Real GDP (trillions of 2009 dollars) In the above figure the economy is initially at point A on the aggregate expenditure curve AEO. Suppose investment decreases. As a result O the AE curve shifts upward to a curve such as AE2. O the AE curve shifts downward to a curve such as AE1. O there is a movement along AEO to a point such as B. O there is a movement along AEO to a point such as C.

If the output level is such that the Y=AE line (45-degree line) is below the aggregate expenditure line, which of the following is true?   a Aggregate expenditure is greater than output, so inventories will decrease and output will increase. b Aggregate expenditure is less than output, so inventories will increase and output will decrease. c Aggregate expenditure is less than output, so inventories will decrease and output will increase. d Aggregate expenditure is greater than output, so inventories will increase and output will decrease.

The table below shows disposable income and desired consumption for a hypothetical economy. Disposable income ($) 0 100 200 Select one: The marginal propensity to consume out of an increase in disposable income from $0 to $100 is. a. 0.75 b. 0.25 OC. 0.80 Consumption ($) d. 0.35 100 175 250 cross out cross out cross out cross out

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181.Which of the following statements is accurate? a.When unplanned inventory changes are positive, GDP is below its equilibrium value b.When unplanned inventory changes are negative, GDP is above  its equilibrium value c.When unplanned inventory changes are positive, GDP is at its equilibrium value d.When unplanned inventory changes are negative, GDP is below its equilibrium value e.None of the above 182.When unplanned inventory changes are positive, GDP is current at its equilibrium level a.True b.False 183.Consider Figure 11-10 above.  Which of the following is true? a.Equilibrium GDP is $8 trillion b.Unplanned inventory changes are $0.4 trillion when GDP is $8 trillion c.Equilibrium GDP is $7 trillion d.The MPC is 1 e.Government expenditures are $8.6 trillion 184.Consider Figure 11-10 above.  Equilibrium GDP occurs at a.$7 trillion b.$8 trillion c.$9 trillion d.$8.6 trillion e.there is…

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.

Consider the following economy. What is the mpc in this economy? Planned Government Net Exports Aggregate Change in Real GDP (Y) Consumption (C) Investment (I') Purchases (G) (NX) Expenditures (AE) Inventories 10000 8200 800 11000 9000 600 12000 9800 13000 14000 15000 800 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 0.50 b 0.75 C 0.80 d 0.90