Question 1

Over the period 1990-2008, NX for the United States has been

Accepted Answer

A)  positive. 
B)  negative. 
C)  both of the above. 
D)  neither of the above. 
A)  positive. 
B)  negative. 
C)  both of the above. 
D)  neither of the above.

Question 2

An increase in government spending $\Delta$G that is paid for by an identical increase in taxes increases equilibrium output by $\Delta$Gm regardless of the mpc. Prove.

Accepted Answer

The decrease in expenditure due to the t

Question 3

An excess demand for money leads to an increase in interest rates for a given level of output.

Accepted Answer

A) True 
 B)False

Question 4

Using the Keynesian cross, if autonomous consumption is $500, government spending and taxes are $200, investment is $100, net exports are zero, and the marginal propensity to consume is 0.9, find equilibrium output.

Accepted Answer

The answer of Using the Keynesian cross, if autonomous consumption...

Question 5

Milton Friedman was a major contributor to the formation of the IS-LM model.

Accepted Answer

A) True 
 B)False

Question 6

The consumption function shifts down if _____ fall(s).

Accepted Answer

A)  taxes 
B)  autonomous consumption 
C)  government spending 
D)  none of the above 
A)  taxes 
B)  autonomous consumption 
C)  government spending 
D)  none of the above

Question 7

Income and disposable income are the same if taxes are zero.

Accepted Answer

A) True 
 B)False

Question 8

If interest rates fall, which of the following would rise due to the impact on the exchange rate?

Accepted Answer

A)  exports 
B)  imports 
C)  investment 
D)  all of the above 
A)  exports 
B)  imports 
C)  investment 
D)  all of the above

Question 9

An increase in net exports shifts the aggregate demand function up.

Accepted Answer

A) True 
 B)False

Question 10

According to the Keynesian cross model, if the marginal propensity to consume is 0.9, and government spending rises by $200, then equilibrium output rises by $380.

Accepted Answer

A) True 
 B)False

Question 11

In the Keynesian cross model, equilibrium output rises if _____ rise(s).

Accepted Answer

A)  government spending 
B)  the mpc 
C)  net exports 
D)  all of the above 
A)  government spending 
B)  the mpc 
C)  net exports 
D)  all of the above

Question 12

Country A is a closed economy so imports and exports are zero. Country B does trade but has no trade deficit (NX = 0) and is otherwise identical to Country A. What is the difference in the IS-LM graph for both countries?

Accepted Answer

The IS curve for country B is

Question 13

If the marginal propensity to consume is 0.8, then the multiplier is

Accepted Answer

A)  0.2. 
B)  1.2 
C)  1.25 
D)  5.0. 
A)  0.2. 
B)  1.2 
C)  1.25 
D)  5.0.

Question 14

On the Keynesian cross diagram, a decrease in which of the following would cause the aggregate demand function to shift up?

Accepted Answer

A)  autonomous consumption 
B)  taxes 
C)  investment 
D)  none of the above 
A)  autonomous consumption 
B)  taxes 
C)  investment 
D)  none of the above

Question 15

What is the marginal propensity to consume?

Accepted Answer

the fracti

Question 16

Federal government expenditures are several times greater than state and local government expenditures in the United States.

Accepted Answer

A) True 
 B)False

Question 17

In a country where investment is relatively insensitive to changes in the interest rate, the IS curve is steeper.

Accepted Answer

A) True 
 B)False

Question 18

Points to the right of the LM curve show an excess

Accepted Answer

A)  demand for goods. 
B)  demand for money. 
C)  supply of goods. 
D)  supply of money. 
A)  demand for goods. 
B)  demand for money. 
C)  supply of goods. 
D)  supply of money.

Question 19

Draw a Keynesian cross diagram and show how an increase in government spending would affect equilibrium output.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& The aggregate dema

Question 20

The price level is an exogenous variable in the IS-LM model.

Accepted Answer

A) True 
 B)False

Exam 21: Is-Lm

Over the period 1990-2008, NX for the United States has been

An increase in government spending Δ\DeltaΔ G that is paid for by an identical increase in taxes increases equilibrium output by Δ\DeltaΔ Gm regardless of the mpc. Prove.

An excess demand for money leads to an increase in interest rates for a given level of output.

Using the Keynesian cross, if autonomous consumption is $500, government spending and taxes are $200, investment is $100, net exports are zero, and the marginal propensity to consume is 0.9, find equilibrium output.

Milton Friedman was a major contributor to the formation of the IS-LM model.

The consumption function shifts down if _____ fall(s).

Income and disposable income are the same if taxes are zero.

If interest rates fall, which of the following would rise due to the impact on the exchange rate?

An increase in net exports shifts the aggregate demand function up.

According to the Keynesian cross model, if the marginal propensity to consume is 0.9, and government spending rises by $200, then equilibrium output rises by $380.

In the Keynesian cross model, equilibrium output rises if _____ rise(s).

Country A is a closed economy so imports and exports are zero. Country B does trade but has no trade deficit (NX = 0) and is otherwise identical to Country A. What is the difference in the IS-LM graph for both countries?

If the marginal propensity to consume is 0.8, then the multiplier is

On the Keynesian cross diagram, a decrease in which of the following would cause the aggregate demand function to shift up?

What is the marginal propensity to consume?

Federal government expenditures are several times greater than state and local government expenditures in the United States.

In a country where investment is relatively insensitive to changes in the interest rate, the IS curve is steeper.

Points to the right of the LM curve show an excess

Draw a Keynesian cross diagram and show how an increase in government spending would affect equilibrium output.

The price level is an exogenous variable in the IS-LM model.

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An increase in government spending $\Delta$ G that is paid for by an identical increase in taxes increases equilibrium output by $\Delta$ Gm regardless of the mpc. Prove.