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MACROECONOMICS CH. 11

Terms in this set (69)

The two components of aggregate expenditures in a private closed economy are ______
consumption and gross investment
The aggregate expenditure schedule in a private closed economy is the sum of ______ plus planned ______.
consumption; investment
What is the equilibrium level of output?
The level of GDP at which the total quantity of goods produced equals the total quantity of goods purchased
Which of the following are true at equilibrium GDP?
The total quantity of goods produced equals the total quantity of goods purchased.
There is no excess of total spending.
There is no unplanned increase in inventories of goods.
According to table, when real domestic output is at $470 billion, the tendency of employment, output, and income is to be _____.
at equilibrium
In a private closed economy, consumption and gross private investment are the components of aggregate ______.
expenditures
Which of the following reflects the total amount that will be spent at each possible output or income level?
Aggregate expenditures schedule
The level of GDP at which the total quantity of goods produced equals the total quantity of goods purchased is known as ______.
equilibrium output
When the level of GDP is below the equilibrium level, businesses will respond to the unplanned decline in business inventories by:
increasing output and employment
GDP ______ is the desired level of output because total spending is just sufficient to purchase total output.
at equilibrium
According to the table, if planned investment by firms was $30B rather than $20B, the equilibrium level of output and employment in this closed private economy would occur where output is ______ and employment is ______.
$510B; 75M
When GDP is above equilibrium, firms will ______ the rate of production.
decrease
In the graph, if real domestic output (GDP) was $430B what would have to happen to the C + Ig curve in order to reach equilibrium GDP?
The C + Ig curve would have to shift downward.
When GDP is ______ than its equilibrium level, businesses will raise the rate of production, leading to more employment and consequently raising the levels of consumption and income.
less
When the level of GDP is above the equilibrium level, businesses will respond to the unintended accumulation of unsold goods by:
decreasing the rate of production
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