ECON 213 TOP EXAM COMPREHENSIVE STUDY
SHEET 2026 SOLVED QUESTIONS PREMIUM
BUNDLE
◉ Aggregate Expenditures equation.
Answer: GDP=AE = C + I + G + (X-M)
◉ Marginal propensity to consume.
Answer: the increase in consumer spending when disposable
income rises by $1
◉ Marginal propensity to consume equation.
Answer: change in consumption/change in income
◉ Marginal propensity to save equation.
Answer: change in savings/change in disposable income
◉ Determinants of Consumption and Saving.
Answer: wealth, expectations, household debt, taxes
dependent of income
,◉ Determinants of Investment Demand.
Answer: Expectations Technological change Operating costs Capital
goods on hand
independent of income
◉ To construct the full aggregate expenditure model, what variables
must be added to the model of the domestic, private sector?
A.Interest rates, inflation rates, and population growth rates
B.The size of the labor force and the average wage
C.The unemployment rate
D.A measure of income inequality and estimated life expectancy
E.Government purchases, taxes, imports, and exports.
Answer: E
◉ disposable income.
Answer: money left after taking out taxes
◉ multiplier effect.
Answer: occurs when a dollar of spending generates many more
dollars of spending in the economy.
◉ multiplier effect equation.
,Answer: 1/(1-MPC)
◉ general way to analyze policies that increase or decrease
aggregate output is to categorize activities.
Answer: injection or withdrawal
◉ In equilibrium, all injections must equal all withdrawals:.
Answer: I + G+ X= S + T +M
◉ recessionary gap.
Answer: The increase in spending needed (when expanded by the
multiplier) to bring a depressed economy back to full employment.
◉ inflationary gap.
Answer: the decrease in spending needed (when expanded by the
multiplier) to bring an overheated economy back to full
employment.
◉ average propensity to consume.
Answer: the percentage of each dollar of income, on average, that a
person spends for current needs rather than savings
◉ average propensity to save.
, Answer: Fraction (or percentage) of disposable income that
households save; saving divided by disposable income.
◉ Keynesian macroeconomic equilibrium.
Answer: The state of an economy at which all injections equal all
withdrawals. There are no pressures pushing the economy to a
higher or lower level of output.
◉ injection.
Answer: Actions that add spending to the economy, including
investment, government spending, and exports
◉ withdrawels.
Answer: Actions that add spending to the economy, including
investment, government spending, and export
◉ What is the difference between APC and MPC?.
Answer: APC = fraction of total income that is consumed: APC=C/Y
MPC = fraction of additional income that is consumed: MPC=ΔC/ΔY
APC looks at average behavior, MPC looks at marginal changes.
◉ What causes consumption to shift at a given income?.
Answer: Wealth changes
SHEET 2026 SOLVED QUESTIONS PREMIUM
BUNDLE
◉ Aggregate Expenditures equation.
Answer: GDP=AE = C + I + G + (X-M)
◉ Marginal propensity to consume.
Answer: the increase in consumer spending when disposable
income rises by $1
◉ Marginal propensity to consume equation.
Answer: change in consumption/change in income
◉ Marginal propensity to save equation.
Answer: change in savings/change in disposable income
◉ Determinants of Consumption and Saving.
Answer: wealth, expectations, household debt, taxes
dependent of income
,◉ Determinants of Investment Demand.
Answer: Expectations Technological change Operating costs Capital
goods on hand
independent of income
◉ To construct the full aggregate expenditure model, what variables
must be added to the model of the domestic, private sector?
A.Interest rates, inflation rates, and population growth rates
B.The size of the labor force and the average wage
C.The unemployment rate
D.A measure of income inequality and estimated life expectancy
E.Government purchases, taxes, imports, and exports.
Answer: E
◉ disposable income.
Answer: money left after taking out taxes
◉ multiplier effect.
Answer: occurs when a dollar of spending generates many more
dollars of spending in the economy.
◉ multiplier effect equation.
,Answer: 1/(1-MPC)
◉ general way to analyze policies that increase or decrease
aggregate output is to categorize activities.
Answer: injection or withdrawal
◉ In equilibrium, all injections must equal all withdrawals:.
Answer: I + G+ X= S + T +M
◉ recessionary gap.
Answer: The increase in spending needed (when expanded by the
multiplier) to bring a depressed economy back to full employment.
◉ inflationary gap.
Answer: the decrease in spending needed (when expanded by the
multiplier) to bring an overheated economy back to full
employment.
◉ average propensity to consume.
Answer: the percentage of each dollar of income, on average, that a
person spends for current needs rather than savings
◉ average propensity to save.
, Answer: Fraction (or percentage) of disposable income that
households save; saving divided by disposable income.
◉ Keynesian macroeconomic equilibrium.
Answer: The state of an economy at which all injections equal all
withdrawals. There are no pressures pushing the economy to a
higher or lower level of output.
◉ injection.
Answer: Actions that add spending to the economy, including
investment, government spending, and exports
◉ withdrawels.
Answer: Actions that add spending to the economy, including
investment, government spending, and export
◉ What is the difference between APC and MPC?.
Answer: APC = fraction of total income that is consumed: APC=C/Y
MPC = fraction of additional income that is consumed: MPC=ΔC/ΔY
APC looks at average behavior, MPC looks at marginal changes.
◉ What causes consumption to shift at a given income?.
Answer: Wealth changes
