An increase in spending by $5 bilion will add OA drectly to isposable income by this amount and cause an increase in national income equal to less than $5 billion due to the multiplier effect. OB. directly to aggregate demand by this amount and lead to an eventual change in national income equal to $5 bilion times the simple multiplier. OC. indirectly to aggregate demand and cause an eventual change in national income equal to $5 billion. OD. indirectly to disposable income, only a fraction of which (determined by the MPC) will then be spent, Le. national income will change by less than $5 billion.

An increase in spending by $5 bilion will add OA drectly to isposable income by this amount and cause an increase in national income equal to less than $5 billion due to the multiplier effect. OB. directly to aggregate demand by this amount and lead to an eventual change in national income equal to $5 bilion times the simple multiplier. OC. indirectly to aggregate demand and cause an eventual change in national income equal to $5 billion. OD. indirectly to disposable income, only a fraction of which (determined by the MPC) will then be spent, Le. national income will change by less than $5 billion.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 6.13P

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Which of the following is INCORRECT? a. The multiplier dampens the increase in income that occurs during expansions and brings the economy to a new equilibrium GDP. O b. Firms experience unplanned decreases in inventories as expansions begin. C. Firms increase production in response to unplanned decreases in inventories. O d. Expansions usually begin with an increase in autonomous spending.
Which of the following policies will NOT shift the Aggregate Expenditure curve upward? Select one: O a. increasing autonomous taxes O b. decreasing autonomous taxes O c. increasing autonomous transfer payments O d. increasing government expenditures on goods and services
Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending? OA. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to a decrease in induced spending OB. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to a decrease in induced spending OC. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to an increase in induced spending OD. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to an increase in induced spending
Which of the following increases the size of the expenditure multiplier? a. a decrease in the marginal propensity to consume O b. a decrease in the marginal propensity to import О с. an increase in investment O d. an increase in autonomous spending
QUESTION 8 Which of these is positively related to the size of the multiplier? O a. The marginal propensity to consume O b. The marginal utility of money OC. The marginal tax propensity Od. The marginal propensity to save
Match each definition to the appropriate component of aggregate demand. Definition The sum of the expenditures of business firms on new plant, equipment, and software and of households on new homes The goods and services purchased by all levels of government The total amount spent by consumers on newly produced goods and services The difference between exports and imports ⒸNet exports O Government spending Consumer Expenditure Which of the following components represents the largest piece of aggregate demand? O Consumer expenditure O Investment spending O Which of the following components represents the smallest piece of aggregate demand? O Consumer expenditure O Government spending O Investment spending ONet exports Investment Spending Government Spending Net Exports O O O O
Moving along the aggregate supply curve, O the real wage rate is constant. O technology advances. O only the price level changes. O the stock of human capital increases. O the quantity of capital used increases.
An increase in the value of the simple multiplier can be caused by... O a. An increase in the net tax rate. O b. A decrease in the net tax rate. O c. An increase in the marginal propensity to save. O d. A decrease in the marginal propensity to consume. O e. An increase in the marginal propensity to import. Clear my choice
2. Assuming that the aggregate price level is constant, the interest rate is fixed, and there are no taxes and no foreign trade, what will be the change in GDP if the fol- lowing events occur? a. There is an autonomous increase in consumer spending of $25 billion; the marginal propensity to consume is 2/3. b. Firms reduce investment spending by $40 billion; the marginal propensity to consume is 0.8. c. The government increases its purchases of military equipment by $60 billion; the marginal propensity to consume is 0.6.
If output is less than planned aggregate expenditure, there will be Lütfen birini seçin: O A. an unplanned increase in inventories O B. a planned decrease in inventories. O C. no change in inventories O D. a planned increase in inventories O E. an unplanned decrease in inventories
Say, the expenditure multiplier for an economy is 2. An increase in government spending by $300 million will provide a .... million boost to the economy. Select one: O a. $150 million. O b. $300 million O c. $600 million O d. $200 million.
Suppose that due ot a fiscal stimulus, there is an increase in disposable incomes of $100 billion in the first round. Then, $33 billion was spent in consumption from this initial change of the disposable incomes. Following the same marginal propensity to consume, how much is the change in consumption spending in the next round from the $33 billion?