Transcript Ch 30
Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem © 2013 Pearson Aggregate Expenditure Multiplier 30 CLICKER QUESTIONS © 2013 Pearson Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem Checkpoint 30.1 Checkpoint 30.2 Checkpoint 30.3 Question 1 Question 4 Question 7 Question 2 Question 5 Question 8 Question 3 Question 6 Question 9 Checkpoint 30.4 Question 10 © 2013 Pearson CHECKPOINT 30.1 Question 1 If when disposable income increases from $9 trillion to $10 trillion, consumption expenditure increases from $6 trillion to $6.8 trillion, the MPC is ______ and the amount of induced expenditure is ______. A. 1.00; $0.8 trillion B. 0.68; $6.8 trillion C. 0.60; $6 trillion D. 0.80; $0.8 trillion E. 0.80; $1 trillion © 2013 Pearson CHECKPOINT 30.1 Question 2 In the figure, autonomous consumption is ______, and the marginal propensity to consume is ___. A. B. C. D. E. $0; 1.00 $50 billion; 0.50 $100 billion; 0.67 $50 billion; 0.75 $200 billion; 0.50 © 2013 Pearson CHECKPOINT 30.1 Question 3 Consumption expenditure _______ increases. A. B. C. D. E. decreases if wealth increases if the real interest rate decreases if income is expected to fall in the future decreases if future income is expected to increase doesn’t change if wealth decreases at the same time that future income is expected to increase © 2013 Pearson CHECKPOINT 30.2 Question 4 If aggregate planned expenditure exceeds real GDP, ____________. A. B. C. D. E. a planned decrease in inventories occurs a planned increase in inventories occurs an unplanned decrease in inventories occurs an unplanned increase in inventory occurs an unplanned decrease in saving occurs © 2013 Pearson CHECKPOINT 30.2 Question 5 Equilibrium expenditure occurs when ________. A. aggregate planned expenditure equals real GDP B. disposable income equals real GDP C. aggregate planned expenditure equals disposable income D. saving is zero E. planned change in inventories is zero © 2013 Pearson CHECKPOINT 30.2 Question 6 In the figure, if real GDP is $5 trillion, then _______. A. the economy is at equilibrium expenditure B. inventories exceed their target C. inventories are below their target D. the price level will rise to restore equilibrium expenditure E. the price level will fall to restore equilibrium expenditure © 2013 Pearson CHECKPOINT 30.3 Question 7 With no income tax and no imports, the multiplier is larger than one because an increase in autonomous expenditure ________. A. lowers the real interest rate, which increases investment B. increases income, which increases saving and lowers the interest rate C. lowers the real interest rate, which increases consumption D. increases income, which increases induced expenditure E. raises the price level rises, which increases profits and increases investment © 2013 Pearson CHECKPOINT 30.3 Question 8 At the beginning of a recession, the multiplier ________ the initial cut in autonomous expenditure and _________. A. offsets; slows the recession B. reinforces; adds force to the recession C. offsets; the recession doesn’t take hold D. reinforces; shortens the recession E. has no effect on the recession © 2013 Pearson CHECKPOINT 30.3 Question 9 As the slope of the AE curve increases, _______. A. B. C. D. E. equilibrium expenditure and real GDP increase the multiplier becomes less effective the size of the multiplier increases the price level rises the size of the multiplier decreases © 2013 Pearson CHECKPOINT 30.4 Question 10 A rise in the price level _____. A. shifts the AE curve upward and creates a movement up along the AD curve B. creates a movement along the AE curve and shifts the AD curve C. shifts the AE curve downward and the AD curve leftward D. shifts the AE curve downward and creates a movement along the AD curve E. creates movements along both the AE and AD curves © 2013 Pearson