API tools faq
paste
Advertisement
sonvplex

Aggregate Expenditure and Output in the Short Run

sonvplex
Apr 14th, 2013
470
0
Never
Add comment
Not a member of Pastebin yet? Sign Up, it unlocks many cool features!
text 21.95 KB | None | 0 0
raw download clone embed print report
  1. Exercise 5 Answer Key
  2. Chapter 11 Aggregate Expenditure and Output in the Short Run
  3.  
  4. 11.1 The Aggregate Expenditure Model
  5.  
  6. 1) The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run, assuming ________ is constant.
  7. A) total production; total income; real GDP
  8. B) total spending; real GDP; total income
  9. C) total spending; real GDP; the price level
  10. D) total income; real GDP; the price level
  11. Answer: C
  12. Comment: Recurring
  13. Diff: 1 Page Ref: 744/340
  14. Topic: The Aggregate Expenditure Model
  15. Objective: LO1: Understand how macroeconomic equilibrium is determined in the aggregate expenditure model.
  16. AACSB: Reflective Thinking
  17. Special Feature: None
  18.  
  19. 2) The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by
  20. A) investment spending.
  21. B) export spending.
  22. C) government spending.
  23. D) the level of aggregate expenditure.
  24. Answer: D
  25. Comment: Recurring
  26. Diff: 1 Page Ref: 744/340
  27. Topic: The Aggregate Expenditure Model
  28. Objective: LO1: Understand how macroeconomic equilibrium is determined in the aggregate expenditure model.
  29. AACSB: Reflective Thinking
  30. Special Feature: None
  31.  
  32. 3) A decrease in consumer confidence can put your job at risk if
  33. A) aggregate expenditures fall.
  34. B) consumers expect their incomes to rise in the future.
  35. C) aggregate expenditures rise.
  36. D) consumers expect firms to increase investment in the future.
  37. Answer: A
  38. Diff: 1 Page Ref: 743/339
  39. Topic: The Aggregate Expenditure Model
  40. Objective: LO1: Understand how macroeconomic equilibrium is determined in the aggregate expenditure model.
  41. AACSB: Reflective Thinking
  42. Special Feature: Economics in YOUR LIFE!: When Consumer Confidence Fails, is Your Job at Risk?
  43.  
  44. 4) Household spending on goods and services is known as
  45. A) consumption spending.
  46. B) planned investment spending.
  47. C) government purchases.
  48. D) net exports.
  49. Answer: A
  50. Comment: Recurring
  51. Diff: 1 Page Ref: 744/340
  52. Topic: The Aggregate Expenditure Model
  53. Objective: LO1: Understand how macroeconomic equilibrium is determined in the aggregate expenditure model.
  54. AACSB: Reflective Thinking
  55. Special Feature: None
  56.  
  57. 5) The aggregate expenditure model focuses on the ________ relationship between real spending and ________.
  58. A) short-run; real GDP
  59. B) short-run; inflation
  60. C) long-run; real GDP
  61. D) long-run; inflation
  62. Answer: A
  63. Comment: Recurring
  64. Diff: 2 Page Ref: 744/340
  65. Topic: The Aggregate Expenditure Model
  66. Objective: LO1: Understand how macroeconomic equilibrium is determined in the aggregate expenditure model.
  67. AACSB: Reflective Thinking
  68. Special Feature: None
  69.  
  70. 6) An unplanned increase in inventories results from
  71. A) an increase in planned investment.
  72. B) a decrease in planned investment.
  73. C) actual investment that is greater than planned investment.
  74. D) actual investment that is less than planned investment.
  75. Answer: C
  76. Comment: Recurring
  77. Diff: 2 Page Ref: 745/341
  78. Topic: Planned Investment and Actual Investment
  79. Objective: LO1: Understand how macroeconomic equilibrium is determined in the aggregate expenditure model.
  80. AACSB: Reflective Thinking
  81. Special Feature: None
  82.  
  83. 11.2 Determining the Level of Aggregate Expenditure in the Economy
  84.  
  85. 1) Which is the largest component of aggregate expenditure?
  86. A) planned investment expenditures
  87. B) consumption expenditures
  88. C) government expenditures
  89. D) net export expenditures
  90. Answer: B
  91. Comment: Recurring
  92. Diff: 1 Page Ref: 747/343
  93. Topic: Determining the Level of Aggregate Expenditure
  94. Objective: LO1: Understand how macroeconomic equilibrium is determined in the aggregate expenditure model.
  95. AACSB: Reflective Thinking
  96. Special Feature: None
  97.  
  98. 2) The five most important variables that determine the level of consumption are
  99. A) disposable income, wealth, expected future income, price level, and interest rate
  100. B) wealth, savings account balances, checking account balances, stock portfolio balances, and bond portfolio balances
  101. C) government purchases, interest rates, income, taxes, and transfers
  102. D) government purchases, saving account balances, wealth, interest rates, portfolio balances
  103. Answer: A
  104. Comment: Recurring
  105. Diff: 2 Page Ref: 747/343
  106. Topic: Consumption
  107. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  108. AACSB: Reflective Thinking
  109. Special Feature: None
  110. 3) A decrease in Social Security payments will
  111. A) decrease consumption spending.
  112. B) decrease investment spending.
  113. C) decrease government spending.
  114. D) decrease export spending.
  115. Answer: A
  116. Comment: Recurring
  117. Diff: 1 Page Ref: 747/343
  118. Topic: Consumption
  119. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  120. AACSB: Reflective Thinking
  121. Special Feature: None
  122.  
  123. 4) Examples of assets that are included in household wealth would be
  124. A) stocks, bonds, and savings accounts.
  125. B) stocks, loans owed, and savings accounts.
  126. C) stocks, bonds, and mortgages.
  127. D) stocks, credit cards, and savings accounts.
  128. Answer: A
  129. Comment: Recurring
  130. Diff: 2 Page Ref: 748/344
  131. Topic: Household Wealth
  132. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  133. AACSB: Reflective Thinking
  134. Special Feature: None
  135.  
  136. 5) An increase in the real interest rate will
  137. A) cause consumers to spend more and save less.
  138. B) most likely lower consumers' purchases of durable goods.
  139. C) most likely lower the reward to savings.
  140. D) most likely lower the cost of borrowing.
  141. Answer: B
  142. Comment: Recurring
  143. Diff: 2 Page Ref: 750/346
  144. Topic: The Interest Rate
  145. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  146. AACSB: Reflective Thinking
  147. Special Feature: None
  148.  
  149. 6) Which of the following will raise consumer expenditures?
  150. A) an increase in interest rates
  151. B) a general decline in housing prices
  152. C) an increase in expected future income
  153. D) an increase in the price level
  154. Answer: C
  155. Comment: Recurring
  156. Diff: 3 Page Ref: 750/346
  157. Topic: Expected Future Income
  158. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  159. AACSB: Reflective Thinking
  160. Special Feature: None
  161.  
  162. 7) The slope of the consumption function is equal to
  163. A) the change in consumption divided by the change in disposable income.
  164. B) the change in consumption divided by the change in personal income.
  165. C) the change in disposable income divided by the change in consumption.
  166. D) the change in national income divided by the change in consumption.
  167. Answer: A
  168. Comment: Recurring
  169. Diff: 2 Page Ref: 751/347
  170. Topic: The Consumption Function
  171. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  172. AACSB: Reflective Thinking
  173. Special Feature: None
  174.  
  175. 8) If disposable income increases by $100 million, and consumption increases by $90 million, then the marginal propensity to consume is
  176. A) 0.9.
  177. B) 0.8.
  178. C) 0.75.
  179. D) 0.6.
  180. Answer: A
  181. Comment: Recurring
  182. Diff: 2 Page Ref: 751/347
  183. Topic: The Marginal Propensity to Consume
  184. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  185. AACSB: Analytic Skills
  186. Special Feature: None
  187.  
  188. Table 11-1
  189.  
  190. Consumption
  191. (dollars) Disposable Income (dollars)
  192. $1,200 $3,000
  193. 2,100 4,000
  194. 3,000 5,000
  195.  
  196. 9) Refer to Table 11-1. Given the consumption schedule in the table above, the marginal propensity to consume is
  197. A) 0.1.
  198. B) 0.3.
  199. C) 0.6.
  200. D) 0.9.
  201. Answer: D
  202. Diff: 2 Page Ref: 754-755/350-351
  203. Topic: The Consumption Function
  204. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  205. AACSB: Analytic Skills
  206. Special Feature: Solved Problem: Calculating the Marginal Propensity to Consume and the Marginal Propensity to Save
  207.  
  208. 10) Refer to Table 11-1. Given the consumption schedule in the table above, the marginal propensity to save is
  209. A) 0.1.
  210. B) 0.4.
  211. C) 0.7.
  212. D) 0.9.
  213. Answer: A
  214. Diff: 2 Page Ref: 754-755/350-351
  215. Topic: The Marginal Propensity to Save
  216. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  217. AACSB: Analytic Skills
  218. Special Feature: Solved Problem: Calculating the Marginal Propensity to Consume and the Marginal Propensity to Save
  219.  
  220. 11) If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is
  221. A) 4.
  222. B) 0.75.
  223. C) 0.5.
  224. D) 0.25.
  225. Answer: D
  226. Comment: Recurring
  227. Diff: 2 Page Ref: 751/347
  228. Topic: Consumption and National Income
  229. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  230. AACSB: Analytic Skills
  231. Special Feature: None
  232.  
  233. 12) If the marginal propensity to save is 0.25, then a $10,000 decrease in disposable income will
  234. A) increase consumption by $7,500.
  235. B) increase consumption by $2,500.
  236. C) decrease consumption by $7,500.
  237. D) decrease consumption by $2,500.
  238. Answer: C
  239. Comment: Recurring
  240. Diff: 2 Page Ref: 754/350
  241. Topic: The Marginal Propensity to Save
  242. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  243. AACSB: Analytic Skills
  244. Special Feature: None
  245.  
  246. 13) If the marginal propensity to consume is 0.75, the marginal propensity to save is
  247. A) 0.25.
  248. B) 0.5.
  249. C) 1.
  250. D) 3.
  251. Answer: A
  252. Comment: Recurring
  253. Diff: 1 Page Ref: 754/350
  254. Topic: The Marginal Propensity to Save
  255. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  256. AACSB: Analytic Skills
  257. Special Feature: None
  258.  
  259. 14) If firms are more optimistic that future profits will rise and remain strong for the next few years, then
  260. A) investment spending will fall.
  261. B) investment spending will rise.
  262. C) investment spending will remain unaffected.
  263. D) investment spending will rise and then fall.
  264. Answer: B
  265. Comment: Recurring
  266. Diff: 2 Page Ref: 755-756/351-352
  267. Topic: Planned Investment
  268. Objective: LO2: Discuss the determinants of the four components of aggregate expenditure and define marginal propensity to consume and marginal propensity to save.
  269. AACSB: Reflective Thinking
  270. Special Feature: None
  271.  
  272. 11.3 Graphing Macroeconomic Equilibrium
  273.  
  274. 1) On the 45-degree line diagram, the 45-degree line shows points where
  275. A) real income equals real GDP.
  276. B) real aggregate expenditure equals C + I.
  277. C) real aggregate expenditure equals real GDP.
  278. D) real aggregate output equals the quantity produced.
  279. Answer: C
  280. Comment: Recurring
  281. Diff: 2 Page Ref: 762-763/358-359
  282. Topic: Macroeconomic Equilibrium
  283. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  284. AACSB: Reflective Thinking
  285. Special Feature: None
  286.  
  287. 2) If planned aggregate expenditure is less than total production,
  288. A) actual inventories will equal planned inventories.
  289. B) firms will experience an unplanned increase in inventories.
  290. C) GDP will increase.
  291. D) the economy is in equilibrium.
  292. Answer: B
  293. Comment: Recurring
  294. Diff: 2 Page Ref: 760-762/356-358
  295. Topic: Graphing Macroeconomic Equilibrium
  296. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  297. AACSB: Reflective Thinking
  298. Special Feature: None
  299.  
  300. 3) If the economy is currently in equilibrium at a level of GDP that is below potential GDP, which of the following would move the economy back to potential GDP?
  301. A) an increase in wealth
  302. B) an increase in interest rates
  303. C) a decrease in business confidence
  304. D) an increase in the value of the dollar relative to other currencies
  305. Answer: A
  306. Comment: Recurring
  307. Diff: 3 Page Ref: 760-762/356-358
  308. Topic: Macroeconomic Equilibrium
  309. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  310. AACSB: Analytic Skills
  311. Special Feature: None
  312.  
  313. Figure 11-2
  314.  
  315.  
  316.  
  317. 4) Refer to Figure 11-2. According to the figure above, at what point is aggregate expenditure greater than GDP?
  318. A) J
  319. B) K
  320. C) L
  321. D) none of the above
  322. Answer: A
  323. Comment: Recurring
  324. Diff: 2 Page Ref: 761-762/357-358
  325. Topic: Graphing Macroeconomic Equilibrium
  326. Skill: Graphing
  327. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  328. AACSB: Analytic Skills
  329. Special Feature: None
  330. 5) Refer to Figure 11-2. At point L in the figure above, which of the following is true?
  331. A) Aggregate expenditure is greater than GDP.
  332. B) The economy has achieved macroeconomic equilibrium.
  333. C) Actual inventories are greater than planned inventories.
  334. D) GDP will be increasing.
  335. Answer: C
  336. Comment: Recurring
  337. Diff: 2 Page Ref: 761-762/357-358
  338. Topic: Graphing Macroeconomic Equilibrium
  339. Skill: Graphing
  340. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  341. AACSB: Analytic Skills
  342. Special Feature: None
  343.  
  344. 6) Refer to Figure 11-2. If the economy is at point L, what will happen?
  345. A) Inventories have fallen below their desired level, and firms decrease production.
  346. B) Inventories have fallen below their desired level, and firms increase production.
  347. C) Inventories have risen above their desired level, and firms decrease production.
  348. D) Inventories have risen above their desired level, and firms increase production.
  349. Answer: C
  350. Comment: Recurring
  351. Diff: 2 Page Ref: 761-762/357-358
  352. Topic: Graphing Macroeconomic Equilibrium
  353. Skill: Graphing
  354. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  355. AACSB: Analytic Skills
  356. Special Feature: None
  357.  
  358. 7) Refer to Figure 11-2. If the economy is at a level of aggregate expenditure given by point K,
  359. A) the economy is in equilibrium.
  360. B) production is greater than spending.
  361. C) production is less than spending.
  362. D) inventories will increase above their desired level.
  363. Answer: A
  364. Comment: Recurring
  365. Diff: 2 Page Ref: 761-762/357-358
  366. Topic: Graphing Macroeconomic Equilibrium
  367. Skill: Graphing
  368. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  369. AACSB: Analytic Skills
  370. Special Feature: None
  371.  
  372. 8) If planned aggregate expenditure is below potential GDP and planned aggregate expenditure equals GDP, then
  373. A) actual inventory investment will be less than planned inventory investment.
  374. B) actual inventory investment will be greater than planned inventory investment.
  375. C) the economy is in a recession.
  376. D) the economy is at full employment.
  377. Answer: C
  378. Comment: Recurring
  379. Diff: 3 Page Ref: 760-762/356-358
  380. Topic: Macroeconomic Equilibrium
  381. Objective: LO3: Use a 45-degree line diagram to illustrate macroeconomic equilibrium.
  382. AACSB: Reflective Thinking
  383. Special Feature: None
  384.  
  385. 11.4 The Multiplier Effect
  386.  
  387. Figure 11-3
  388.  
  389.  
  390.  
  391. 1) Refer to Figure 11-3. Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP?
  392. A) $9 million
  393. B) $10 million
  394. C) $90 million
  395. D) $100 million
  396. Answer: D
  397. Comment: Recurring
  398. Diff: 2 Page Ref: 767-768/363-364
  399. Topic: The Multiplier Effect
  400. Skill: Graphing
  401. Objective: LO4: Describe the multiplier effect and use the multiplier formula to calculate changes in equilibrium GDP.
  402. AACSB: Analytic Skills
  403. Special Feature: None
  404. 2) Refer to Figure 11-3. Suppose that government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP1 to GDP2, and this amount is $400 billion. If the MPC is 0.75, then what is the distance between N and L or by how much did government spending change?
  405. A) $10 billion
  406. B) $100 billion
  407. C) $200 billion
  408. D) $300 billion
  409. Answer: B
  410. Comment: Recurring
  411. Diff: 3 Page Ref: 767-768/363-364
  412. Topic: The Multiplier Effect
  413. Skill: Graphing
  414. Objective: LO4: Describe the multiplier effect and use the multiplier formula to calculate changes in equilibrium GDP.
  415. AACSB: Analytic Skills
  416. Special Feature: None
  417.  
  418. Figure 11-4
  419.  
  420.  
  421. 3) Refer to Figure 11-4. Potential GDP equals $100 billion. The economy is currently producing GDP1 which is equal to $90 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?
  422. A) -$18 billion
  423. B) -$2 billion
  424. C) $2 billion
  425. D) $18 billion
  426. Answer: C
  427. Comment: Recurring
  428. Diff: 3 Page Ref: 767-768/363-364
  429. Topic: The Multiplier Effect
  430. Skill: Graphing
  431. Objective: LO4: Describe the multiplier effect and use the multiplier formula to calculate changes in equilibrium GDP.
  432. AACSB: Analytic Skills
  433. Special Feature: None
  434. 4) In the aggregate expenditure model, ________ has both an autonomous component and an induced component.
  435. A) planned investment spending
  436. B) consumption spending
  437. C) government spending
  438. D) net export spending
  439. Answer: B
  440. Comment: Recurring
  441. Diff: 1 Page Ref: 767-768/363-364
  442. Topic: The Multiplier Effect
  443. Objective: LO4: Describe the multiplier effect and use the multiplier formula to calculate changes in equilibrium GDP.
  444. AACSB: Reflective Thinking
  445. Special Feature: None
  446.  
  447. 5) If an increase in autonomous consumption spending of $10 million results in a $50 million increase in equilibrium real GDP, then
  448. A) the MPC is 0.5.
  449. B) the MPC is 0.75.
  450. C) the MPC is 0.8.
  451. D) the MPC is 0.9.
  452. Answer: C
  453. Comment: Recurring
  454. Diff: 3 Page Ref: 767-768/363-364
  455. Topic: The Multiplier Effect
  456. Objective: LO4: Describe the multiplier effect and use the multiplier formula to calculate changes in equilibrium GDP.
  457. AACSB: Analytic Skills
  458. Special Feature: None
  459.  
  460. 6) The multiplier is calculated as the
  461. A) change in real GDP/ change in autonomous expenditure.
  462. B) change in autonomous expenditure/ change in real GDP.
  463. C) change in nominal GDP/ change in autonomous expenditure.
  464. D) change in real GDP/ change in induced spending.
  465. Answer: A
  466. Comment: Recurring
  467. Diff: 1 Page Ref: 770-771/366-367
  468. Topic: The Multiplier Effect
  469. Objective: LO4: Describe the multiplier effect and use the multiplier formula to calculate changes in equilibrium GDP.
  470. AACSB: Reflective Thinking
  471. Special Feature: None
  472.  
  473. 7) Which of the following is a true statement about the multiplier?
  474. A) The multiplier rises as the MPC rises.
  475. B) The smaller the MPC, the larger the multiplier.
  476. C) The multiplier is a value between zero and one.
  477. D) The multiplier effect does not occur when autonomous expenditure decreases.
  478. Answer: A
  479. Comment: Recurring
  480. Diff: 2 Page Ref: 771/367
  481. Topic: The Multiplier Effect
  482. Objective: LO4: Describe the multiplier effect and use the multiplier formula to calculate changes in equilibrium GDP.
  483. AACSB: Reflective Thinking
  484. Special Feature: None
  485.  
  486. 11.5 The Aggregate Demand Curve
  487.  
  488. 1) The aggregate demand curve illustrates the relationship between ________ and the ________, holding constant all other factors that affect aggregate expenditure.
  489. A) the price level; quantity of planned aggregate expenditure
  490. B) the inflation rate; quantity of planned aggregate expenditure
  491. C) the price level; quantity of planned investment expenditure
  492. D) the price level; quantity of consumption expenditure
  493. Answer: A
  494. Comment: Recurring
  495. Diff: 1 Page Ref: 773-774/369-370
  496. Topic: The Aggregate Demand Curve
  497. Objective: LO5: Understand the relationship between the aggregate demand curve and aggregate expenditure.
  498. AACSB: Reflective Thinking
  499. Special Feature: None
  500.  
  501. 2) Which of the following correctly describes how an increase in the price level affects consumption spending?
  502. A) An increase in the price level raises real wealth, which causes consumption to increase.
  503. B) An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
  504. C) An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase
  505. D) An increase in the price level lowers real wealth, which causes consumption to decrease.
  506. Answer: D
  507. Comment: Recurring
  508. Diff: 2 Page Ref: 773-774/369-370
  509. Topic: The Aggregate Demand Curve
  510. Objective: LO5: Understand the relationship between the aggregate demand curve and aggregate expenditure.
  511. AACSB: Reflective Thinking
  512. Special Feature: None
  513.  
  514. 3) What impact does a decrease in the price level in the United States have on net exports and why?
  515. A) A decrease in the price level increases net exports because lower prices increase the value of the dollar.
  516. B) A decrease in the price level increases net exports by reducing the relative cost of American goods.
  517. C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar.
  518. D) A decrease in the price level reduces net exports because lower prices increase American spending on imports.
  519. Answer: B
  520. Comment: Recurring
  521. Diff: 2 Page Ref: 773-774/369-370
  522. Topic: The Aggregate Demand Curve
  523. Objective: LO5: Understand the relationship between the aggregate demand curve and aggregate expenditure.
  524. AACSB: Reflective Thinking
  525. Special Feature: None
  526.  
  527. 4) An increase in aggregate expenditure has what result on equilibrium GDP?
  528. A) Equilibrium GDP rises.
  529. B) Equilibrium GDP is not affected by a decrease in aggregate expenditure.
  530. C) Equilibrium GDP falls.
  531. D) Equilibrium GDP may rise or fall depending on the size of the decrease in aggregate expenditure relative to the initial level of GDP.
  532. Answer: A
  533. Comment: Recurring
  534. Diff: 2 Page Ref: 773-774/369-370
  535. Topic: The Aggregate Demand Curve
  536. Objective: LO5: Understand the relationship between the aggregate demand curve and aggregate expenditure.
  537. AACSB: Reflective Thinking
  538. Special Feature: None
Advertisement
Add Comment
Please, Sign In to add comment
Advertisement
Public Pastes
Advertisement
We use cookies for various purposes including analytics. By continuing to use Pastebin, you agree to our use of cookies as described in the Cookies Policy.  OK, I Understand
Not a member of Pastebin yet?
Sign Up, it unlocks many cool features!