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Exam 8: Aggregate Expenditure and Output in the Short Run

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Question 31

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If the economy is currently in equilibrium at a level of GDP that is below potential GDP,which of the following would move the economy back to potential GDP?

A) an increase in wealth
B) an increase in interest rates
C) a decrease in business confidence
D) an increase in the value of the dollar relative to other currencies
E) a decrease in government spending

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Question 32

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Given the equations for C,I,G,and NX below,what is the marginal propensity to consume? C = 2,000 + 0.9Y I = 2,500 G = 3,000 NX = 400

A) -0.1
B) 0.1
C) 0.2
D) 0.9
E) 2,000

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Question 33

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Figure 8.3 Alt text for Figure 8.3: In figure 8.3,a graph comparing real GDP and real aggregate expenditure. Long description for Figure 8.3: The x-axis is labelled,real GDP,Y (trillions of 2002 dollars) .The y-axis is labelled,real aggregate expenditure,AE (trillions of 2002 dollars) .Line Y = AE,originates at the vertex and slopes up to the top right corner.Line AE1,begins a little less than half way along the x-axis and slopes up to the end of the x-axis.Both these lines intersect at point K,approximately 3 quarters of the way along both lines.Point J is plotted a little less than half way along line AE1,to the left of point K.Point L is marked close to the right end of the line AE1,to the right of point K. -Refer to Figure 8.3.According to the figure above,at what point is aggregate expenditure less than GDP?

Figure 8.3 Alt text for Figure 8.3: In figure 8.3,a graph comparing real GDP and real aggregate expenditure. Long description for Figure 8.3: The x-axis is labelled,real GDP,Y (trillions of 2002 dollars) .The y-axis is labelled,real aggregate expenditure,AE (trillions of 2002 dollars) .Line Y = AE,originates at the vertex and slopes up to the top right corner.Line AE1,begins a little less than half way along the x-axis and slopes up to the end of the x-axis.Both these lines intersect at point K,approximately 3 quarters of the way along both lines.Point J is plotted a little less than half way along line AE1,to the left of point K.Point L is marked close to the right end of the line AE1,to the right of point K. -Refer to Figure 8.3.If the economy is at point J,what will happen?

From 2009 to 2014,________ for Canada were negative.

Which of the following is a true statement about the multiplier?

Examples of assets that are included in household wealth would be

Table 8.3 -Refer to Table 8.3.Given the consumption schedule in the table above,the marginal propensity to save is

If planned aggregate expenditure is less than total production,

The larger the MPC,the larger the value of the multiplier.

An unplanned increase in inventories results from

Which of the following is not a component of aggregate expenditure?

A general formula for the multiplier is

What are the five main determinants of consumption spending? Which of these is the most important?

Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what is the marginal propensity to consume? C = 5,000 + (MPC) Y I = 1,500 G = 2,000 NX = -500

The key idea of the aggregate expenditure model is that in any particular year,the level of ________ is determined mainly by the level of aggregate expenditure.

If firms sell exactly what they expected to sell,all of the following will be true except

If firms find that consumers are purchasing less than expected,which of the following would you expect?

If the marginal propensity to save is 0.35,the multiplier is 2.86.

Figure 8.1 Alt text for Figure 8.1: In figure 8.1,a graph comparing real GDP and real aggregate expenditure. Long description for Figure 8.1: The x-axis is labelled,real GDP,Y (trillions of 2002 dollars) .The y-axis is labelled,real aggregate expenditure,AE (trillions of 2002 dollars) .A line,labelled Y = AE,originates at the vertex and slopes up to the top right corner.Another line,labelled AE1,begins a little less than half way along the x-axis and slopes up to the end of the x-axis.Both these lines intersect at point K,approximately three quarters of the way along both lines.Point J is plotted a little less than half way along the line AE1,to the left of point K.Point L is plotted close to the right end of the line AE1,to the right of point K. -Refer to Figure 8.1.According to the figure above,at what point is aggregate expenditure greater than GDP?