fer to Figure 10-4. When TE is $700 billion, what will firms most likely do next? a. Firms will cut back production to reduce inventories to their optimum levels. b. Firms will increase production to increase inventories to their optimum levels. c. Firms will neither increase nor decrease production since the economy is in equilibrium. Total Expenditures billions of dollars) 100 0 Figure 10-4 100 200 300 400 500 600 700 800 Pea COP (ions of dollar)

fer to Figure 10-4. When TE is $700 billion, what will firms most likely do next? a. Firms will cut back production to reduce inventories to their optimum levels. b. Firms will increase production to increase inventories to their optimum levels. c. Firms will neither increase nor decrease production since the economy is in equilibrium. Total Expenditures billions of dollars) 100 0 Figure 10-4 100 200 300 400 500 600 700 800 Pea COP (ions of dollar)

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 10E

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Similar questions

Which shows income and consumption levels for period 1 through 7, what is the marginal propensity to consume ?
During 2019, a country reported that its real GDP increased by $3.0 billion. If the slope of its aggregate planned expenditure curve is 0.9, then which of the following might have led to the increase in real GDP? O a. Investment decreased by $0.3 billion. on O b. Exports increased by $0.3 billion. O c. Exports decreased by $0.3 billion. O d. Imports increased by $0.3 billion. O e. Government expenditure on goods and services increased by $3 billion.
QUESTION 47 An increase in the marginal propensity to consume (MPC) O a. increases the multiplier, so that changes in government spending have a larger effect on aggregate expenditure (aggregate demand). O b.increases the multiplier, so that changes in government spending have smaller effect on aggregate expenditure (aggregate demand). O c. decreases the multiplier, so that changes in government spending have a larger effect on aggregate expenditure (aggregate demand). O d. decreases the multiplier, so that changes in government spending have a smaller effect on aggregate expenditure (aggregate demand).
Suppose that Amazon decides to spend $10 million on a new distribution center. If the marginal propensity to consume is .8. then how much will GDP go up by once the multiplier process has played out? O $10 million O $20 million O $40 milion O $50 million
Suppose the level of potential GDP is $6,000 billion, but the equilibrium level of GDP is $7,500 billion. If the marginal propensity to consume is 0.67, how much should government spending be decreased to eliminate the inflationary gap? O $250 billion $1500 billion O $500 billion O $125 billion
Which of the following is INCORRECT? a. The multiplier dampens the increase in income that occurs during expansions and brings the economy to a new equilibrium GDP. O b. Firms experience unplanned decreases in inventories as expansions begin. C. Firms increase production in response to unplanned decreases in inventories. O d. Expansions usually begin with an increase in autonomous spending.
.Refer to the information provided in Figure 8.9 below to answer the questions that follow AE 225 200 175 150 45 100 200 300 Aggregate output ($ millions) Figure 8.9 Refer to Figure 8.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result ?of a decrease in investment by $20 million AE line shifts down, increasing equilibrium output and equilibrium expenditure a O AE line shifts up, increasing equilibrium output and equilibrium expenditure b O AE line shifts down, decreasing equilibrium output and equilibrium expenditure .c O AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure .d O Aggregate expenditures ($ millions)
An increase in interest rates shifts the Investment Demand curve up and increases Business Investment Expenditures. O True O False Households' autonomous savings is exactly the same as autonomous consumption. O True O False An increase in households' wealth will increase the marginal propensity to consume. O True O False Private-Sector Savings equal Consumption Expenditures at the Break-Even Disposable Income. True O False In National Income Accounting, an increase in unplanned inventory increases actual business investment expenditures (la). O True O False
which seems to be correct?
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
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Quèstion 27 $60 $40+ $20 十 $50 100 150 200 Disposable Income(Y) -20 Refer to the diagram. The average propensity to consume: O A. is equal to the average propensity to save. O B. cannot be determined from the information given. OC is greater than 1 at all levels of disposable income above $100. O D. is greater than 1 at all levels of disposable income below $100. Saving (S)