#1
Which of the following is a component of aggregate expenditure in macroeconomics?
Government spending
Individual savings
Foreign exchange reserves
Corporate profits
#2
What is the formula for calculating aggregate expenditure?
Consumption + Investment + Government spending + Net exports
Consumption - Investment + Government spending - Net exports
Consumption + Investment - Government spending + Net exports
Consumption - Investment - Government spending - Net exports
#3
What is the relationship between aggregate expenditure and GDP in macroeconomics?
Aggregate expenditure is always equal to GDP
Aggregate expenditure is greater than GDP
Aggregate expenditure is less than GDP
Aggregate expenditure and GDP are unrelated
#4
What is the difference between planned investment and actual investment in macroeconomics?
Planned investment includes government spending, while actual investment does not
Planned investment considers future expectations, while actual investment reflects current expenditures
Planned investment is always equal to actual investment
Planned investment is determined by the government, while actual investment is determined by businesses
#5
What does the term 'crowding out' refer to in macroeconomics?
An increase in private investment due to government spending
A decrease in private investment caused by increased government borrowing
An increase in consumer spending due to government stimulus
A decrease in government spending during periods of economic recession
#6
What does the aggregate expenditure line represent in the Keynesian cross diagram?
Aggregate demand at different price levels
Aggregate supply at different price levels
Equilibrium output at different income levels
Equilibrium income at different expenditure levels
#7
In the Keynesian cross model, what happens if planned expenditure exceeds actual output?
An increase in inventories
A decrease in inventories
No effect on inventories
Shift in the aggregate expenditure line
#8
In the Keynesian cross model, what does the 45-degree line represent?
Consumption function
Equilibrium level of income
Government spending
Investment function
#9
What is the significance of the consumption function in macroeconomics?
It shows the relationship between saving and investment
It illustrates how consumption varies with income
It determines the level of government spending in the economy
It represents the relationship between imports and exports
#10
Which of the following is NOT a component of planned investment in the Keynesian model?
Business investment
Inventory investment
Residential construction
Government spending on infrastructure
#11
What is the slope of the consumption function in the Keynesian model?
Less than 1
Greater than 1
Equal to 1
Depends on the level of income
#12
Which of the following is an assumption of the simple Keynesian model of macroeconomic equilibrium?
Perfect competition prevails in the market
Consumption is the only determinant of saving
Government does not intervene in the economy
Aggregate supply equals aggregate demand
#13
What is the multiplier effect in macroeconomics?
The increase in government spending to stimulate the economy
The decrease in consumer spending due to a decrease in income
The process by which an initial change in spending leads to a larger change in national income
The decrease in investment due to increased interest rates
#14
What happens to the equilibrium level of income if there is an increase in autonomous consumption in the Keynesian model?
The equilibrium level of income decreases
The equilibrium level of income remains unchanged
The equilibrium level of income increases
The equilibrium level of income becomes negative
#15
What is the difference between the expenditure multiplier and the tax multiplier?
Expenditure multiplier affects only consumption, while tax multiplier affects only government spending
Expenditure multiplier affects only investment, while tax multiplier affects only government spending
Expenditure multiplier affects only government spending, while tax multiplier affects only consumption
Expenditure multiplier affects overall spending, while tax multiplier affects disposable income
#16
In the Keynesian model, what effect does an increase in the marginal propensity to consume (MPC) have on the multiplier?
Increases the multiplier
Decreases the multiplier
Does not affect the multiplier
Changes the sign of the multiplier
#17
What is the significance of the marginal propensity to consume (MPC) in the Keynesian model?
It indicates the fraction of disposable income spent on consumption
It represents the total consumption in the economy
It determines the level of government spending required for equilibrium
It measures the responsiveness of investment to changes in income