MCQs > Finance & Management > Macroeconomics MCQs > Aggregate Expenditure Model MCQs

Aggregate Expenditure Model MCQ

Which of the following does the aggregate expenditure model fail to account for?

Answer

Correct Answer: Inflation

Note: This Question is unanswered, help us to find answer for this one

What happens to the aggregate demand curve when aggregate expenditure decreases?

Answer

Correct Answer: It shifts left.

Note: This Question is unanswered, help us to find answer for this one

What happens to the level of aggregate expenditure as the price level decreases?

Answer

Correct Answer: It increases.

Note: This Question is unanswered, help us to find answer for this one

The expenditure multiplier equals 1 ______ the marginal propensity to save.

Answer

Correct Answer: Divided by

Note: This Question is unanswered, help us to find answer for this one

The idea of the expenditure multiplier is that ______ increases in spending in one part of the economy lead to increased spending by others in the economy as well.

Answer

Correct Answer: Permanent

Note: This Question is unanswered, help us to find answer for this one

Which of the following explains why an increase in business investment of a given amount can create an increase in output equal to many times the investment increase?

Answer

Correct Answer: Expenditure multiplier

Note: This Question is unanswered, help us to find answer for this one

Which of the following responds most dramatically to perceptions of future changes in economic activity?

Answer

Correct Answer: Planned investment

Note: This Question is unanswered, help us to find answer for this one

Which of the following is considered an autonomous expenditure that may be added to the consumption function?

Answer

Correct Answer: Investment

Note: This Question is unanswered, help us to find answer for this one

Which variable in the following equation refers to the money allocated in the federal budget?

Answer

Correct Answer: G

Note: This Question is unanswered, help us to find answer for this one

Which of the following refers to the point at which aggregate expenditure equals output?

Answer

Correct Answer: Equilibrium

Note: This Question is unanswered, help us to find answer for this one

Which of the following is TRUE of the sum of marginal propensity to consume and marginal propensity to spend?

Answer

Correct Answer: It always equals 1.

Note: This Question is unanswered, help us to find answer for this one

The additional saving that results from an additional dollar of income is known as marginal propensity to ______.

Answer

Correct Answer: Save

Note: This Question is unanswered, help us to find answer for this one

Which of the following is an autonomous factor that, when decreased, causes consumer spending to rise?

Answer

Correct Answer: The interest rate

Note: This Question is unanswered, help us to find answer for this one

What type of expenditures are the largest single component of demand for final goods?

Answer

Correct Answer: Household

Note: This Question is unanswered, help us to find answer for this one

Which economist created the aggregate expenditure model?

Answer

Correct Answer: John Maynard Keynes

Note: This Question is unanswered, help us to find answer for this one

Unplanned inventory investment changes in inventories that firms did not anticipate.

Answer

Correct Answer: True

Note: This Question is unanswered, help us to find answer for this one

Marginal propensity to save is the ____ saving that results from an additional dollar of income

Answer

Correct Answer: Additional

Note: This Question is unanswered, help us to find answer for this one

Marginal propensity to consume is additional consumption that results from an additional dollar of income

Answer

Correct Answer: True

Note: This Question is unanswered, help us to find answer for this one

The multiplier that only considers the impact of consumption changes on aggregate expenditures is known as expenditure multiplier

Answer

Correct Answer: True

Note: This Question is unanswered, help us to find answer for this one

Autonomous determinants of consumption expenditures not dependent on the level of current disposable income that can result from factors such as real wealth, the Interest rate, household debt, expectations, and tastes and preferences

Answer

Correct Answer: True

Note: This Question is unanswered, help us to find answer for this one