Which of the following statements are correct? The multiplier is: Select one or more: O a. the ratio of the money supply to nominal expenditure O b. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) O c. the ratio of an increase in consumer spending to an increase in GDP O d. the ratio of government debt to income

Which of the following statements are correct? The multiplier is: Select one or more: O a. the ratio of the money supply to nominal expenditure O b. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) O c. the ratio of an increase in consumer spending to an increase in GDP O d. the ratio of government debt to income

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. A change in autonomous spending results to a shift of the LM curve either to the left or right. O a. False; movement along the IS curve O b. False; movement along the LM curve O c. True O d. False; shift of the IS curve 2. Which of the following statements is true? 3. O a. The goods and money markets can never be in equilibrium. O b. The goods and money markets are in equilibrium at the points where the money market is in equilibrium. O c. The goods and money markets are in equilibrium at their point of intersection only. O d. The goods and money markets are in equilibrium at the points where the goods market is in equilibrium. Which of the following describes the steepest investment schedule? O a. 1-450-8(3) O b. 1=450-2(3) O c. 1=450-9(3) O d. 1=450-5(3)
QUESTION 6 Potential GDP Aggregate expenditure AE, 45° Y. Real GDP (Y) When real GDP is greater than Yo in the diagram above: O A. - inventories will decrease OB. ·Aggregate expenditure will be less than Real GDP OC. Aggregate expenditure will be equal to Real GDP OD. O D. inventories will increase QUESTION 7 Y G Xn $1,000 $1,400 1,400 1,400 1,400 1,400 $0 $800 -$200 2,500 5,000 7,500 10,000 2,300 3,800 5,300 6,800 1,000 1,000 1,000 1,000 -200 -200 -200 -200 Suppose you are given the data in the table above for a hypothetical economy. All data are in billions of dollars. Yis actual real GDP, and C, Ip, G, and Xn are the consumption, planned investment, government purchases, and net exports components of aggregate expenditures, respectively. Calculate the equilibrium GDP (give your answer in billions of $) Aggregate Expenditure
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Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is 4. If household wealth falls by 6 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? In what direction and by how much will it eventually shift?
Suppose the economy is such that the current GDP is great than potential GDP. If the government does not act, which of the following would we expect to occur? Select one or more: O a. Price levels will decrease Ob. GDP will increase O c. Price levels will increase O d. No effect of GDP e. GDP will decrease O f. No effect on price levels