Question 1

In which of the following situations for a mixed open economy will the level of GDP expand?

Accepted Answer

A)   when Ig + X + G exceeds Sa + M + T
B)   when Sa + T + M exceeds Ig + G + X
C)   when domestic output exceeds Ca + Ig + G + Xn
D)   when Ig + M + T exceeds Ca + X + SE) None of the above
F) B) and D)

Question 2

4. B)  Y3. C)  Y2. D)  Y1." class="answers-bank-image d-inline" rel="preload" >
-The equilibrium level of GDP for the above private open economy is:

Accepted Answer

A)   Y4.
B)   Y3.
C)   Y2.
D)   Y1.E) None of the above
F) A) and B)

Question 3

At the equilibrium GDP for an open economy:

Accepted Answer

A)   net exports may be either positive or negative.
B)   imports will always exceed exports.
C)   exports will always exceed imports.
D)   exports and imports will be equal.E) A) and B)
F) All of the above

Question 4

The following information is for a closed economy:
 
-Refer to the above information.If both government spending and taxes are zero,the equilibrium level of GDP:

Accepted Answer

A)   is $200.
B)   is $300.
C)   is $400.
D)   is $500.E) None of the above
F) All of the above

Question 5

Refer to the data below.If gross investment is $10 at all levels of GDP,the equilibrium GDP will be:
The following schedule contains data for a private closed economy.All figures are in billions.

Accepted Answer

A)   $300
B)   $220
C)   $260
D)   $180E) None of the above
F) A) and B)

Question 6

Refer to the diagram below.The equilibrium condition for a private closed economy is Ig = S.

Accepted Answer

A) True 
 B)False

Question 7

A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because:

Accepted Answer

A)   government spending is more employment-intensive than is either consumption or investment spending.
B)   government spending increases the money supply and a tax reduction does not.
C)   a portion of a tax cut will be saved.
D)   taxes vary directly with income.E) None of the above
F) A) and C)

Question 8

-In the above private open economy,international trade:

Accepted Answer

A)   is inflationary.
B)   is a source of additional jobs for domestic workers.
C)   has no effect on GDP.
D)   has a contractionary effect on GDP.E) A) and B)
F) All of the above

Question 9

Which of the following statements is correct for a private closed economy?

Accepted Answer

A)   Saving equals planned investment only at the equilibrium level of domestic output.
B)   All levels of domestic output where planned investment exceeds saving will be too high for equilibrium.
C)   Planned and actual investment are identical at all possible levels of domestic output.
D)   Saving equals actual investment only at the equilibrium level of domestic output.E) A) and B)
F) A) and D)

Question 10

-Refer to the above diagrams.Other things equal,an interest rate decrease 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) A) and C)
F) A) and B)

Question 11

Investment and saving are,respectively:

Accepted Answer

A)   income and wealth.
B)   stocks and flows.
C)   injections and leakages.
D)   leakages and injections.E) B) and D)
F) All of the above

Question 12

Which of the following will cause the investment schedule to shift downward?

Accepted Answer

A)   an increase in the real interest rate
B)   a decline in wage rates
C)   a significant decline in the real interest rate
D)   a new technological advance which cuts the price of steel by one-halfE) All of the above
F) C) and D)

Question 13

If the MPC is .50,all taxes are lump-sum taxes,and the equilibrium GDP is $40 billion below the full-employment GDP,then the size of the recessionary expenditure gap:

Accepted Answer

A)   is $40 billion.
B)   is $20 billion.
C)   is $60 billion.
D)   cannot be determined from the information given.E) A) and D)
F) B) and D)

Question 14

The relationship between investment and GDP is shown by the:

Accepted Answer

A)   consumption of fixed capital schedule.
B)   saving schedule.
C)   investment schedule.
D)   consumption schedule.E) B) and C)
F) None of the above

Question 15

If a nation imposes tariffs and quotas on foreign products,the immediate effect,if no retaliation is immediately imposed by other countries will be to:

Accepted Answer

A)   reduce the rate of domestic inflation.
B)   increase efficiency in the world economy.
C)   increase domestic output and employment.
D)   reduce domestic output and employment.E) A) and D)
F) B) and D)

Question 16

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) All of the above
F) A) and B)

Question 17

Assume in a private economy that the equilibrium level of income is $380 and the MPS is 0.25.Now suppose government collects taxes of $50 and spends the entire amount.As a result:

Accepted Answer

A)   the equilibrium level of real income and the price level will both remain unchanged.
B)   nominal wage rates will fall.
C)   the equilibrium level of income will rise to $420.
D)   the equilibrium level of income will rise to $430.E) A) and B)
F) A) and C)

Question 18

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) A) and D)
F) B) and C)

Question 19

If the MPC in an economy is .75,a $1 billion increase in taxes will reduce the GDP by:

Accepted Answer

A)   $1 billion.
B)   $.75 billion.
C)   $3 billion.
D)   $4 billion.E) A) and C)
F) A) and D)

Question 20

In the aggregate expenditures model,it is assumed that the planned investment:

Accepted Answer

A)   automatically changes in response to changes in the current level of real domestic output.
B)   changes by less in percentage terms than changes in the level of real domestic output.
C)   does not respond to changes in interest rates.
D)   does not change when the level of real domestic output changes.E) None of the above
F) A) and D)

Exam 11: The Aggregate Expenditures Model

If the MPC in an economy is .75,a $1 billion increase in taxes will reduce the GDP by:

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

If a nation imposes tariffs and quotas on foreign products,the immediate effect,if no retaliation is immediately imposed by other countries will be to:

Correct AnswerverifiedShow Answer

In which of the following situations for a mixed open economy will the level of GDP expand?

Correct AnswerverifiedShow Answer

Refer to the data below.If gross investment is $10 at all levels of GDP,the equilibrium GDP will be: The following schedule contains data for a private closed economy.All figures are in billions.

Correct AnswerverifiedShow Answer

In the aggregate expenditures model,it is assumed that the planned investment:

Correct AnswerverifiedShow Answer

A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because:

Correct AnswerverifiedShow Answer

Which of the following statements is correct for a private closed economy?

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

-The equilibrium level of GDP for the above private open economy is:

Correct AnswerverifiedShow Answer

The following information is for a closed economy: -Refer to the above information.If both government spending and taxes are zero,the equilibrium level of GDP:

Correct AnswerverifiedShow Answer

Assume in a private economy that the equilibrium level of income is $380 and the MPS is 0.25.Now suppose government collects taxes of $50 and spends the entire amount.As a result:

Correct AnswerverifiedShow Answer

Refer to the diagram below.The equilibrium condition for a private closed economy is Ig = S.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

At the equilibrium GDP for an open economy:

Correct AnswerverifiedShow Answer

Which of the following will cause the investment schedule to shift downward?

Correct AnswerverifiedShow Answer

-In the above private open economy,international trade:

Correct AnswerverifiedShow Answer

The relationship between investment and GDP is shown by the:

Correct AnswerverifiedShow Answer

If the MPC is .50,all taxes are lump-sum taxes,and the equilibrium GDP is $40 billion below the full-employment GDP,then the size of the recessionary expenditure gap:

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

Refer to the diagram below.The equilibrium condition for a private closed economy is I_g = S.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified