Exam 22: Adding Government and Trade to the Simple Macro Model

Consider a simple macro model with government and foreign trade and where the price level is taken as given.The simple multiplier is equal to

Consider the net export function.Suppose exports are $940 and imports are given by IM = 0.1Y.At what level of national income will net exports equal zero?

In the simple macro model that is considered in Chapters 21 and 22 of the textbook,

In the simple macro model,how do government transfer payments to individuals affect desired aggregate expenditure?

FIGURE 22-4 Refer to Figure 22-4.The rotation from AE₀ to AE₁ could be caused by

Why are government expenditures such as Old Age Security payments,employment insurance payments,or welfare benefits paid to individuals not considered part of G,the government component of aggregate expenditure?

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,X = 130,IM = 0.08Y,T = 0.Equilibrium national income is 5000 when G is equal to

Consider the following simple macro model with a constant price level and demand-determined output: C = 150 + 0.9 , = 0.8Y,I = 400,G = 700,T = (0.2)Y,X = 130,IM = (0.08)Y.Equilibrium national income is

Consider the following news headline: "Finance minister announces that the federal income-tax rate will rise by three percentage points." Assuming that aggregate output is demand-determined,what will be the effect of this action,all other things equal,on the AE function and equilibrium national income?

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The value of the simple multiplier in this model is

A decrease in domestic national income will cause a ________ the net export (NX)function.

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: • marginal propensity to consume (mpc)= 0.80 • net tax rate (t)= 0.15 • no foreign trade • fixed price level • all expenditure and income figures are in billions of dollars. FIGURE 22-3 Refer to Figure 22-3.What is total autonomous expenditure?

In our simple macro model with government,consider the equation Y_D = (0.75)Y.Which of the following statements about this equation is correct?

In a simple macro model,it is generally assumed that a country's exports

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is 0.3Y.The government budget is in surplus only when Y is

The table below shows national income and imports.The level of exports is fixed at $300.All figures in the table and in the questions are in millions of dollars. TABLE 22-1 Refer to Table 22-1.What are the correct values for the level of net exports (a,b,c,and d)at each level of national income?

FIGURE 22-5 Refer to Figure 22-5,Diagram 2.Which of the following fiscal policy measures could the government implement to return national income to the full-employment level of GDP (potential output,Y*)?

In a simple macro model,the net export (NX)function indicates a ________ relationship between net exports and ________.

Consider the net export function.Suppose exports are $200 and imports are given by IM = 0.2Y.At what level of national income will net exports equal zero?

Consider the government's budget balance.Suppose G = 500 and the government's net tax revenue is equal to 0.25Y.When Y = 2920,the government is running a budget