Chapter 28 example #82767

The stimulus package enacted by the Federal government in 2009 was intended to: Select one: a. Shift the aggregate expenditures schedule down b. Close an inflationary expenditures-gap c. Bring inflation down d. Push the aggregate expenditures schedule upward

In the aggregate expenditure model, which of the following variables is assumed to be independent of real GDP? Select one: a. Profit b. Saving c. Investment d. Consumption

In a recessionary expenditure gap, the equilibrium level of real GDP is: Select one: a. Less than planned aggregate expenditures b. Greater than planned aggregate expenditures c. Greater than full-employment GDP d. Less than full-employment GDP

In the Great Recession of 2007-2009, consumption C and investment Ig fell while government G expanded. Select one: True False

In the aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a: Select one: a. Decrease in government spending or an increase in taxes b. Decrease in taxes or an increase in government spending c. Decrease in interest rates or a decrease in taxes d. Decrease in saving or an increase in government spending

When aggregate expenditure is greater than GDP, then there will be an: Select one: a. Unplanned increase in inventories and GDP will increase b. Unplanned decrease in inventories and GDP will increase c. Unplanned increase in inventories and GDP will decrease d. Unplanned decrease in inventories and GDP will decrease

Over time, an increase in the real output and incomes of the trading partners of the United States will most likely: Select one: a. Increase U.S. exports b. Decrease U.S. exports c. Increase imports of the U.S. d. Decrease imports of the U.S.

John Maynard Keynes developed the aggregate expenditures model in order to understand the: Select one: a. Second World War b. Great Depression c. Oil crises of the 1970s and 1980s d. Great Recession of 2007-2009

When the economy is at its equilibrium GDP level, all of the following will occur, except: Select one: a. Aggregate expenditures = GDP b. Inventories will be zero c. Saving equals planned investment d. There are no unplanned changes in inventories

Positive net exports increase aggregate expenditures beyond what they would be in a closed economy and thus have an expansionary effect on domestic GDP. Select one: True False

One major point that Keynes raised pertains to income and spending. He argued that: Select one: a. All income is often spent in the same period of time b. Oftentimes, people spend more than their incomes c. The marginal propensity to spend out of additional income is quite volatile d. Pessimism could cause aggregate spending to fall short of total output

If the expected rate of return on investment decreases, then most likely the: Select one: a. Investment schedule will shift upward b. Investment schedule will shift downward c. Consumption schedule will shift upward d. Consumption schedule will shift downward

John Maynard Keynes developed the ideas underlying the aggregate expenditures model: Select one: a. In the 1960s b. In the 1980s c. As a reinforcement of Say's Law d. As a critique of classical economics

Other things being equal, a decrease in an economy's exports will: Select one: a. Increase domestic aggregate expenditures and the equilibrium level of GDP b. Decrease domestic aggregate expenditures and the equilibrium level of GDP c. Have no effect on domestic GDP because imports will offset the change in exports d. Increase the amount of imports consumed by the private sector

Leakages from the income-expenditure stream are: Select one: a. Consumption, saving, and transfers b. Saving, taxes, and transfers c. Saving, taxes, and imports d. Imports, taxes, and transfers

In an inflationary expenditure gap, the equilibrium level of real GDP would be: Select one: a. Greater than planned investment b. Equal to full-employment GDP c. Greater than full-employment GDP d. Less than full-employment GDP

Net exports are negative when: Select one: a. Net exports exceed imports b. Depreciation exceeds exports c. Exports exceed imports d. Imports exceed exports

In the flow of income and spending, saving and investment are, respectively: Select one: a. An injection and a leakage b. A leakage and an injection c. Wealth and income d. Income and wealth

In 2008, the Federal government provided tax rebate checks to taxpayers in the hope that: Select one: a. C would shift down b. C would shift up c. G would shift down d. G would shift up

One basic assumption of the aggregate expenditures model is that the price level in the economy is fixed. Select one: True False

The investment demand curve relates planned investment spending to: Select one: a. Real GDP or income, whereas the investment expenditure schedule relates planned investment to interest rates b. Real GDP and income, whereas the investment expenditure schedule relates planned investment to consumption c. The general price level, whereas the investment expenditure schedule relates planned investment to interest rates d. Real interest rates, whereas the investment expenditure schedule relates planned investment to GDP or income