question

John meynard keynes created the aggregate demand expenditures model based primarily on what historic event

answer

Great depression

question

The aggregate expenditure model is built upon which of the following assumptions

answer

prices are fixed

question

A private closed economy includes

answer

Households and business, but not government or international trade

question

In the aggregate expenditure model, it is assumed that invesment

answer

does not change when real GDP changes

question

All else equal, a large decline in the real interest rate will shift the

answer

investment schedule upward

question

The level of aggregate expenditures in the private closed economy is determined by the

answer

expenditures of consumers and businesses

question

Other thing equal , the slope of the aggregate expenditures schedule will increase as a result of

answer

an increase in the MPC

question

In a private closed economy, when aggregate expenditures exceed GDP

answer

planned investment equals savings

question

In a private closed economy, when aggregate expenditures exceed GDP

answer

Business inventories will fall

question

If an unintended increase in business inventories occurs at some level of GDP, then GDP

answer

is too high for equilibrium

question

Assume that in a private closed economy consumption is 240 billion and investment is 50 billion, both at the 280 billion level of domestic output. THUS

answer

unplanned decreases in inventories of 10 billion will occur

question

A private closed economy will expand when

answer

unplanned decreases in inventories occur

question

If aggregate expenditures exceed GDP in a private closed economy

answer

Planned investment will exceed savings

question

For a private closed economy, and unintended decline in inventories suggest that

answer

aggregate expenditures exceed production

question

When investment remains the same at each level of GDP in a private closed economy, the slope of the aggregate expenditures schedule

answer

equal the MPC

question

Actual invesment 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.

answer

.10

question

If unintended increases in business inventories occur, we can expect

answer

a decline in GDP and rising unemployment

question

In the aggregate expenditures model, technological progress will shift the investment schedule

answer

upward and increase aggregate expenditures

question

At equilibrium real GDP in a private closed economy

answer

aggregate expenditures and real GDP are equal

question

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources

answer

a rise in the real GDP

question

Which of the following statements is correct for a private closed economy

answer

Savings equals planned investment only at the equilibrium level of GDP

question

at the 180 billion equilibrium level of income, saving is 38 billion in a private closed economy. planned investment must be

answer

38 billion

question

Planned investment plus unintended increases in inventories equals

answer

actual investment

question

Savings is always equal to

answer

actual investment

question

Actual investment equals savings

answer

at all levels of GDP

question

unintended changes in inventories

answer

Bring actual investment and saving into equality at all levels of GDP

question

Investment and savings are, respectively

answer

injections and leakages

question

If the marginal propensity to consume is .9 in a private closed economy, a 20 billion decline in investment spending will decrease

answer

savings by 20

question

Imports have the same effect on the current size of GDP as

answer

savings

question

Exports have the same effect on the current size of GDP as

answer

Investment

question

At the equilibrium GDP for a private open economy

answer

net exports may be either positive or negative

question

Other thing 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

answer

U.S real GDP will fall

question

If net exports decline from zero to some negative amount, the aggregate expenditures schedule would

answer

shift downward

question

If net exports are positive

answer

Aggregate expenditures are greater at each level of GDP than when net exports are zero or negative

question

An upward shift of the aggregate expenditures schedule might be caused by

answer

A decrease in imports, with no change in exports

question

Other things equal, an increase in an economies exports will

answer

Increase its domestic aggregate expenditures and therefore increases its equilibrium GDP

question

If the dollar appreciates relative to foreign currencies, we would expect

answer

A countrys net exports to fall

question

If a nations imposes tariffs and quotas on foreign products, the immediate effect will be to

answer

increase domestic output and employment

question

If the multiplier in an economy is 5, a 20 billion increase in net exports will

answer

increase GDP by 100 billion

question

Imports have the same effect on the current size of GDP as

answer

savings

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