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27 terms

Chapter 10 Aggregate Expenditure y Aggregate Demand

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The aggregate expenditure line shows total planned spending at each
Income level, holding the price level constant
____ is illustrated by The distance between the aggregate expenditure line and the 45 degree line At each level of real GDP
Unplanned inventory changes
If planned spending exceeds planned output the result is
Unintended inventory reductions
The economy will expand if
Injections exceed leakages
On the aggregate expenditure graph, if and autonomous investment decreases by 10 billion
The aggregate expenditure line shifts downward by 10 billion
On the aggregate expenditure graph, if and autonomous investment increases by 20 billion
The aggregate expenditure line shifts upward by 20 billion
On the aggregate expenditure graph, if and autonomous saving increases by 15 billion
The aggregate expenditure line shifts downward by 15 billion
The simple multiplier
Is defined as 1.0 divided by the MPS(marginal propensity to save)
If the MPS is 0.25 then the simple multiplier is
4
If the simple multiplier is 10 then the MPS is
1/10
It is ____ that if there are no unintended changes In inventory, the economy is at Equilibrium level of real GDP demanded
This is true
Consumption plus saving equals
Disposable income at every level of real GDP Demanded
Aggregate Expenditure means
Total or combined spending
Movement along the aggregate expenditure curve is caused by
A change in the level of income
The aggregate expenditure line shows
Real GDP on the horizontal axis and Aggregate Expenditure on the vertical axis
If leakages exceed injections this will cause the economy to
Contract or shrink
In the simple aggregate expenditure model,
planned investment is Autonomous
The aggregate demand curve illustrates a relationship between
The price level and real GDP
When speaking of aggregate expenditures and increase in price level will
Shift the aggregate expenditure line downward; the economy moves upward along the aggregate demand curve.
An increase in the U.S. Price level, other things constant would
Decrease U.S. Exports and increase U.S. Imports. ( we would bring stuff in b/c it's cheaper)
As the U.S. price levels rise in relation to the price levels of other countries, in the U.S.
Consumption and net exports would decline.
A decrease in the U.S. Price level would result in
An increase in the level of aggregate quantity demanded.
A decline in the U.S. Price level would
Stimulate U.S. Exports but discourage imports causing a rightward movement along a given aggregate demand curve.
An increase in planned investment would
Cause a rightward shift in the aggreagate demand curve
If the level of autonomous spending increases at a given price level
The aggregate expenditure line shifts upward; the aggregate demand curve shifts right.
A decrease in planned investment will shift the aggregate demand curve
Inward
The slope of the aggregate expenditure line equals
The MPC