Question 1

Refer to the information provided in Figure 8.1 below to answer the questions that follow.  Figure 8.1
-Refer to Figure 8.1. This household consumes ________ at an income level of $3,000.

Accepted Answer

A)   $1,000
B)   $1,450
C)   $2,000
D)   $3,500E) B) and C)
F) B) and D)

Question 2

Refer to the information provided in Figure 8.10 below to answer the questions that follow.  Figure 8.10
-Refer to Figure 8.10. At aggregate output levels below $1,000 million, there are

Accepted Answer

A)   unplanned decreases in inventories and output increases.
B)   unplanned increases in inventories and output increases.
C)   unplanned increases in inventories and output decreases.
D)   unplanned decreases in inventories and output decreases.E) A) and B)
F) B) and D)

Question 3

If planned investment is ________ to changes in the interest rate, the planned investment schedule is vertical.

Accepted Answer

A)   positively related
B)   negatively related
C)   perfectly unresponsive
D)   perfectly responsiveE) All of the above
F) None of the above

Question 4

Reducing the interest rate, ceteris paribus, is likely to reduce the level of planned investment spending.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an investment?

Accepted Answer

A)   the purchase of a new printing press by a business
B)   the purchase of a corporate bond by a household
C)   the purchase of a share of stock by a household
D)   a leveraged buyout of one corporation by anotherE) A) and B)
F) All of the above

Question 6

Suppose consumption is $20,000 when income is $32,000 and the MPC equals 0.8. When income increases to $40,000, consumption is

Accepted Answer

A)   $26.400.
B)   $28,000.
C)   $32,000.
D)   $72,000.E) C) and D)
F) B) and C)

Question 7

A decrease in planned investment causes

Accepted Answer

A)   output to increase.
B)   output to decrease, but by a smaller amount than the decrease in investment.
C)   output to decrease, but by a larger amount than the decrease in investment.
D)   output to decrease by an amount equal to the decrease in investment.E) B) and C)
F) None of the above

Question 8

Firms react to negative inventory investment by increasing output.

Accepted Answer

A) True 
 B)False

Question 9

If Lily's consumption function is of the form [C = 100 + 0.8Y], her saving equals zero at an income level of

Accepted Answer

A)   180.
B)   500.
C)   800.
D)   cannot be determined from the given informationE) C) and D)
F) B) and D)

Question 10

If C = 100 + 0.8Y and I = 50, then the equilibrium level of income is

Accepted Answer

A)   187.5.
B)   375.
C)   600.
D)   750.E) A) and D)
F) A) and C)

Question 11

Refer to the information provided in Table 8.10 below to answer the questions that follow.
Table 8.10 
-Refer to Table 8.10. Planned saving equals planned investment at an aggregate output level of

Accepted Answer

A)   $2,000 million.
B)   $2,400 million.
C)   $2,800 million.
D)   $3,200 million.E) A) and B)
F) None of the above

Question 12

Which of the following is not considered investment?

Accepted Answer

A)   the acquisition of capital goods
B)   the purchase of government bonds
C)   the increase in planned inventories
D)   the construction of a new factoryE) C) and D)
F) A) and B)

Question 13

Refer to the information provided in Figure 8.2 below to answer the questions that follow. 1. B)  AB. C)  CY2. D)  AC." class="answers-bank-image d-inline" rel="preload" > Figure 8.2
-Refer to Figure 8.2. Jerry's saving is negative along the line segment

Accepted Answer

A)   AY1.
B)   AB.
C)   CY2.
D)   AC.E) A) and D)
F) B) and C)

Question 14

Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is

Accepted Answer

A)   -$20 billion.
B)   -$10 billion.
C)   $70 billion.
D)   $140 billion.E) All of the above
F) A) and C)

Question 15

Refer to the information provided in Table 8.7 below to answer the questions that follow.
Table 8.7 
-Refer to Table 8.7. Planned investment equals actual investment at

Accepted Answer

A)   all income levels.
B)   all income levels above $600 billion.
C)   all income levels below $600 billion.
D)   $1,000 billion.E) B) and C)
F) A) and D)

Question 16

Refer to the information provided in Table 8.1 below to answer the questions that follow.
Table 8.1 
-Refer to Table 8.1. At an aggregate income level of $100, aggregate saving would be

Accepted Answer

A)   -$70.
B)   -$30.
C)   $50.
D)   $70.E) All of the above
F) C) and D)

Question 17

Refer to the information provided in Figure 8.11 below to answer the questions that follow.  Figure 8.11
-Refer to Figure 8.11. A $10 million increase in investment changes equilibrium output to

Accepted Answer

A)   $240 million.
B)   $225 million.
C)   $175 million.
D)   $90 million.E) B) and C)
F) B) and D)

Question 18

Y = C + S even when the economy is not in equilibrium.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the information provided in Table 8.1 below to answer the questions that follow.
Table 8.1 
-Refer to Table 8.1. Society's MPC is

Accepted Answer

A)   0.95.
B)   0.90.
C)   0.80.
D)   0.05.E) All of the above
F) A) and C)

Question 20

Refer to the information provided in Table 8.10 below to answer the questions that follow.
Table 8.10 
-Refer to Table 8.10. At an aggregate output level of $2,000 million, planned expenditure equals

Accepted Answer

A)   $2,200.
B)   $2,500.
C)   $2,700.
D)   $4,700.E) A) and D)
F) A) and C)

Exam 8: Aggregate Expenditure and Equilibrium Output

If C = 100 + 0.8Y and I = 50, then the equilibrium level of income is

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Y = C + S even when the economy is not in equilibrium.

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Suppose consumption is $20,000 when income is $32,000 and the MPC equals 0.8. When income increases to $40,000, consumption is

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Which of the following is an investment?

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Assume that in Scandia, planned investment is $80 billion but actual investment is $60 billion. Unplanned inventory investment is

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Refer to the information provided in Figure 8.10 below to answer the questions that follow. Figure 8.10 -Refer to Figure 8.10. At aggregate output levels below $1,000 million, there are

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Refer to the information provided in Table 8.10 below to answer the questions that follow. Table 8.10 -Refer to Table 8.10. Planned saving equals planned investment at an aggregate output level of

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Refer to the information provided in Table 8.1 below to answer the questions that follow. Table 8.1 -Refer to Table 8.1. Society's MPC is

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Refer to the information provided in Table 8.7 below to answer the questions that follow. Table 8.7 -Refer to Table 8.7. Planned investment equals actual investment at

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Refer to the information provided in Figure 8.2 below to answer the questions that follow. Figure 8.2 -Refer to Figure 8.2. Jerry's saving is negative along the line segment

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If Lily's consumption function is of the form [C = 100 + 0.8Y], her saving equals zero at an income level of

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Which of the following is not considered investment?

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Refer to the information provided in Table 8.1 below to answer the questions that follow. Table 8.1 -Refer to Table 8.1. At an aggregate income level of $100, aggregate saving would be

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Refer to the information provided in Figure 8.1 below to answer the questions that follow. Figure 8.1 -Refer to Figure 8.1. This household consumes ________ at an income level of $3,000.

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Refer to the information provided in Table 8.10 below to answer the questions that follow. Table 8.10 -Refer to Table 8.10. At an aggregate output level of $2,000 million, planned expenditure equals

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Refer to the information provided in Figure 8.11 below to answer the questions that follow. Figure 8.11 -Refer to Figure 8.11. A $10 million increase in investment changes equilibrium output to

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Firms react to negative inventory investment by increasing output.

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If planned investment is ________ to changes in the interest rate, the planned investment schedule is vertical.

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Reducing the interest rate, ceteris paribus, is likely to reduce the level of planned investment spending.

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A decrease in planned investment causes

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