Question 1

Suppose the economy is operating at its full-employment-noninflationary GDP and the MPC is 0.75.The federal government now finds that it must increase spending on military goods by $21 billion in response to a deterioration in the international political situation.To sustain full-employment-noninflationary GDP government must:

Accepted Answer

A)   reduce taxes by $28 billion.
B)   reduce transfer payments by $21 billion.
C)   increase taxes by $21 billion.
D)   increase taxes by $28 billion.E) None of the above
F) B) and D)

Question 2

-Refer to the above diagram for a private closed economy.At the $200 level of GDP:

Accepted Answer

A)   consumption will equal GDP.
B)   planned investment will equal saving and unintended investment will be zero.
C)   aggregate expenditures will exceed GDP,causing GDP to rise.
D)   GDP will exceed aggregate expenditures,causing GDP to fall.E) A) and C)
F) All of the above

Question 3

A recessionary expenditure gap exists if:

Accepted Answer

A)   planned investment exceeds saving at the full-employment GDP.
B)   the aggregate expenditures schedule lies below the 45-degree line at the full-employment GDP.
C)   the aggregate expenditures schedule intersects the 45-degree line at any level of GDP.
D)   the aggregate expenditures schedule lies above the 45-degree line at the full-employment GDP.E) None of the above
F) C) and D)

Question 4

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

Accepted Answer

A)   shift the aggregate expenditures line downward.
B)   shift the aggregate expenditures line upward.
C)   not affect the aggregate expenditures line.
D)   reduce the equilibrium GDP.E) A) and B)
F) A) and C)

Question 5

Refer to the below diagram,which aggregate expenditure (AE) schedule for a private closed economy implies the largest MPC? 4 B)  AE3 C)  AE2 D)  AE1" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   AE4
B)   AE3
C)   AE2
D)   AE1E) A) and D)
F) B) and C)

Question 6

A lump-sum tax causes the after-tax consumption schedule to be flatter than the before-tax consumption schedule.

Accepted Answer

A) True 
 B)False

Question 7

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 + .4Y
-Refer to the above information.In equilibrium,consumption will be:

Accepted Answer

A)   $400
B)   $280
C)   $320
D)   $360E) All of the above
F) None of the above

Question 8

Exports have the same macroeconomic effect on GDP as:

Accepted Answer

A)   imports.
B)   investment.
C)   taxes.
D)   saving.E) A) and B)
F) A) and C)

Question 9

The table shows a private,open economy.All figures are in billions of dollars.
 
-Refer to the above table.If net exports increased by $10 billion at each level of GDP,the equilibrium real GDP would be:

Accepted Answer

A)   $550
B)   $600
C)   $650
D)   $700E) A) and B)
F) None of the above

Question 10

If at some level of GDP the economy is experiencing an unplanned decrease in inventories:

Accepted Answer

A)   the aggregate level of saving will decline.
B)   the price level will fall.
C)   the business sector will lay off workers.
D)   domestic output will increase.E) A) and D)
F) A) and C)

Question 11

3,the: A)  inflationary GDP gap is BC. B)  recessionary GDP gap is BC. C)  recessionary GDP gap is AB. D)  inflationary expenditure gap is ed." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3,the:

Accepted Answer

A)   inflationary GDP gap is BC.
B)   recessionary GDP gap is BC.
C)   recessionary GDP gap is AB.
D)   inflationary expenditure gap is ed.E) B) and C)
F) C) and D)

Question 12

The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars.
 
-Refer to the above table.If taxes were $5,government purchases of goods and services $10,planned investment $6,and net exports zero,equilibrium real GDP would be:

Accepted Answer

A)   $600
B)   $610
C)   $620
D)   $630E) B) and C)
F) None of the above

Question 13

-The tax in the above economy is a:

Accepted Answer

A)   10 percent proportional tax.
B)   lump-sum tax of $20.
C)   lump-sum tax of $10.
D)   progressive tax.E) All of the above
F) C) and D)

Question 14

-Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If businesses were willing to invest $30 at each possible level of GDP,the equilibrium level of GDP would be:

Accepted Answer

A)   $462.5.
B)   $435.
C)   $420.
D)   $380.E) A) and B)
F) B) and D)

Question 15

In reality,if a nation imposes tarrifs,then the final result will be that:

Accepted Answer

A)   net exports and GDP will increase.
B)   net exports and GDP will decrease.
C)   there will be is no long term effect on net exports and GDP.
D)   there will be a decrease in imports and an increase in GDP.E) B) and D)
F) All of the above

Question 16

At equilibrium real GDP in a private closed economy:

Accepted Answer

A)   the MPC must equal the APC.
B)   the slope of the aggregate expenditures schedule equals the MPS.
C)   planned and actual investment are equal.
D)   planned saving and consumption are equal.E) All of the above
F) C) and D)

Question 17

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Accepted Answer

A)   the MPC is smaller in the private sector than it is in the public sector.
B)   declines in government spending always tend to stimulate private investment.
C)   disposable income will fall by some amount smaller than the tax increase.
D)   only part of the tax increase will affect the consumption negatively.E) None of the above
F) B) and C)

Question 18

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

Question 19

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 B)
F) B) and D)

Question 20

-In equilibrium in the above private open economy:

Accepted Answer

A)   imports exceed exports.
B)   net exports are a positive amount.
C)   a balance of payments surplus exists.
D)   exports exceed imports.E) All of the above
F) B) and C)

Exam 11: The Aggregate Expenditures Model

-Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₃,the:

Correct Answer
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The table shows a private,open economy.All figures are in billions of dollars. -Refer to the above table.If net exports increased by $10 billion at each level of GDP,the equilibrium real GDP would be:

Correct Answer
verified

-Refer to the above diagram for a private closed economy.At the $200 level of GDP:

Correct Answer
verified

-Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If businesses were willing to invest $30 at each possible level of GDP,the equilibrium level of GDP would be:

Correct Answer
verified

In reality,if a nation imposes tarrifs,then the final result will be that:

Correct Answer
verified

If at some level of GDP the economy is experiencing an unplanned decrease in inventories:

Correct Answer
verified

The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars. -Refer to the above table.If taxes were $5,government purchases of goods and services $10,planned investment $6,and net exports zero,equilibrium real GDP would be:

Correct Answer
verified

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

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 + .4Y -Refer to the above information.In equilibrium,consumption will be:

Correct Answer
verified

A lump-sum tax causes the after-tax consumption schedule to be flatter than the before-tax consumption schedule.

Correct Answer
verified

Refer to the below diagram,which aggregate expenditure (AE) schedule for a private closed economy implies the largest MPC?

Correct Answer
verified

At equilibrium real GDP in a private closed economy:

Correct Answer
verified

A recessionary expenditure gap exists if:

Correct Answer
verified

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Correct Answer
verified

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

Correct Answer
verified

-In equilibrium in the above private open economy:

Correct Answer
verified

Exports have the same macroeconomic effect on GDP as:

Correct Answer
verified

-The tax in the above economy is a:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Exam 11: The Aggregate Expenditures Model

-Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3,the:

Correct AnswerverifiedShow Answer

The table shows a private,open economy.All figures are in billions of dollars. -Refer to the above table.If net exports increased by $10 billion at each level of GDP,the equilibrium real GDP would be:

Correct AnswerverifiedShow Answer

-Refer to the above diagram for a private closed economy.At the $200 level of GDP:

Correct AnswerverifiedShow Answer

-Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If businesses were willing to invest $30 at each possible level of GDP,the equilibrium level of GDP would be:

Correct AnswerverifiedShow Answer

In reality,if a nation imposes tarrifs,then the final result will be that:

Correct AnswerverifiedShow Answer

If at some level of GDP the economy is experiencing an unplanned decrease in inventories:

Correct AnswerverifiedShow Answer

The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars. -Refer to the above table.If taxes were $5,government purchases of goods and services $10,planned investment $6,and net exports zero,equilibrium real GDP would be:

Correct AnswerverifiedShow Answer

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

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 + .4Y -Refer to the above information.In equilibrium,consumption will be:

Correct AnswerverifiedShow Answer

A lump-sum tax causes the after-tax consumption schedule to be flatter than the before-tax consumption schedule.

Correct AnswerverifiedShow Answer

Refer to the below diagram,which aggregate expenditure (AE) schedule for a private closed economy implies the largest MPC?

Correct AnswerverifiedShow Answer

At equilibrium real GDP in a private closed economy:

Correct AnswerverifiedShow Answer

A recessionary expenditure gap exists if:

Correct AnswerverifiedShow Answer

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Correct AnswerverifiedShow Answer

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

Correct AnswerverifiedShow Answer

-In equilibrium in the above private open economy:

Correct AnswerverifiedShow Answer

Exports have the same macroeconomic effect on GDP as:

Correct AnswerverifiedShow Answer

-The tax in the above economy is a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₃,the:

Correct Answer
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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 + .4Y -Refer to the above information.In equilibrium,consumption will be:

Correct Answer
verified

Correct Answer
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