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Chapter 11 - The Aggregate Expenditures Model
1. The most basic assumption of the aggregate expenditures model is that:
2. John Maynard Keynes developed the aggregate expenditures model in order to understand
the:
Chapter 11 - The Aggregate Expenditures Model
3. The investment schedule shows the:
4. The difference between the investment demand curve and the investment schedule is that
the former shows:
Chapter 11 - The Aggregate Expenditures Model
5. Which of the following is graphed as a horizontal line across levels of real GDP?
6. The investment demand curve relates planned investment spending to:
7. In the aggregate expenditure model, which of the following variables is assumed to be
independent of real GDP?
Chapter 11 - The Aggregate Expenditures Model
8. The above figure indicates that:
Chapter 11 - The Aggregate Expenditures Model
9. A rightward shift of the investment demand curve will:
10. If the real interest rate falls, then the:
11. If the stock of available capital in the economy is running too low, then the:
Chapter 11 - The Aggregate Expenditures Model
12. If the expected rate of return on investment decreases, then most likely the:
The data below are for a private (no government) closed economy. All figures are in billions
of dollars.
13. Refer to the above table. The MPC and multiplier are, respectively:
Chapter 11 - The Aggregate Expenditures Model
14. Refer to the above table. If planned investment is $25 billion, then aggregate expenditures
at the income level of $560 billion will be:
15. Refer to the above table. If planned investment is $25 billion, the equilibrium level of
GDP will be:
16. Refer to the above table. If planned investment is $15 billion, then at the $560 billion level
of output, there will be a(n):
Chapter 11 - The Aggregate Expenditures Model
17. Refer to the above table. If planned investment is $18 billion, then at the $660 billion level
of disposable income, there will be an:
All figures are in billions of dollars.
18. Refer to the above table. The MPS and the multiplier are, respectively:
Chapter 11 - The Aggregate Expenditures Model
19. Refer to the above table. When there is no investment in this private closed economy, the
equilibrium level of GDP will be:
20. Refer to the above table. If gross investment is $12 billion, the equilibrium level of GDP
will be:
21. Refer to the above table. Suppose investment is $12 billion and the economy revises its
saving plans so as to save $4 billion less at all levels of income. The new equilibrium GDP
will be:
Chapter 11 - The Aggregate Expenditures Model
22. When aggregate expenditure is greater than GDP, then there will be an:
23. In a private closed economy, there will be an unplanned increase in inventories when:
Chapter 11 - The Aggregate Expenditures Model
24. Refer to the above graph for a private closed economy. In this economy, investment is:
25. Refer to the above graph for a private closed economy. The equilibrium level of GDP in
this economy is:
26. Refer to the above graph for a private closed economy. The multiplier for the above
economy is:
Chapter 11 - The Aggregate Expenditures Model
27. Refer to the above graph for a private closed economy. At the equilibrium level of GDP,
saving will be:
28. Refer to the above graph for a private closed economy. When income is equal to $150
billion, aggregate:
29. Refer to the above graph for a private closed economy. At the $150-billion level of GDP:
Chapter 11 - The Aggregate Expenditures Model
30. Refer to the above graph for a private closed economy. When output or income is $350
billion there will be:
The table shows a private closed economy. All figures are in billions of dollars.
31. Refer to the above table. If the real rate of interest is 2%, then the equilibrium level of
GDP will be:
Chapter 11 - The Aggregate Expenditures Model
32. Refer to the above table. An increase in the real interest rate from 2% to 6% will:
33. When the economy is at its equilibrium GDP level, all of the following will occur, except:
34. In the flow of income and spending, saving and investment are, respectively:
Chapter 11 - The Aggregate Expenditures Model
35. If GDP exceeds aggregate expenditures in a private closed economy:
36. When planned investment exceeds saving in a private closed economy:
37. If actual investment exceeds planned investment in a private closed economy, then:
Chapter 11 - The Aggregate Expenditures Model
38. When saving is less than planned investment in the aggregate expenditures model of a
private closed economy then:
39. All of the following are true when there is an unplanned decrease in inventories, except:
40. Saving is $15 billion at the $125 billion equilibrium level of output in a closed, private
economy. Actual investment must be:
Chapter 11 - The Aggregate Expenditures Model
41. Planned investment is $20 billion and saving is $15 billion when GDP in the economy is
$180 billion. The economy is:
42. Planned investment is $20 billion and saving is $9 billion at the $175 billion level of
output in a private, closed economy. Actual investment at this level must be:
43. Saving is $40 billion and planned investment is $28 billion at the $175 billion level of
output in a private, closed economy. At this level:
Chapter 11 - The Aggregate Expenditures Model
44. Actual investment is $28 billion and saving is $15 billion at the $166 billion level of
output in a private, closed economy. At this level:
45. Consumption is $141 billion, planned investment is $15 billion, and saving is $15 billion
in a private, closed economy. At this level:
46. If the MPC in an economy is 0.75 and aggregate expenditures increase by $5 billion, then
equilibrium GDP will increase by:
Chapter 11 - The Aggregate Expenditures Model
47. In a private closed economy where MPC = 0.8, if consumers reduce their spending by $10
billion and firms cut investments by $5 billion, then equilibrium GDP will decrease by:
48. The marginal propensity to consume is 0.8. Equilibrium GDP will increase by $30 billion
if aggregate expenditures rise by:
49. Recently, the level of GDP has declined by $60 billion in an economy where the marginal
propensity to consume is 0.75. Aggregate expenditures must have fallen by:
Chapter 11 - The Aggregate Expenditures Model
50. The marginal propensity to save is 0.2. Equilibrium GDP will decrease by $50 billion if
aggregate expenditures schedule decrease by:
51. If aggregate expenditures increase by $12 billion and equilibrium GDP consequently
increases by $48 billion, then the marginal propensity to save in the economy must be:
52. Net exports are negative when:
