EU23L1

  • 1

    •

    The sum of planned consumption expenditure, planned investment, planned government purchases, and planned net exports is ________________.

    real GDP
    aggregate expenditure
    aggregate planned expenditure
    the expenditure approach to real GDP

  • 2

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    The consumption function is the relationship between consumption expenditure and ___________________, other things remaining the same.

    potential GDP
    the 45 degree line
    saving
    disposable income

  • 3

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    The marginal propensity to consume ____________________.

    is the amount of disposable income consumed
    plus the marginal propensity to save equals 1
    is the fraction of disposable income consumed
    is the fraction of GDP consumed

  • 4

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    The marginal propensity to save is _____________.

    equal to the slope of the saving function
    equal to 1 plus the slope of the consumption function
    equal to the inverse of the marginal propensity to consume
    always greater than the marginal propensity to consume

  • 5

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    The marginal propensity to import is _______ that is spent on imports.

    the amount of real GDP
    the fraction of an increase in potential GDP
    the fraction of an increase in real GDP
    the amount of potential GDP

  • 6

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    The part of aggregate planned expenditure that does not vary with real GDP _______________.

    is induced expenditure
    equals zero
    is autonomous expenditure
    equals equilibrium expenditure

  • 7

    •

    Induced expenditure includes ______________________.

    induced consumption and government purchases
    induced consumption expenditure minus imports
    induced consumption expenditure plus imports
    autonomous expenditure

  • 8

    •

    All of the following statements about equilibrium expenditure are true except:

    Unplanned inventory investment is zero
    Aggregate planned expenditure equals actual expenditure
    Actual investment is less than planned investment
    Aggregate planned expenditure equals real GDP

  • 9

    •

    The multiplier is the amount by which ____________________ is multiplied to determine __________________.

    the change in autonomous expenditure; the change in real GDP
    autonomous expenditure; real GDP
    the change in induced expenditure; the change in potential GDP
    the change in real GDP; the change in potential GDP

  • 10

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    The multiplier is greater than 1 because the change in autonomous expenditure leads to ______________.

    more saving
    more investment
    more induced expenditure
    less consumption expenditure