Chapter 24 Post Quiz
The Multiplier Model

Matching Questions:

Match the terms on the left with the definition in the column on the right. Enter the lowercase letter of that definition in the box to the left of the question number.

	1. Multiplier model	a. a macroeconomic theory that relies on the idea that each dollar change in exogenous expenditures leads to a more than a dollar change in GDP.
	2. Equilibrium level of unemployment	b. the status of the economy at which higher spending will result in no significant increase in output or employment, but higher price levels.
	3. Change in output	c. the increase in GDP that is caused by a one dollar increase in government spending.
	4. Multiplier	d. will occur if there is a difference between planned output and planned spending.
	5. Full employment	e. (1/MPS) x change in investment.
	6. Change in output	f. occurs at the intersection of the saving and investment schedules.
	7. Reduction in consumption spending	g. equals MPC x expenditure multiplier.
	8. Higher taxes	h. will result in higher GDP and employment if investment and government purchases remain the same.
	9. Government expenditure multiplier	i. will reduce employment and GDP in the multiplier model as long as they are not coupled with an increase in government spending.
	10. Tax multiplier	j. the number by which the change in investment must be multiplied in order to determine the resulting change in total output.