Question 1

Suppose that real GDP is $14 trillion. Explain what happens when planned expenditures are greater than real GDP.

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Question 2

What is the difference between induced and autonomous expenditure? Which components of aggregate expenditure fall under which category?

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Question 3

What is the consumption function? What factor leads to a movement along the consumption function?

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Question 4

List the components of aggregate expenditure and describe how each of them change as real GDP increases.

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Question 5

What is the marginal propensity to consume? Why it is an important concept?

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Question 6

What does the marginal propensity to consume measure and how is it related to the consumption function?

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Question 7

Define induced expenditure and autonomous expenditure. Which expenditure items are induced expenditure and which are autonomous expenditure?

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Question 8

Explain the relationships between real GDP, aggregate expenditures, induced expenditures, and unplanned investment.

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Question 9

What is the difference between movements along the consumption function and shifts in the consumption function? What factor or factors lead to movements along the consumption function and what factor or factors lead to shifts in the consumption function?

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Question 10

List and explain factors that influence consumption expenditure.

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Question 11

"If aggregate planned expenditure exceeds real GDP, then aggregate expenditure and real GDP will increase." Explain whether the previous sentence is correct or incorrect.

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Question 12

At the equilibrium level of aggregate expenditure, what does aggregate expenditure equal? What happens at other levels of real GDP to bring about an equilibrium?

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Question 13

Discuss the link between real GDP and imports.

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Question 14

What is the marginal propensity to consume? Can the marginal propensity to consume be greater than 1?

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Question 15

Please explain the relationship between consumption, disposable income and saving.

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Question 16

"Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase." Explain whether the previous sentence is correct or incorrect.

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Question 17

How is it possible for consumption expenditure to be positive even when disposable income is zero?

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Question 18

"Aggregate planned expenditure is the sum of planned consumption expenditure, investment, government expenditure on goods and services, and exports minus imports." Is the previous statement correct or incorrect?

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Question 19

Explain the different components of autonomous versus induced expenditures.

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Question 20

What is the relationship between U.S. real GDP and U.S. imports?

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Quiz 11: Expenditure Multipliers: They Keynesian Model