20. Which of the following quotations illustrates a decrease in aggregate expenditure?

A) "The new stadium will generate $200 million in spin off spending."

B) "Higher expected profits are leading to higher investment spending by business, and will lead to higher consumer spending."

C) "The projected cuts in government jobs will hurt the local retail industry."

D) "Taking the grain elevator out of our small town will destroy 300 jobs."

E) Both C and D

21. Which one of the following will lead to an increase in the slope of the AE function?

A) an increase in the marginal propensity to import

B) an increase in the marginal tax rate

C) a decrease in the marginal propensity to consume

D) a decrease in the marginal propensity to save

E) an increase in the marginal propensity to save

22. The aggregate expenditure curve will become steeper if

A) people become thriftier.

B) people show an increased preference for foreign-made products.

C) firms expect an increase in future profit.

D) income tax rates are lowered.

E) income tax rates are raised.

23. In a recent study, the University of Underfunded argued that it created four times as many jobs as people that it hired directly. This argument illustrates the idea

A) of the marginal propensity to consume.

B) of the multiplier.

C) of government spending.

D) of the tax multiplier.

E) that universities are wasting taxpayers' dollars.

24. The multiplier shows that as ________ expenditure changes, real GDP changes by ________ amount.

A) autonomous; an even larger

B) autonomous; the same

C) induced; the same

D) induced; an even larger

E) induced; a smaller

25. Suppose that the economy is at full employment, the price level is 100, and the multiplier is 2. Investment increases by $10 billion. In the short run ________, and in the long run ________.

A) real GDP increases by less than $20 billion; real GDP does not change

B) real GDP increases by more than $20 billion; real GDP does not change

C) real GDP increases by less than $20 billion; real GDP increases by at least $20 billion

D) real GDP does not change; real GDP increases by less than $20 billion

E) real GDP does not change; real GDP does not change