Question 1

Refer to the above diagrams.Other things equal, an interest rate increase will:

Accepted Answer

A)  shift curve A to the right and shift curve B upward.
B)  shift curve A to the left and shift curve B downward.
C)  leave curve A in place but shift curve B downward.
D)  leave curve A in place but shift curve A upward.E) None of the above
F) All of the above

Question 2

Refer to the diagram below for a private closed economy.At income level D:

Accepted Answer

A)  planned investment is GH.
B)  unplanned investment is GH.
C)  unplanned disinvestment is GH.
D)  saving equals planned investment.E) B) and C)
F) C) and D)

Question 3

Assume that an economy is operating at less than its full-employment level of output.Which event would most likely increase an economy's exports?

Accepted Answer

A)  a rise in the tariff on products imported from abroad
B)  a fall in the prosperity of trading partners for this economy
C)  an appreciation of a nation's currency relative to foreign currencies
D)  a depreciation of a nation's currency relative to foreign currenciesE) A) and C)
F) All of the above

Question 4

Investment and saving are, respectively:

Accepted Answer

A)  income and wealth.
B)  stocks and flows.
C)  injections and leakages.
D)  leakages and injections.E) None of the above
F) A) and D)

Question 5

The following information is for a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP) .Ig = 80 S = -80 + 0.4Y
Refer to the above information.The equilibrium GDP will be:

Accepted Answer

A)  $160.
B)  $400.
C)  $360.
D)  $480.E) All of the above
F) A) and B)

Question 6

C = 40 + .8Y _
Ig = Ig = 40
_
X = X = 20
_
M = M = 30
Refer to the above information.In equilibrium, the level of consumption is:

Accepted Answer

A)  $230
B)  $320
C)  $400
D)  $150E) All of the above
F) None of the above

Question 7

The multiplier for the economy in the above diagram:

Accepted Answer

A)  is 3.
B)  is 4.
C)  is 4.8.
D)  is 5.4.E) C) and D)
F) B) and D)

Question 8

Refer to the diagram below for a private closed economy.In equilibrium the level of consumption:

Accepted Answer

A)  will be $100.
B)  will be $500.
C)  will be $600.
D)  cannot be determined from the information given.E) C) and D)
F) All of the above

Question 9

Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion.If the MPC is 0.6, what change in aggregate expenditures is needed to achieve full employment?

Accepted Answer

A)  a decrease of $24 billion
B)  an increase of $24 billion
C)  a decrease of $16 billion
D)  an increase of $16 billionE) All of the above
F) None of the above

Question 10

The level of aggregate expenditures in the private closed economy is determined by the:

Accepted Answer

A)  expenditures of consumers and businesses.
B)  intersection of the saving schedule and the 45-degree line.
C)  equality of the MPC and MPS.
D)  intersection of the saving and consumption schedules.E) A) and B)
F) All of the above

Question 11

In a mixed open economy the equilibrium level of GDP exists where:

Accepted Answer

A)  Ca + Ig + Xn intersects the 45-degree line.
B)  Ca + Ig = Sa + T + X.
C)  Ca + Ig + Xn + G = GDP.
D)  Ca + Ig + Xn = Sa + T.E) A) and D)
F) A) and B)

Question 12

If the MPC is.9, a $20 billion increase in a lump-sum tax will reduce GDP by $200 billion.

Accepted Answer

A) True 
 B)False

Question 13

The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively. 0 = 30." class="answers-bank-image d-inline" rel="preload" > The equation representing the investment schedule for the above economy is:

Accepted Answer

A)  I = .3Y.
B)  I = 80 - .3Y.
C)  I = 30 + .1Y.
D)  I = I0 = 30.E) B) and C)
F) None of the above

Question 14

Other things equal, if $100 billion of government purchases (G)  is added to private spending (C + Ig + Xn) , GDP will:

Accepted Answer

A)  increase by $100 billion.
B)  increase by more than $100 billion.
C)  increase by less than $100 billion.
D)  fall by $100 billionE) B) and D)
F) A) and C)

Question 15

Refer to the above diagram for a private closed economy.At the $100 level of GDP:

Accepted Answer

A)  aggregate expenditures will exceed GDP, causing GDP to fall.
B)  planned investment will exceed saving, but actual investment will be equal to saving.
C)  households will consume more than their income.
D)  saving will be $40.E) All of the above
F) B) and D)

Question 16

Refer to the above diagram, which applies to a private closed economy.If the initial gross investment Ig1 increases to Ig2, the equilibrium GDP will increase by:

Accepted Answer

A)  FE.
B)  AB.
C)  AD.
D)  GE.E) A) and D)
F) C) and D)

Question 17

Refer to the above information.If the real interest rate is 20 percent, the equilibrium level of GDP will be:

Accepted Answer

A)  $100
B)  $200
C)  $300
D)  $400E) A) and B)
F) A) and C)

Question 18

Refer to the diagram below.The change in aggregate expenditures as shown from (C + Ig + Xn2)  to (C + Ig + Xn1)  might be caused by: g + Xn2)  to (C + Ig + Xn1)  might be caused by:   A) an appreciation of this nation's currency relative to the currencies of its trading partners. B) a depreciation of this nation's currency relative to the currencies of its trading partners. C) a decrease in this nation's price level relative to price levels abroad. D) a rightward shift in this nation's aggregate supply curve." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  an appreciation of this nation's currency relative to the currencies of its trading partners.
B)  a depreciation of this nation's currency relative to the currencies of its trading partners.
C)  a decrease in this nation's price level relative to price levels abroad.
D)  a rightward shift in this nation's aggregate supply curve.E) A) and C)
F) B) and C)

Question 19

A recessionary expenditure gap in a mixed open economy can be measured as the extent to which aggregate expenditures fall short of those required to achieve the full-employment GDP.

Accepted Answer

A) True 
 B)False

Question 20

The effect of imposing a lump-sum tax is to:

Accepted Answer

A)  reduce the absolute levels of consumption and saving at each level of GDP and to reduce the size of the multiplier.
B)  reduce the absolute levels of consumption and saving at each level of GDP, but to not change the size of the multiplier.
C)  reduce the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier.
D)  increase the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier.E) C) and D)
F) B) and D)

Exam 11: Part B: The Aggregate Expenditures Model

The level of aggregate expenditures in the private closed economy is determined by the:

Correct AnswerverifiedShow Answer

C = 40 + .8Y _ Ig = Ig = 40 _ X = X = 20 _ M = M = 30 Refer to the above information.In equilibrium, the level of consumption is:

Correct AnswerverifiedShow Answer

Other things equal, if $100 billion of government purchases (G) is added to private spending (C + Ig + Xn) , GDP will:

Correct AnswerverifiedShow Answer

Assume that an economy is operating at less than its full-employment level of output.Which event would most likely increase an economy's exports?

Correct AnswerverifiedShow Answer

The multiplier for the economy in the above diagram:

Correct AnswerverifiedShow Answer

Refer to the above diagram, which applies to a private closed economy.If the initial gross investment Ig1 increases to Ig2, the equilibrium GDP will increase by:

Correct AnswerverifiedShow Answer

Refer to the diagram below.The change in aggregate expenditures as shown from (C + Ig + Xn2) to (C + Ig + Xn1) might be caused by:

Correct AnswerverifiedShow Answer

A recessionary expenditure gap in a mixed open economy can be measured as the extent to which aggregate expenditures fall short of those required to achieve the full-employment GDP.

Correct AnswerverifiedShow Answer

The following information is for a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP) .Ig = 80 S = -80 + 0.4Y Refer to the above information.The equilibrium GDP will be:

Correct AnswerverifiedShow Answer

Investment and saving are, respectively:

Correct AnswerverifiedShow Answer

Refer to the diagram below for a private closed economy.In equilibrium the level of consumption:

Correct AnswerverifiedShow Answer

The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively. The equation representing the investment schedule for the above economy is:

Correct AnswerverifiedShow Answer

If the MPC is.9, a $20 billion increase in a lump-sum tax will reduce GDP by $200 billion.

Correct AnswerverifiedShow Answer

Refer to the above diagram for a private closed economy.At the $100 level of GDP:

Correct AnswerverifiedShow Answer

Refer to the diagram below for a private closed economy.At income level D:

Correct AnswerverifiedShow Answer

Refer to the above information.If the real interest rate is 20 percent, the equilibrium level of GDP will be:

Correct AnswerverifiedShow Answer

Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion.If the MPC is 0.6, what change in aggregate expenditures is needed to achieve full employment?

Correct AnswerverifiedShow Answer

In a mixed open economy the equilibrium level of GDP exists where:

Correct AnswerverifiedShow Answer

Refer to the above diagrams.Other things equal, an interest rate increase will:

Correct AnswerverifiedShow Answer

The effect of imposing a lump-sum tax is to:

Correct AnswerverifiedShow Answer

Correct Answer
verified

C = 40 + .8Y _ I_g = I_g = 40 _ X = X = 20 _ M = M = 30 Refer to the above information.In equilibrium, the level of consumption is:

Correct Answer
verified

Other things equal, if $100 billion of government purchases (G) is added to private spending (C + I_g + X_n) , GDP will:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the above diagram, which applies to a private closed economy.If the initial gross investment I_g1 increases to I_g2, the equilibrium GDP will increase by:

Correct Answer
verified

Refer to the diagram below.The change in aggregate expenditures as shown from (C + I_g + X_n2) to (C + I_g + X_n1) might be caused by:

Correct Answer
verified

Correct Answer
verified

The following information is for a private closed economy, where I_g is gross investment, S is saving, and Y is gross domestic product (GDP) .I_g = 80 S = -80 + 0.4Y Refer to the above information.The equilibrium GDP will be:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified