ECONS 102 Exam 4 Questions and Correct Answers the Latest Update and Recommended Version
12 views 0 purchase
Course
Econ 102
Institution
Econ 102
The _____ the MPC is, the _____ disposable income "leaks out" into savings at each round of
expansion.
→ higher; less
Real aggregate spending
→ GDP = Y = C + I
Disposable income
→ YD = Y = GDP
Aggregate consumption function
→ C = A + MPC x YD
Planned aggregate spending
→ the to...
ECONS 102 Exam 4 Questions and
Correct Answers the Latest Update and
Recommended Version
The _____ the MPC is, the _____ disposable income "leaks out" into savings at each round of
expansion.
→ higher; less
Real aggregate spending
→ GDP = Y = C + I
Disposable income
→ YD = Y = GDP
Aggregate consumption function
→ C = A + MPC x YD
Planned aggregate spending
→ the total amount of planned spending in the economy
Firms will reduce production due to an unintended _____ in inventories
→ rise
Firms will increase production due to an unintended _____ in inventories
(Figure: Income-Expenditure Equilibrium) According to the Figure: Income-Expenditure
Equilibrium, if planned investment spending increases by $100, income-expenditure
equilibrium occurs at GDP of:
→ $2250
If the slope of the aggregate expenditures curve = 0.9, the multiplier is equal to:
→ 10
A country is closed. It has no government sector, and its aggregate price levels and interest
rate levels are fixed. Furthermore, the marginal propensity to consume is constant and the
country's consumption function is as follows: C = 200 + 0.75YD, where YD is disposable
income and C is consumption. Assume that planned investment equals 75.
According to the Scenario: A Country's Consumption Function, holding everything else constant,
what will happen if aggregate wealth decreases by $100?
→ The AE curve will shift downward.
(T/F) Suppose we are in an economy with no taxes or imports. If the marginal propensity to
consume is 0.9 and investment spending increases by $50 billion, the change in real GDP will
be $5 billion.
→ False
(Figure: Aggregate Expenditures I) Refer to the Figure: Aggregate Expenditures I. When real
GDP is $700 billion, there will be a:
→ $125 million increase in unplanned inventory investment.
1|Page| GradeA+ | 2 0 0 2 5
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller TestTrackers. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
