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

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,G = 700,T = 0,X = 130,IM = 0.08Y.The trade balance at equilibrium national income is a

Consider the government's budget balance.Suppose G = 400 and the government's net tax revenue is 20% of national income (Y).Government saving is negative for all values of Y

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.In this economy,if actual national income increases by $600,the level of imports will

Which of the following can cause a downward shift and steepening of the net export (NX)function?

A movement along the net export (NX)function can be caused by a change in

Consider the following news headline: "Canadians develop a greater taste for foreign vacations." Assuming that aggregate output is demand-determined,what effect will this have,all other things equal,on the AE function and on equilibrium national income?

Consider a macro model in which output is assumed to be demand-determined.One situation which may justify this assumption is when

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

FIGURE 22-4 Refer to Figure 22-4.Autonomous expenditures ________ as the AE curve rotates from AE₁ to AE₀ 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.Equilibrium national income is

In an open economy with government and demand-determined output,a decrease in the equilibrium level of national income could be caused by