MACRO chapter 11 Questions and Answers
(100% Correct Answers) Already Graded A+
Basic Keynesian Model [ Ans: ] the assumption that firms
meet the demand for their products at preset prices
In the Keynesian model, it is assumed that, when demand
for a firm's product changes, the firm [ Ans: ] changes
production levels to meet demand
Cost-Benefit Principle [ Ans: ] the decision whether to to
change prices frequency or infrequently
prices should be changed if the benefit of doing so
outweighs the cost of making the changes
Menu Costs [ Ans: ] cost of changing prices
Four Components of PAE [ Ans: ] consumption, planned
investment, government purchases, net exports
doesn't include interest paid on national debt
Planned Investment may differ from actual investment
because of [ Ans: ] unplanned changes in inventory
If a firm sells less than expected, actual investment
increases because [ Ans: ] the unsold goods are added to
the inventory (counted as an investment)
, If a firm sells more output than expected, planned
investment is [ Ans: ] greater than actual investment
If a firm sells less output than expected, planned
investment is [ Ans: ] less than actual investment
Unplanned investment = 0 when [ Ans: ] planned
investment = actual investment
When actual investment is greater than planned [ Ans: ]
firm sold less output than expected
When actual investment is less than planned [ Ans: ] firm
sold more output than expected
PAE= [ Ans: ] C+I^p+G+NX
Largest component of PAE [ Ans: ] consumption
Consumption function is the relationship between [ Ans: ]
consumption and its determinants, such as disposable
income
Consumption depends on [ Ans: ] disposable income and
factors other than disposable income
The slope of the consumption function = [ Ans: ] mpc
(marginal propensity to consume)
As disposable income increases [ Ans: ] consumption
increases
(100% Correct Answers) Already Graded A+
Basic Keynesian Model [ Ans: ] the assumption that firms
meet the demand for their products at preset prices
In the Keynesian model, it is assumed that, when demand
for a firm's product changes, the firm [ Ans: ] changes
production levels to meet demand
Cost-Benefit Principle [ Ans: ] the decision whether to to
change prices frequency or infrequently
prices should be changed if the benefit of doing so
outweighs the cost of making the changes
Menu Costs [ Ans: ] cost of changing prices
Four Components of PAE [ Ans: ] consumption, planned
investment, government purchases, net exports
doesn't include interest paid on national debt
Planned Investment may differ from actual investment
because of [ Ans: ] unplanned changes in inventory
If a firm sells less than expected, actual investment
increases because [ Ans: ] the unsold goods are added to
the inventory (counted as an investment)
, If a firm sells more output than expected, planned
investment is [ Ans: ] greater than actual investment
If a firm sells less output than expected, planned
investment is [ Ans: ] less than actual investment
Unplanned investment = 0 when [ Ans: ] planned
investment = actual investment
When actual investment is greater than planned [ Ans: ]
firm sold less output than expected
When actual investment is less than planned [ Ans: ] firm
sold more output than expected
PAE= [ Ans: ] C+I^p+G+NX
Largest component of PAE [ Ans: ] consumption
Consumption function is the relationship between [ Ans: ]
consumption and its determinants, such as disposable
income
Consumption depends on [ Ans: ] disposable income and
factors other than disposable income
The slope of the consumption function = [ Ans: ] mpc
(marginal propensity to consume)
As disposable income increases [ Ans: ] consumption
increases
