You observe that unplanned inventories are increasing. You predict that there will be ________. A) a business cycle B) an expansion C) a trough D) a recession
97) You observe that unplanned inventories are increasing. You predict that there will be ________.
A) a business cycle
B) an expansion
C) a trough
D) a recession
98) Business cycle turning points are
A) unaffected by, and unrelated to the multiplier.
B) easy to predict.
C) brought about by changes in autonomous expenditures that are then subject to the multiplier effect.
D) None of the above is correct.
99) Which of the following does NOT occur as the economy moves from an expansion to a recession?
A) An initial decrease in autonomous spending is the trigger that creates the business cycle turning point.
B) The change in planned spending exceeds the change in real GDP.
C) The multiplier process reinforces any decrease in spending and pushes the economy into recession.
D) Incomes fall during recessions as firms cut production in response to unplanned increases in inventories.
100) Which of the following is INCORRECT?
A) Expansions usually begin with an increase in autonomous spending.
B) Firms experience unplanned decreases in inventories as expansions begin.
C) Firms increase production in response to unplanned decreases in inventories.
D) The multiplier dampens the increase in income that occurs during expansions and brings the economy to a new equilibrium GDP.
101) A decrease in autonomous expenditure shifts the AE curve
A) downward and leaves its slope unchanged.
B) downward and makes it steeper.
C) downward and makes it flatter.
D) upward and makes it steeper.
102) If investment increases by $150 and, in response, equilibrium expenditure rises by $600,
A) the multiplier is 0.25.
B) the multiplier is 4.0.
C) the MPC is 4.
D) the slope of the AE curve is 3.0.
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