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Chapter 11 - The Aggregate Expenditures Model
49. Actual investment is $62 billion at an equilibrium output level of $620 billion in a private
closed economy. The average propensity to save at this level of output is:
50. Refer to the above diagram for a private closed economy. The MPC and MPS are:
Chapter 11 - The Aggregate Expenditures Model
51. Refer to the above diagram for a private closed economy. Gross investment:
52. Refer to the above diagram for a private closed economy. At the $200 level of GDP:
Chapter 11 - The Aggregate Expenditures Model
53. Refer to the above diagram for a private closed economy. At the $400 level of GDP:
54. Refer to the above diagram for a private closed economy. At the $300 level of GDP:
Chapter 11 - The Aggregate Expenditures Model
11-24
55. Refer to the above diagram for a private closed economy. At the equilibrium level of GDP
the APC and APS:
56. If unintended increases in business inventories occur, we can expect:
(Advanced analysis) Answer the question on the basis of the following information for a
private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic
product (GDP).
Chapter 11 - The Aggregate Expenditures Model
57. Refer to the above information. The equilibrium GDP will be:
58. Refer to the above information. In equilibrium consumption will be:
59. Refer to the above information. In equilibrium saving will be:
Chapter 11 - The Aggregate Expenditures Model
(Advanced analysis) Answer the question on the basis of the following information for a
private closed economy.
where S is saving, Ig is gross investment, i is the real interest rate, and Y is GDP.
60. Refer to the above information. If the real interest rate is 5 (percent), investment will be:
61. Refer to the above information. In equilibrium the level of saving will be:
Chapter 11 - The Aggregate Expenditures Model
11-27
62. Refer to the above information. In equilibrium the level of consumption will be:
63. In a private closed economy _____ investment is equal to saving at all levels of GDP and
equilibrium occurs only at that level of GDP where _____ investment is equal to saving.
64. (Advanced analysis) If S = -60 + .25Y and Ig = 60, where S is saving, Ig is gross
Chapter 11 - The Aggregate Expenditures Model
11-28
65. In the aggregate expenditures model, technological progress will shift the investment
schedule:
66. At equilibrium real GDP in a private closed economy:
(Advanced analysis) Answer the question on the basis of the following information for a
private closed economy where C is consumption, Y is the gross domestic product, Ig is gross
investment, and i is the interest rate:
Chapter 11 - The Aggregate Expenditures Model
67. Refer to the above information. Given that the interest rate is 10 (percent), the amount that
businesses will want to invest will be:
69. What will be the effect of an excess of planned investment over saving in a private closed
economy with unemployed resources?
Chapter 11 - The Aggregate Expenditures Model
70. Which of the following statements is correct for a private closed economy?
71. At the $180 billion equilibrium level of income, saving is $38 billion in a private closed
economy. Planned investment must be:
72. Planned investment plus unintended increases in inventories equals:
Chapter 11 - The Aggregate Expenditures Model
73. Saving is always equal to:
74. Actual investment equals saving:
75. Unintended changes in inventories:
Chapter 11 - The Aggregate Expenditures Model
76. Investment and saving are, respectively:
77. (Advanced analysis) In a private closed economy (a) the marginal propensity to save is
0.25, (b) consumption equals income at $120 billion, and (c) the level of investment is $40
billion. What is the equilibrium level of income?
78. If the marginal propensity to consume is 0.9 in a private closed economy, a $20 billion
decline in investment spending will decrease:
Chapter 11 - The Aggregate Expenditures Model
79. Suppose that the level of GDP increased by $100 billion in a private closed economy
where the marginal propensity to consume is 0.5. Aggregate expenditures must have
increased by:
80. (Advanced analysis) Assume the consumption schedule for a private closed economy is C
= 40 + 0.75Y, where C is consumption and Y is gross domestic product. The multiplier for this
economy is:
81. (Advanced analysis) Assume the saving schedule for a private closed economy is S = -20
+ 0.2Y, where S is saving and Y is gross domestic product. The multiplier for this economy is:
Chapter 11 - The Aggregate Expenditures Model
Answer the question below on the basis of the following information for a private closed
economy:
82. Refer to the above information. If the real interest rate is 20 percent, the equilibrium GDP
will be:
Chapter 11 - The Aggregate Expenditures Model
83. Refer to the above information. If the real interest rate is 10 percent, the equilibrium GDP
will be:
84. Refer to the above information. The data suggest that:
85. Refer to the above information. The multiplier for this economy is:
Chapter 11 - The Aggregate Expenditures Model
Answer the question on the basis of the following information for a private closed economy:
86. Refer to the above information. If the real interest rate is 9 percent, the equilibrium GDP
will be:
Chapter 11 - The Aggregate Expenditures Model
87. Refer to the above information. In this economy a 3 percentage point decrease in the
interest rate will:
88. Refer to the above information. The multiplier in this economy is:
Chapter 11 - The Aggregate Expenditures Model
89. Refer to the above diagram for a private closed economy. The marginal propensity to
consume is:
Chapter 11 - The Aggregate Expenditures Model
90. Refer to the above diagram for a private closed economy. The upward shift of the
aggregate expenditures schedule from (C + Ig)1 to (C + Ig)2 reflects:
91. Refer to the above diagram for a private closed economy. The multiplier is:
92. Imports have the same effect on the current size of GDP as:
Chapter 11 - The Aggregate Expenditures Model
93. Exports have the same effect on the current size of GDP as:
94. At the equilibrium GDP for a private open economy:
95. Other things equal, if a change in the tastes of American consumers causes them to
purchase more foreign goods at each level of U.S. GDP, then:
