Question 1

Planned investment refers to the:

Accepted Answer

Planned investment refers to the intentional expenditures made by companies on capital goods such as factories, machinery, and software. It does not refer to total investment or total purchases of inputs. Spending on capital imports by an economy may be a component of planned investment but is not the sole definition of it.

Question 2

The difference between total investment and planned investment is that:

Accepted Answer

Total investment includes changes in inventories, while planned investment does not necessarily include changes in inventories. Therefore, C is the correct answer. A is incorrect because taxes are not necessarily subtracted from either total investment or planned investment. B is incorrect because planned investment can be larger or smaller than total investment. D is incorrect because planned investment may or may not include changes in inventories.

Question 3

Consumption is $13.7 trillion, investment is $4 trillion, government expenditure is $5 trillion, and net exports are -$3 trillion. Based on these statistics, what is aggregate expenditure?

Accepted Answer

The answer of Consumption is $13.7 trillion, investment is $4...

Question 4

Consumption is $14.2 trillion, investment is $4.8 trillion, government expenditure is $4.1 trillion, and net exports are $1.2 trillion. Based on these statistics, what is aggregate expenditure?

Accepted Answer

The answer of Consumption is $14.2 trillion, investment is $4.8...

Question 5

Explain the exchange rate effect relationship between higher interest rates and net exports.

Accepted Answer

The answer of Explain the exchange rate effect relationship between...

Question 6

Explain the debt effect on consumption when prices rise in the economy.

Accepted Answer

The answer of Explain the debt effect on consumption when...

Question 7

Explain the real wealth effect on consumption when prices fall in the economy.

Accepted Answer

The answer of Explain the real wealth effect on consumption...

Question 8

Explain the international trade effect on net exports when prices fall in the economy.

Accepted Answer

The answer of Explain the international trade effect on net...

Question 9

Explain the real wealth effect on consumption when prices rise in the economy.

Accepted Answer

The answer of Explain the real wealth effect on consumption...

Question 10

Explain the international trade effect on net exports when prices rise in the economy.

Accepted Answer

The answer of Explain the international trade effect on net...

Question 11

How do changes in each of these variables affect aggregate demand in Uganda?
(i) The Ugandan government rebuilds its highway infrastructure.
(ii) Corporate taxes in Uganda are reduced.
(iii) The Ugandan central bank engages in contractionary monetary policy.

Accepted Answer

The answer of How do changes in each of these...

Question 12

How do changes in each of these variables affect aggregate demand in Germany?
(i) Business confidence decreases in Germany.
(ii) Germany's trading partners experience increased economic growth.
(iii) Unemployment insurance increases in Germany.

Accepted Answer

The answer of How do changes in each of these...

Question 13

How do changes in each of these variables affect aggregate supply?
(i) The Brazilian economy experiences a decline in productivity.
(ii) An agricultural-based economy faces high costs for imported farm machinery and equipment.
(iii) The Organization of the Petroleum Exporting Countries (OPEC) increases production of oil and thus lowers oil prices.

Accepted Answer

The answer of How do changes in each of these...

Question 14

How do changes in each of these variables affect aggregate supply in the United States?
(i) U.S. tariffs increase import prices for U.S. producers who use foreign made inputs.
(ii) The U.S. dollar depreciates.
(iii) The U.S. dollar appreciates.

Accepted Answer

The answer of How do changes in each of these...

Question 15

How does a reduction in corporate tax rates affect the economy in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

Accepted Answer

The answer of How does a reduction in corporate tax...

Question 16

Factories now use data analytics to increase production efficiency and reduce waste in production. How does this affect the economy in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

Accepted Answer

The answer of Factories now use data analytics to increase...

Question 17

How does an increase in asset prices affect aggregate demand in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

Accepted Answer

The answer of How does an increase in asset prices...

Question 18

How does a depreciation of the Kenyan shilling affect aggregate demand in Kenya in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

Accepted Answer

The answer of How does a depreciation of the Kenyan...

Question 19

When the government raises government spending by $50 million, what is the final effect on GDP if the multiplier is 2.5?

Accepted Answer

The answer of When the government raises government spending by...

Question 20

When the government raises government spending by $325 million, what is the final effect on GDP if the multiplier is 2?

Accepted Answer

The answer of When the government raises government spending by...

Quiz 33: Aggregate Demand and Aggregate Supply

Planned investment refers to the:

The difference between total investment and planned investment is that:

Consumption is $13.7 trillion, investment is $4 trillion, government expenditure is $5 trillion, and net exports are -$3 trillion. Based on these statistics, what is aggregate expenditure?

Consumption is $14.2 trillion, investment is $4.8 trillion, government expenditure is $4.1 trillion, and net exports are $1.2 trillion. Based on these statistics, what is aggregate expenditure?

Explain the exchange rate effect relationship between higher interest rates and net exports.

Explain the debt effect on consumption when prices rise in the economy.

Explain the real wealth effect on consumption when prices fall in the economy.

Explain the international trade effect on net exports when prices fall in the economy.

Explain the real wealth effect on consumption when prices rise in the economy.

Explain the international trade effect on net exports when prices rise in the economy.

How do changes in each of these variables affect aggregate demand in Uganda? (i) The Ugandan government rebuilds its highway infrastructure. (ii) Corporate taxes in Uganda are reduced. (iii) The Ugandan central bank engages in contractionary monetary policy.

How do changes in each of these variables affect aggregate demand in Germany? (i) Business confidence decreases in Germany. (ii) Germany's trading partners experience increased economic growth. (iii) Unemployment insurance increases in Germany.

How do changes in each of these variables affect aggregate supply in the United States? (i) U.S. tariffs increase import prices for U.S. producers who use foreign made inputs. (ii) The U.S. dollar depreciates. (iii) The U.S. dollar appreciates.

How does a reduction in corporate tax rates affect the economy in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

Factories now use data analytics to increase production efficiency and reduce waste in production. How does this affect the economy in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

How does an increase in asset prices affect aggregate demand in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

How does a depreciation of the Kenyan shilling affect aggregate demand in Kenya in the AD-AS framework? Draw a graph of the AD-AS framework to illustrate your answer.

When the government raises government spending by $50 million, what is the final effect on GDP if the multiplier is 2.5?

When the government raises government spending by $325 million, what is the final effect on GDP if the multiplier is 2?