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If actual spending is AED 5mn while planned spending is AED 5
If actual spending is AED 5mn while planned spending is AED 5.5mn, the gap is adjusted for by: OA) A decrease in unplanned inventory expenditure by AED 0.5mn OB) An increase in planned inventory expenditure by AED 0.5mn OC) An increase in unplanned inventory expenditure by AED 0.5m OD) A decrease in planned inventory expenditure by AED 0.5 Which of the following components of spending accounts for two-thirds of total spending? ON) Consumption Os) Investment Oc) Government purchases OD) Net exports Spending that is not related to the level of disposable income is called: OA) Marginal propensity to consume OB) Autonomous expenditure Oc) Induced expenditure OD) Wealth effect The slope of the consumption function is OA) Marginal propensity to consume OB) Autonomous expenditure OC) Induced expenditure OD) Wealth effect If the MPC is 0.75, then an initial increase in planned aggregate expenditure of $150b will eventually increase the real GDP by: OA) $112.sbn OB) $200 OC) $600 OD) $750 To graph the relationship of the MPC and the income-expenditure multiplier, the curve would be OA) Upward sloping OB) Downward sloping Oc) Moro OD) Vertical If an increase in planned investment of $80bn causes equilibrium output demanded to increase by $240, the value of the marginal propensity to contume ON) OB) 2/3 OC) 3/2 OD) 1/3 Given the consumption function - 33000+ 0.7 increase in disposable income from $5,000 billion to 56,000 billion will most comption by OA) $1,300be OB) $1,800 c) $1,000 OD) $100
Expert Solution
Answer 1:
Option C. When actual spending in the economy is less than planned spending, then the gap between these two types of spending is adjusted for by an increase in unplanned inventory expenditure by AED 0.5mm.
Answer 2:
Option A. Consumption expenditure forms the largest component of the aggregate expenditure in the economy and thus account for two third of the total spending in the economy.
Answer 3:
Option B. Spending that is not related to disposable income is known as Autonomous expenditure in the economy.
Answer 4:
Option A. The slope of the consumption function is Marginal propensity to Consume.
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