1. The ratio of the increase in ________ to the increase in ________ is called t

Question

1. The ratio of the increase in ________ to the increase in ________ is called the multiplier.

a.equilibrium nominal GDP; autonomous expenditure, b. librium real GDP; autonomous expenditure, c.autonomous expenditure; equilibrium real GDP, d.induced expenditure; equilibrium real GDP

2.The multiplier is calculated as the change in ________ / change in ________.

real GDP; autonomous expenditure

autonomous expenditure; real GDP.

nominal GDP; autonomous expenditure.

real GDP; induced spending.

3.

$10 billion

$100 billion

$200 billion

$300 billion

4. Question 13

Aggregate expenditure is greater than GDP.

The economy has achieved macroeconomic equilibrium.

Actual inventories are greater than planned inventories.

GDP will be increasing.

5.The National Restaurant Association states that the restaurant industry has economic effect of more than $1.7 trillion annually in the United States, with every dollar spent in restaurants generating an estimated total of $2.05 in spending in the economy. This indicates that the spending multiplier for the restaurant industry is equal to

6.

Question 15

If the marginal propensity to consume is 0.6, the marginal propensity to save is

0.4.

0.6.

1.

1.5.

1 points

Question 16

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to ________ and real GDP to ________.

increase; increase

decrease; increase

increase; decrease

decrease; decrease

1 points

Question 17

If planned aggregate expenditure is less than total production,

actual inventories will equal planned inventories.

firms will experience an unplanned decrease in inventories.

GDP will decrease.

the economy is in equilibrium.

1 points

Question 18

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

The multiplier rises as the MPC rises.

The smaller the MPC, the larger the multiplier.

The multiplier is a value between zero and one.

The multiplier effect does not occur when autonomous expenditure decreases.

1 points

Question 19

Households expect future income to rise.

Household wealth falls.

The firm's cash flow rises as profits rise.

Government expenditures increase.

1 points

Question 20

Which of the following leads to an increase real GDP?

a decrease in government spending

a decrease in the inflation rate in other countries, relative to the inflation in the United States

a decrease in interest rates

households have increasingly pessimistic expectations about future income

$10 billion

$100 billion

$200 billion

$300 billion

4. Question 13

Figure 12-1




Refer to Figure 12-1. At point L in the figure above, which of the following is true?

Aggregate expenditure is greater than GDP.

The economy has achieved macroeconomic equilibrium.

Actual inventories are greater than planned inventories.

GDP will be increasing.

5.The National Restaurant Association states that the restaurant industry has economic effect of more than $1.7 trillion annually in the United States, with every dollar spent in restaurants generating an estimated total of $2.05 in spending in the economy. This indicates that the spending multiplier for the restaurant industry is equal to

6.

Question 15

If the marginal propensity to consume is 0.6, the marginal propensity to save is

0.4.

0.6.

1.

1.5.

1 points

Question 16

The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net exports to ________ and real GDP to ________.

increase; increase

decrease; increase

increase; decrease

decrease; decrease

1 points

Question 17

If planned aggregate expenditure is less than total production,

actual inventories will equal planned inventories.

firms will experience an unplanned decrease in inventories.

GDP will decrease.

the economy is in equilibrium.

1 points

Question 18

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

The multiplier rises as the MPC rises.

The smaller the MPC, the larger the multiplier.

The multiplier is a value between zero and one.

The multiplier effect does not occur when autonomous expenditure decreases.

1 points

Question 19

Figure 12-2





Refer to Figure 12-2. If the U.S. economy is currently at point N, which of the following could cause it to move to point K?

Households expect future income to rise.

Household wealth falls.

The firm's cash flow rises as profits rise.

Government expenditures increase.

1 points

Question 20

Which of the following leads to an increase real GDP?

a decrease in government spending

a decrease in the inflation rate in other countries, relative to the inflation in the United States

a decrease in interest rates

households have increasingly pessimistic expectations about future income

Explanation / Answer

ans 1

a.equilibrium nominal GDP; autonomous expenditure

ans 2

nominal GDP; autonomous expenditure.

ans 3

fig not visible

Multiplier =1/(1-MPC) = 1/ (1- 0.75) = 1/0.25 = 4 = change in GDP / change in Govt spending

      4= 400 / change in Govt spending

change in Govt spending = 100

$100 billion

ans 4

fig not visible

ans 5

is incomplete

ans 15

0.4.

MPS= 1- mPC= 1-0.6 = 0.4

ans 16

decrease; decrease

ans 17

GDP will decrease.

ans 18

The multiplier rises as the MPC rises.

fig not visible, incomplete information

ans20

a decrease in interest rates

interest increases , investment and GDP increases

ans 19

fig not visible, incomplete information

ans20

a decrease in interest rates

interest increases , investment and GDP increases

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