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 = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.The vertical intercept of the AE function is

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

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory ________ will induce firms to________ the rate of output production.

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

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

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import).

When compared to a simple macroeconomic model (with only consumption and investment),adding government and foreign trade to the AE function causes

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

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

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

Transfer payments made by the government affect its net tax revenues

A downward shift and steepening of the net export (NX)function can be caused by

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

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

Consider the simplest macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = .2Y,X = 130,and IM = 0.14Y.Autonomous expenditures in this model are

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

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.Total autonomous spending in this model is

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

Suppose exports (X)=100,Y=500,and imports are equal to mY,where m is the marginal propensity to import.Net exports would be equal to zero if the marginal propensity to import were

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 trade balance at equilibrium national income is