Macroeconomics - Ch 11

Question 1

Planned investment

Answer 1

the amounts business firms collectively intend to invest

Question 2

Investment schedule

Answer 2

a curve or schedule that shows the amounts firms plan to invest at various possible values of real gross domestic product

Question 3

Aggregate expenditures schedule

Answer 3

shows the amount (C+Ig) that will be spent at each possible output or income level

Question 4

Equilibrium GDP

Answer 4

C+Ig = GDP

Question 5

Leakage

Answer 5

saving, a withdrawal of spending from the economy’s circular flow of income and expenditures

Question 6

Injection

Answer 6

investment, the purchases of capital goods is an injection of spending into the income-expenditures stream; potential replacement for the leakage of saving

Question 7

Unplanned changes in inventories

Answer 7

changes in inventories that firms did not anticipate; changes in inventories that occur because of unexpected increases or decreases of aggregate spending (or of aggregate expenditures)

Question 8

Net exports

Answer 8

exports minus imports; can be positive or negative

Question 9

Lump-sum tax

Answer 9

tax of a constant amount; a tax yielding the same amount of tax revenue at each level of GDP

Question 10

Recessionary expenditure gap

Answer 10

amount by which aggregate expenditures at the full-employment GDP fall short of those required to achieve the full-employment GDP

Question 11

Inflationary expenditure gap

Answer 11

the amount by which an economy’s aggregate expenditures at the full-employment GDP exceed those just necessary to achieve the full-employment level of GDP