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

Suppose Y = 400 and the government's net tax rate is 10%.If we are told that the government has a budget surplus,then government purchases must be

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is equal to 0.12Y.The government budget is balanced when Y equals

A fall in the Canadian-dollar price of foreign currency,other things being equal,causes Canada's net export (NX)function to shift ________ and ________.

An increase in the value of the simple multiplier can be caused by

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 the equilibrium national income in this economy?

Consider the simplest 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 marginal propensity to spend on national income,z,is

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 vertical intercept of the AE function is

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.7 and a net tax rate of 30% of national income,the marginal propensity to consume out of national income is

Consider the government's budget balance.Suppose G = 600 and the government's net tax revenue is 10% of Y.The government budget is balanced when Y equals

Consider a macro model with a constant price level and demand-determined output.A rise in the net tax rate ________ the simple multiplier 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 = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.If national income is 2400,then desired aggregate expenditure is

Fiscal policy involves the government's use of ________ to affect economic outcomes.

Which of the following can cause an upward shift and flattening of the net export (NX)function?

Consider a model in which output is demand-determined.If the marginal propensity to spend out of national income is 0.4,then a $0.6 billion decrease in government purchases will cause equilibrium national income to ________ by approximately ________.

In our simple macro model with government,consider the equation T = (0.2)Y.Which of the following statements about this equation is correct?

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.The vertical intercept of the AE function is

The diagrams below show the import,export,and net export functions for an economy. FIGURE 22-1 Refer to Figure 22-1.If actual national income is equal to $2000,then imports are equal to

Consider the net export function.Suppose exports are $1850 and imports are given by IM = 0.13Y.At what level of national income will net exports equal zero?

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.9 and a net tax rate of 10% of national income,the marginal propensity to consume out of national income is

A decrease in the value of the simple multiplier can be caused by