In the simple two-sector Keynesian income-expenditure model with no government or external sector, assuming actual and planned saving are always equal, when aggregate output is less than aggregate planned expenditureGroup of answer choicesany unplanned change in inventories will be negativeactual investment is greater than planned investmentplanned saving is greater than planned investmentactual saving is equal to planned investment

Adding an external sector to the Keynesian income-expenditure model implies that for equilibrium, in terms of leakages and injectionsGroup of answer choicesplanned saving cannot not be equal to planned investment if the sum of taxation and imports is diiferent from the sum of government expenditure and exportsplanned saving must equal planned investment but the budget balance and/or the trade balance cannot be equal to zeroit is not necessary for planned saving and planned investment to be equal but exports must be equal to importsit is not necessary for planned saving and planned investment to be equal but if they are unequal then either the budget or the trade balance must be equal to zero.

In the basic Keynesian model, all statements below except for one are true. Which is the incorrect statement? Group of answer choicesPlanned aggregate expenditure is always equal to output in equilibrium. Planned government spending always equals actual government spending.Planned net exports always equal actual net exports.Planned investment always equals actual investment.Planned consumption always equals actual consumption.

According to the “paradox of thrift”, for the simple Keynesian income-expenditure model where there is no government or external sector,Group of answer choicesin the aggregate an increase in the proportion of income which households wish to save will lead to a rise in the level of investment and a rise in the level of incomewhile an individual may increase the proportion of income which they save, if all individuals do this aggregate income falls leaving aggregate saving unchangedan increase in the proportion of income which individuals wish to save will in the aggregate lead to an increase in the size of the income-expenditure multiplierthe equilibrium level of income will not be affected by a change in the proportion of income which households wish to save.

In the Keynesian income-expenditure model, equilibrium income is necessarily equal to a multiple ofGroup of answer choicesthe exogenous component of planned aggregate expenditure which is partly dependent on the autonomous component of taxation when government is includedthe autonomous component of consumption, regardless of whether the economy is closed or openthe sum of investment, government expenditure and net exportsnone of the other alternatives are correct.

Consider a simple economy with no government or external sector. Assume that in this economy the consumption (and thus saving) plans of households are always realized. Assume for the current period this economy is characterized by the following data:Y = 2800, Cp = 1800 and Ip = 400where Y is output, Cd is consumption and Ip is planned investment. In this caseGroup of answer choicesoutput is at its equilibrium level but planned saving and planned investment are unequalaggregate planned expenditure is greater than outputtotal investment recorded in the national accounts would be 1000output is not at its equilibrium level and total investment will be smaller than planned investment.