1) If investment spending depends on GDP, this is called induced investment? T/F 2) A change in the price level will cause a shift in the expenditure schedule. T/F 3) A decrease in the price level causes a lower equilibrium quantity demanded? T/F
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1) If investment spending depends on
2) A change in the price level will cause a shift in the expenditure schedule. T/F
3) A decrease in the price level causes a lower
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- Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.Which of the following would be most likely to increase consumption spending? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a A reduction in consumer credit card debt b A drop in stock prices c A higher interest rate d The expectation of lower future pricesWhich of the following statements is most accurate? a.Most of the variation in consumption spending can be explained by changes in debt b. There is no single factor that explains much of the variation in consumption spending c. Most of the variation in consumption spending can be explained by changes in the interest rate. d. Most of the variation in consumption spending can be explained by changes in wealth e. most of the variation in consumption spending can be explained by changes in disposable income.
- What would an increase in planned investment increases real GDP, but an unplanned increase in inventory investment decrease real GDP in the aggregate expenditure model?When the price level falls A) the slope of the aggregate expenditures curve changes. B) the aggregate expenditure curve remains constant. C) the aggregate expenditures curve shifts down. D) the aggregate expenditures curve shifts upFind the consumption expenditure from the given information:- Autonomous consumption- 100 Marginal propensity to consume - 0.70 National income - 1000
- In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. Exports are $500 billion and imports are $450 billion. Assume that net taxes and imports are autonomous and price level is fixed. a)What is the consumotion function? b)What is the equation of the aggregate expenditure curve? c)Calculate equilibrium expenditure. d)Calculate the multiplier. e)If investment decreases to $150 billion, what is the change in equilibrium expenditure ?In the aggregate expenditure model, what is NOT necessarily a characteristic of an economy in equilibrium?(a) The aggregate expenditure line is equal to the 45-degree line.(b) Aggregate expenditures are equal to income.(c) Investment equals saving.(d) Nothing is pressuring the economy to move to a higher or lower level of outputCalculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output.
- Calculate autonomous consumption expenditure from the following date about an economy which is In equilibrium.National income = Rs. 1,100Marginal propensity to save = 0.20Investment expenditure = Rs. 80(Autonomous Consumption Expenditure = 120If investment increases by $50 billion, by how much will aggregate demand change? Aggregate demand will _______. A. increase by less than $50 billion because there will be fewer goods and services produced for consumption expenditure B. increase by more than $50 billion because the increase in aggregate income induces an increase in consumption expenditure C. probably decrease by $50 billion, but it depends on the change in aggregate supply D. increase by exactly $50 billion because investment is a component of aggregate demandThe consumption expenditure and output of the country is 500 billion and 100 billion respectively. Calculate the average propensity to consume.