If unplanned inventories are rising it means that real GDP is greater than Aggregate Expenditures. O True, this point is to the left of the equilibrium and businesses will increase employment to sell off their excess inventory. O True, this point is to the right of the equilibrium and businesses will reduce production in the future until they sell off the excess inventory. O False, rGDP will always equal AE even if inventories are rising. O False, when rGDP is greater than AE it means inventories are decreasing.

If unplanned inventories are rising it means that real GDP is greater than Aggregate Expenditures. O True, this point is to the left of the equilibrium and businesses will increase employment to sell off their excess inventory. O True, this point is to the right of the equilibrium and businesses will reduce production in the future until they sell off the excess inventory. O False, rGDP will always equal AE even if inventories are rising. O False, when rGDP is greater than AE it means inventories are decreasing.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter9: The Keynesian Model In Action

Section: Chapter Questions

Problem 5SQP

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How do inventories change when aggregate planned expenditure is less than real GDP? If aggregate planned expenditure is less than real GDP, inventories O A. increase, and the AE curve shifts upward O B. increase, and as real GDP decreases a movement down along the AE curve occurs C. decrease, and as real GDP increases a movement up along the AE curve occurs O D. decrease, and the AE curve shifts downward
Which of the following would not increase consumption spending? O Decreased disposable income. Increased household wealth O A lower interest rate O Expectations of greater future income
All of the following are true when there is an unplanned decrease in inventories, except: O a. Actual investment is greater than planned investment O b. Real GDP will be rising O c. GDP is less than aggregate expenditures O d. Saving is less than planned investment
25. Which one of the following statements is INCORRECT? A The level of autonomous consumption is determined by the non-income determinants of consumption spending. The impact of a change in one or more of the non-income determinants of consumption can be illustrated by a shift В of the consumption function. The level of autonomous consumption determines the position of the consumption function. Investment spending is the most stable component of aggregate spending in the C economy.
The difference between planned and unplanned spending is O Always negative O Inventories O Unplanned changes in inventories O Always positive
The Life-Cycle/Permanent Income Model of Consumption makes a different prediction from the Keynesian Model, about how Consumption reacts to an increase in current income. Which of the following is the best description of the difference? O In the Keynesian Model, consumers will increasktheir spending by the mpc times the increase in income. In the Life-Cycle/Permanent Income Model, consumers will not increase their spending by much unless they believe that the increase in their income is permanent. O In the Life-Cycle/Permanent Income Model, consumers will increase their spending by the mpc times the increase in income. In the Keynesian Model, consumers will only increase their spending if they believe that the increase in their income is temporary. O In the Keynesian Model, consumers will increase their spending by the mpc times the increase in income. In the Life-Cycle/Permanent Income Model, consumers will only increase their spending if they believe that the increase in their income…
Question 1 Given the following information: 1 = 150, G = 150, T-150 and C = 150 +0.75(Yd) Which of the following is true if Planned Aggregate Income is 2000? (Assume X-M is unaffected) O 1837 is the Planned Aggregate Expenditure s O 1612 is the disposable income O 1654 is the consumption spending when planned output is 2000 O At least 2 of the choices
.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)
The slope of the aggregate expenditure line is always this slope equals the than 1. If there are no imports or taxes, O greater: marginal propensity to save O greater: marginal propensity to consume O less; marginal propensity to consume O less; marginal propensity to save
Which of the following is true concerning the relationship between the business cycle and aggregate investment spending? O When the economy is in recession, unemployment rises and income falls. Firms will be less likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has fallen. O When the economy is in recession, unemployment rises and income falls. Firms will be more likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has risen. O When the economy is in recession, unemployment falls and income rises. Firms will be more likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has risen. O When the economy is in recession, unemployment falls and income rises. Firms will be less likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has fallen.
Problem 2 Consider an economy that is open to foreign trade and is described by the following model C= 100+0.9Yd |= 25 Consumption function Investment G=80 Government T=50 Таxes Exports Imports X=25 M= 50 Refer to problem 1. What is the equilibrium level of income? * Y= $1350 Y= $1850 Y= $2350 Y= $2650
Answer question 18