Question 1

Ceteris paribus,how does a recession in the United States affect U.S.net exports?

Accepted Answer

The answer of Ceteris paribus,how does a recession in the...

Question 2

Figure 23-1 
-Refer to Figure 23-1.If the economy is at a level of aggregate expenditure given by point K,
A) the economy is in equilibrium.
B) production is greater than spending.
C) production is less than spending.
D) inventories will increase above their desired level.

Accepted Answer

Point K is where the aggregate expenditure line intersects with the 45-degree line. This indicates that production (output) is equal to spending (aggregate expenditure) and the economy is in equilibrium.

Question 3

How does a decrease in government spending affect the aggregate expenditure line?
A) It shifts the aggregate expenditure line upward.
B) It shifts the aggregate expenditure line downward.
C) It increases the slope of the aggregate expenditure line.
D) It decreases the slope of the aggregate expenditure line.

Accepted Answer

A decrease in government spending will decrease the overall aggregate expenditure in the economy, therefore shifting the aggregate expenditure line downward. This is because government spending is a component of aggregate expenditure, and a decrease in government spending decreases the overall level of spending.

Question 4

On the 45-degree line diagram,the 45-degree line shows points where
A) real income equals real GDP.
B) real aggregate expenditure equals C + I.
C) real aggregate expenditure equals real GDP.
D) real aggregate output equals the quantity produced.

Accepted Answer

The 45-degree line represents points where real aggregate expenditure (the sum of consumption, investment, government spending, and net exports) equals real GDP (the total value of goods and services produced in an economy). Therefore, choice C is the correct answer. The other options are incorrect as they do not accurately describe the purpose of the 45-degree line.

Question 5

Figure 23-1 
-Refer to Figure 23-1.According to the figure above,at what point is aggregate expenditure greater than GDP?
A) J
B) K
C) L
D) none of the above

Accepted Answer

The answer of Figure 23-1 
-Refer to Figure 23-1.According to...

Question 6

If planned aggregate expenditure is less than total production,
A) actual inventories will equal planned inventories.
B) firms will experience an unplanned increase in inventories.
C) GDP will increase.
D) the economy is in equilibrium.

Accepted Answer

If planned aggregate expenditure is less than total production, it means that demand for goods and services is less than what is being produced, and firms will be left with unsold goods, leading to an unplanned increase in inventories.

Question 7

Which of the following leads to an increase real GDP?
A) a decrease in government spending
B) a decrease in the inflation rate in other countries, relative to the inflation in the United States
C) a decrease in interest rates
D) households have increasingly pessimistic expectations about future income

Accepted Answer

The answer of Which of the following leads to an...

Question 8

If planned aggregate expenditure is less than total production,
A) actual inventories will equal planned inventories.
B) firms will experience an unplanned decrease in inventories.
C) GDP will decrease.
D) the economy is in equilibrium.

Accepted Answer

The answer of If planned aggregate expenditure is less than...

Question 9

If planned aggregate expenditure is below potential GDP and planned aggregate expenditure equals GDP,then
A) actual inventory investment will be less than planned inventory investment.
B) actual inventory investment will be greater than planned inventory investment.
C) the economy is in a recession.
D) the economy is at full employment.

Accepted Answer

The answer of If planned aggregate expenditure is below potential...

Question 10

Assume that inventories declined by more than analysts predicted.This implies that
A) planned aggregate expenditure was greater than real GDP.
B) planned aggregate expenditure was equal to real GDP.
C) planned aggregate expenditure was less than real GDP.
D) planned aggregate expenditure is unrelated to real GDP.

Accepted Answer

The answer of Assume that inventories declined by more than...

Question 11

Figure 23-1 
-Refer to Figure 23-1.If the economy is at point L,what will happen?
A) Inventories have fallen below their desired level, and firms decrease production.
B) Inventories have fallen below their desired level, and firms increase production.
C) Inventories have risen above their desired level, and firms decrease production.
D) Inventories have risen above their desired level, and firms increase production.

Accepted Answer

The answer of Figure 23-1 
-Refer to Figure 23-1.If the...

Question 12

Explain how a stock market crash has the potential to lead to a recession in an economy.

Accepted Answer

The answer of Explain how a stock market crash has...

Question 13

Figure 23-1 
-Refer to Figure 23-1.At point L in the figure above,which of the following is true?
A) Aggregate expenditure is greater than GDP.
B) The economy has achieved macroeconomic equilibrium.
C) Actual inventories are greater than planned inventories.
D) GDP will be increasing.

Accepted Answer

The answer of Figure 23-1 
-Refer to Figure 23-1.At point...

Question 14

Given Table 23-3 below,fill in the values for saving.Assume there are no taxes.

Accepted Answer

The answer of Given Table 23-3 below,fill in the values...

Question 15

On the 45-degree line diagram,for points that lie below the 45-degree line,
A) planned aggregate expenditure is greater than GDP.
B) planned aggregate expenditure is less than GDP.
C) planned aggregate expenditure is equal to GDP.
D) planned aggregate expenditure is less than aggregate income.

Accepted Answer

The 45-degree line represents the level of GDP, and points below the line represent planned aggregate expenditure that is less than GDP.

Question 16

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

Accepted Answer

An increase in wealth typically leads to higher consumer spending, which can stimulate economic activity and move the economy towards its potential GDP by increasing demand for goods and services.

Question 17

Suppose the United States experiences a long period of inflation relative to other countries.How will this affect U.S.net exports?

Accepted Answer

The answer of Suppose the United States experiences a long...

Question 18

Following three years of negative growth,restaurant sales in the United States were expected to increase 3.6 percent in 2011.If the increase in restaurant sales increases aggregate expenditure,
A) unplanned investment will decrease.
B) planned investment will decrease.
C) planned aggregate expenditure will be less than real GDP.
D) real GDP will be less than nominal GDP.

Accepted Answer

The answer of Following three years of negative growth,restaurant sales...

Question 19

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC).Show that MPC + MPS = 1.Table 23-4

Accepted Answer

The answer of Given Table 23-4 below,fill in the values...

Question 20

Given Table 23-3 below,fill in the values for saving.Assume taxes = $800.Table 23-3

Accepted Answer

The answer of Given Table 23-3 below,fill in the values...

Quiz 23: Aggregate Expenditure and Output in the Short Run

Ceteris paribus,how does a recession in the United States affect U.S.net exports?

Figure 23-1 -Refer to Figure 23-1.If the economy is at a level of aggregate expenditure given by point K,

How does a decrease in government spending affect the aggregate expenditure line?

On the 45-degree line diagram,the 45-degree line shows points where

Figure 23-1 -Refer to Figure 23-1.According to the figure above,at what point is aggregate expenditure greater than GDP?

If planned aggregate expenditure is less than total production,

Which of the following leads to an increase real GDP?

If planned aggregate expenditure is less than total production,

If planned aggregate expenditure is below potential GDP and planned aggregate expenditure equals GDP,then

Assume that inventories declined by more than analysts predicted.This implies that

Figure 23-1 -Refer to Figure 23-1.If the economy is at point L,what will happen?

Explain how a stock market crash has the potential to lead to a recession in an economy.

Figure 23-1 -Refer to Figure 23-1.At point L in the figure above,which of the following is true?

Given Table 23-3 below,fill in the values for saving.Assume there are no taxes.

On the 45-degree line diagram,for points that lie below the 45-degree line,

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?

Suppose the United States experiences a long period of inflation relative to other countries.How will this affect U.S.net exports?

Following three years of negative growth,restaurant sales in the United States were expected to increase 3.6 percent in 2011.If the increase in restaurant sales increases aggregate expenditure,

Given Table 23-4 below,fill in the values of the marginal propensity to save (MPS)and the marginal propensity to consume (MPC).Show that MPC + MPS = 1.Table 23-4

Given Table 23-3 below,fill in the values for saving.Assume taxes = $800.Table 23-3