output. B)actual aggregate expenditure equals real GDP. C)total inventories equal zero. D)aggregate planned expenditure equals real GDP.

D)aggregate planned expenditure equals real GDP.

An increase in real GDP leads to A)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)an increase in aggregate planned expenditure.

If real disposable income increases by $1,500, consumption expenditures will A)stay constant. B)increase by more than $1,500. C)decrease by less than $1,500. D)increase by less than $1,500.

D)increase by less than $1,500.

If the MPC increases from 0.75 to 0.80 and there are no income taxes or imports A)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)the multiplier becomes larger.

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)the smaller is the value of the multiplier.