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

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. Which of the following correctly describes the consumption function for this economy?

The diagram below shows desired aggregate expenditure for a hypothetical economy. Assume the following features of this economy: · marginal propensity to consume mpc) = 0.75 · net tax rate t) = 0.20 · no foreign trade · fixed price level · all expenditure and income figures are in billions of dollars. FIGURE 22-2 -Refer to Figure 22-2. What is the value of the multiplier in this economy?

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

FIGURE 22-4 -Refer to Figure 22-4. The rotation from AE0 to AE1 could 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. Which of the following equations describes the aggregate expenditure function for this economy?

In a macro model where the marginal propensity to consume out of disposable income is 0.8, the net tax rate is 0.25, and the marginal propensity to import is 0.12, the simple multiplier will be

Consider an open economy that has a marginal propensity to import equal to 0.30. If national income rises by $2500, imports will rise by

Consider the simplest macro with demand-determined output. If the marginal propensity to consume out of disposable income MPC) is equal to the marginal propensity to spend out of national income z), then

Consider a simple macro model with government and demand -determined output. If the government wants to reduce equilibrium national income by $20 billion, G must be

The table below shows national income and imports. The level of exports is fixed at $300. All figures in table and questions) are in millions of dollars. TABLE 22-1 -Refer to Table 22-1. What are the correct values for the level of net exports a, b, c, and d) at each level of national income?

The diagrams below show the import, export, and net export functions for an economy. FIGURE 22-1 -Refer to Figure 22-1. The function for desired imports for this economy can be expressed as

The table below shows national income and imports. The level of exports is fixed at $300. All figures in table and questions) are in millions of dollars. TABLE 22-1 -Refer to Table 22-1. On a graph of the net export function for this economy, at what level of Y would the NX function intersect the horizontal axis?

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

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. Equilibrium national income is

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

The diagram below shows desired aggregate expenditure for a hypothetical economy. Assume the following features of this economy: · marginal propensity to consume mpc) = 0.75 · net tax rate t) = 0.20 · no foreign trade · fixed price level · all expenditure and income figures are in billions of dollars. FIGURE 22-2 -Refer to Figure 22-2. What is total autonomous expenditure?

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

The table below shows national income and imports. The level of exports is fixed at $300. All figures in table and questions) are in millions of dollars. TABLE 22-1 -Refer to Table 22-1. What is the marginal propensity to import?

FIGURE 22-5 -Refer to Figure 22-5, Diagram 2. Which of the following fiscal policy measures could the government implement to return national income to the full-employment level of GDP potential output, Y*)?

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