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

Consider the general form of the consumption function in a simple macro model.Once government and taxes are included in the model,desired consumption can be expressed as ________,where a = autonomous consumption,t = net tax rate,Y = national income,YD = disposable income,and MPC = marginal propensity to consume.

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.Desired consumption expenditure at equilibrium national income 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 marginal propensity to spend on national income,z,is

In a simple macro model with a constant price level,a decrease in the net tax rate causes the AE curve to

The AE function for an open economy with government can be written as

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

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

Exports are treated as autonomous expenditure in our simple macro model because

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.The marginal propensity to spend on national income in this model is

An increase in foreign income,other things being equal,is assumed to cause the net export (NX)function to

An upward shift and flattening of the net export (NX)function can be caused by

Consider the governmentʹs budget balance.Suppose G = 2500 and the governmentʹs net tax revenue is equal to 0.2Y.When Y = 11 000,the government is running a budget

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

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

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 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 the net export function.An increase in domestic national income,other things being equal,is assumed to cause

Consider the governmentʹs budget balance.Suppose G = 500 and the governmentʹs net tax revenue is equal to 0.2Y.The government budget is balanced when Y equals

When determining the AE function for an open economy with government,it is generally assumed that as real national income

A fall in domestic prices relative to foreign prices,other things being equal,causes the net export (NX)function to shift ________ and ________.