At the equilibrium level of GDP,
A) actual investment is zero
B) unplanned changes in inventories are zero
C) saving is greater than planned investment
D) saving is less than planned investment
Answer: B
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The Aggregate Expenditures Model
- Assume that the marginal propensity to save is 0.1 in an economy. To reduce the level of real GDP by $50 billion in that economy to achieve a full employment level of output, it will be necessary to
- A major limitation of the aggregate expenditures model is that it
- If the MPC in an economy is 0.75, government could eliminate a recessionary expenditure gap of $50 billion by decreasing taxes by
- The amount by which an economy's aggregate expenditures must shift upward to achieve full-employment GDP is
- The economy is operating at the full-employment level of output. A depreciation of the dollar will most likely result in
- Other things remaining constant, which would increase an economy's real GDP and employment?
- An increase in the real GDP of an economy will, other things remaining constant,
- Compared with a private closed economy, aggregate expenditures and GDP will
- If saving is greater than planned investment
- When the economy's real GDP exceeds its equilibrium real GDP,
- Which is an injection of spending into the income expenditures stream?
- On a graph, the equilibrium real GDP is found at the intersection of the 45-degree line and the
- If real GDP is $275 billion, consumption is $250 billion, and investment is $30 billion, real GDP
- If the economy is private and closed to international trade, and government neither taxes nor spends, then real GDP equals
- The premise of the model in this chapter is that the amount of goods and services produced, and therefore the level of employment, depends
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