Aggregate Expenditure, Part 1
Inventories refer to:
A. goods which have been presold to consumers before they are produced by firms.
B. goods that have been produced by firms but not yet sold to consumers.
C. goods that have been produced by firms and sold to consumers in the same year.B. goods that have been produced by firms but not yet sold to consumers.
Macroeconomic equilibrium occurs when:
A. aggregate expenditure = GDP
B. aggregate income = planned inventories
C. aggregate expenditure = C + I + G + net transfers
If disposable income falls by $50 billion and consumption then falls by $40 billion as a result of income falling, then the slope of the consumption function is:
A. 0.10
B. 0.80
C. 1.20
B. 0.80
Potential GDP refers to the level of:
A. real GDP in the long run
B. nominal GDP in the long run
C. real GDP in the short runA. real GDP in the long run
If a positive technological change occurs in the economy,
A. the long-run aggregate supply curve will shift to the right
B. we will move up along the long-run aggregate supply curve
C. the long-run aggregate supply curve will shift to the left
A. the long-run aggregate supply curve will shift to the right
Stagflation occurs when:
A. inflation rises and GDP falls.
B. inflation falls and GDP rises.
C. inflation rises and GDP rises.
A. inflation rises and GDP falls.
The formula for aggregate expenditure is:
A. AE = C + I + G + NX
B. AE = C + I + G - NX
C. AE = C + I - depreciation - NX
A. AE = C + I + G + NX
What term describes the relationship between consumption spending and disposable income that consumers have to spend?
A. Household wealth
B. The consumption function
C. The paradox of thriftB. The consumption function
What is the smallest component of aggregate expenditure in the United States?
A. government expenditures
B. net export expenditures
C. consumption expenditures
B. net export expenditures
Full-employment GDP is also known as:
A. realized GDP
B. balanced-budget GDP
C. potential GDP
C. potential GDP
For the "Great Recession" of 2007 - 2009, it took _____ for employment to return to its cyclical peak.
A. about 18 months
B. about 3.5 years
C. more than 6 years
C. more than 6 years
According to ______, entrepreneurship does NOT contribute anything of value to production.
A. Karl Marx
B. Milton Friedman
C. John Maynard Keynes
A. Karl Marx
The ____ model focuses on the relationship between total spending (aggregate expenditure) and real GDP (total production) in the short run.
A. supply and demand
B. national income
C. aggregate expenditure
C. aggregate expenditure
MPC + MPS =
A. 0
B. 0.5
C. 1
C. 1
Refer to the board:
At what point is aggregate expenditure less than GDP?
A. A
B. B
C. C
C. C
A decrease in the price level will:
A. shift the short-run aggregate supply curve to the left
B. move the economy down along a stationary short-run aggregate supply curve
C. move the economy up along a stationary short-run aggregate supply curve
B. move the economy down along a stationary short-run aggregate supply curve
Which of the following is one reason for the decline in aggregate demand that led to the "Great Recession" in 2007 - 2009?
A. the financial crisis
B. falling oil prices
C. increases in housing prices
A. the financial crisis
New Keynesians emphasize the importance of:
A. increasing the quantity of money at a constant rate.
B. real causes of the business cycle.
C. sticky wages and prices.
C. sticky wages and prices.
The key idea of the aggregate expenditure model is that the goal in any particular year is that the level of ______ is determined mainly by the level of aggregate expenditure.
A. export spending
B. government spending
C. GDP
C. GDP
If the marginal propensity to consumer (MPC) is 0.75 in an economy, the marginal propensity to save (MPS) would equal:
A. 0.25
B. 0.50
C. 1
A. 0.25
Refer to the board:
If the economy is in equilibrium, it is at a level of aggregate expenditure given by point
A. A
B. B
C. C
B. B
Refer to the board:
An increase in the labor force would be represented by a movement from:
A. SRAS 1 to SRAS 2
B. SRAS 2 to SRAS 1
C. Point A to Point B
A. SRAS 1 to SRAS 2
Low levels of unemployment during _____ make it easier for workers to ______ wages.
A. a recession; negotiate higher
B. an expansion; accept lower
C. an expansion; negotiate higher
C. an expansion; negotiate higher
Which of the following models advocate that the quantity of money should be increased at a constant rate?
A. the monetarist model
B. the real business cycle model
C. the new classical modelA. the monetarist model
What is the largest component of aggregate expenditure?
A. net export expenditures
B. consumption expenditures
C. planned investment expenditures
B. consumption expenditures
What is defined as the value of a household's assets minus the value of its liabilities?
A. Disposable income
B. Personal household consumption
C. Household wealth
C. Household wealth
The ratio of the increase in equilibrium real GDP to the increase in an autonomous expenditure (like government spending on education) is called the:
A. consumption function
B. MPS
C. multiplier
C. multiplier
Refer to the board:
An increase in the price level would be represented by a movement from:
A. Point A to Point B
B. SRAS 2 to SRAS 1
C. SRAS 1 to SRAS 2
A. Point A to Point B
On average, in recessions since 1950 BESIDES the "Great Recession", it has taken _____ for employment to return to its cyclical peak.
A. about 1 year
B. about 18 months
C. almost 2.5 years
C. almost 2.5 years
Which of the following models focuses on how productivity shocks explain fluctuations in real GDP?
A. the monetarist model
B. the new Keynesian model
C. the real business cycle model
C. the real business cycle model