eco 11 quiz
Firms do not change prices frequently because:
it is costly to do so
When actual investment is less than planned investment:
firms sold more output than expected
In the Keynesian model, it is assumed that, when demand for a firm's product changes, the firm:
changes production levels to meet the demand.
Menu costs are the costs of:
changing prices
The largest component of planned aggregate expenditure is:
consumption
The four components of planned aggregate expenditure are:
consumption, planned investment, government purchases, and net exports.
The decision whether to change prices frequently or infrequently is an application of the:
cost-benefit principle
The two parts of the Keynesian consumption function are consumption that depends on ______ and consumption that depends on _____.
disposable income; factors other than disposable income
The basic Keynesian model is built on the key assumption that:
firms meet the demand for their products at preset prices.
When actual investment is greater than planned investment:
firms sold less output than expected
All of the following would be included in planned aggregate expenditure EXCEPT:
interest paid on the government debt
If firms sell more output than expected, planned investment:
is greater than actual investment
If firms sell less output than expected, planned investment:
is less than actual investment
The consumption function is relationship between consumption and:
its determinants, such as disposable income.
In the basic Keynesian model all of the following are true EXCEPT:
planed investment always equals actual investment
Unplanned inventory investment equals zero when
planned investment equals actual investment.
Planned aggregate expenditure is total:
planned spending on final goods and services.
All of the following would be included in planned aggregate expenditure EXCEPT:
social security payments
If firms sell less than expected, actual investment increases because _____, which is counted as investment.
the unsold goods are added to inventory
Planned investment may differ from actual investment because of:
unplanned changes in inventories