Question 1

Refer to the above data.If gross investment is $120, the equilibrium level of GDP will be:

Accepted Answer

A) $380 
B) $370 
C) $360 
D) $400 
A) $380 
B) $370 
C) $360 
D) $400

Question 2

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

Accepted Answer

A) a decline in the rate of interest 
B) an unplanned accumulation of inventories by businesses 
C) a rise in the real GDP 
D) the federal budget will automatically move toward a deficit 
A) a decline in the rate of interest 
B) an unplanned accumulation of inventories by businesses 
C) a rise in the real GDP 
D) the federal budget will automatically move toward a deficit

Question 3

At equilibrium real GDP in a private closed economy:

Accepted Answer

A) the MPC must equal the APC. 
B) the slope of the aggregate expenditures schedule equals the MPS. 
C) planned and actual investment are equal. 
D) planned saving and consumption are equal. 
A) the MPC must equal the APC. 
B) the slope of the aggregate expenditures schedule equals the MPS. 
C) planned and actual investment are equal. 
D) planned saving and consumption are equal.

Question 4

Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3, the:

Accepted Answer

A) inflationary GDP gap is BC. 
B) recessionary GDP gap is BC. 
C) recessionary GDP gap is AB. 
D) inflationary expenditure gap is ed. 
A) inflationary GDP gap is BC. 
B) recessionary GDP gap is BC. 
C) recessionary GDP gap is AB. 
D) inflationary expenditure gap is ed.

Question 5

The economy in the above diagram is incurring:

Accepted Answer

A) balance in its international trade. 
B) a trade deficit. 
C) a trade surplus. 
D) inflation. 
A) balance in its international trade. 
B) a trade deficit. 
C) a trade surplus. 
D) inflation.

Question 6

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Accepted Answer

A) the MPC is smaller in the private sector than it is in the public sector. 
B) declines in government spending always tend to stimulate private investment. 
C) disposable income will fall by some amount smaller than the tax increase. 
D) only part of the tax increase will affect the consumption negatively. 
A) the MPC is smaller in the private sector than it is in the public sector. 
B) declines in government spending always tend to stimulate private investment. 
C) disposable income will fall by some amount smaller than the tax increase. 
D) only part of the tax increase will affect the consumption negatively.

Question 7

Equal increases in government expenditures and tax collections will leave the equilibrium GDP unchanged.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the above diagram for a private closed economy.Unplanned investment in inventories will:

Accepted Answer

A) occur at all levels of GDP in excess of $200. 
B) occur at all levels of GDP in excess of $600. 
C) occur at all levels of GDP below $600. 
D) not occur because the economy is necessarily in equilibrium. 
A) occur at all levels of GDP in excess of $200. 
B) occur at all levels of GDP in excess of $600. 
C) occur at all levels of GDP below $600. 
D) not occur because the economy is necessarily in equilibrium.

Question 9

Refer to the above diagram.The value of the multiplier for this economy is:

Accepted Answer

A) BC/hg. 
B) BC/AB. 
C) ed/di. 
D) df/BC. 
A) BC/hg. 
B) BC/AB. 
C) ed/di. 
D) df/BC.

Question 10

In reality, if a nation devalues its currency, then the final result will be that:

Accepted Answer

A) net exports and GDP will increase. 
B) net exports and GDP will decrease. 
C) there will be is no long term effect on net exports and GDP. 
D) there will be a decrease in imports and an increase in GDP. 
A) net exports and GDP will increase. 
B) net exports and GDP will decrease. 
C) there will be is no long term effect on net exports and GDP. 
D) there will be a decrease in imports and an increase in GDP.

Question 11

Other things equal, the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n):

Accepted Answer

A) rightward shift in the investment-demand schedule. 
B) downward shift in the consumption schedule. 
C) upward shift in the consumption schedule. 
D) upward shift in the investment schedule. 
A) rightward shift in the investment-demand schedule. 
B) downward shift in the consumption schedule. 
C) upward shift in the consumption schedule. 
D) upward shift in the investment schedule.

Question 12

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1, the:

Accepted Answer

A) inflationary expenditure gap is hg. 
B) recessionary expenditure gap is BC. 
C) inflationary expenditure gap is zero. 
D) inflationary expenditure gap is ed. 
A) inflationary expenditure gap is hg. 
B) recessionary expenditure gap is BC. 
C) inflationary expenditure gap is zero. 
D) inflationary expenditure gap is ed.

Question 13

During the recession of 2008-2009 the federal government undertook various policies intended to stimulate private spending and investment.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Accepted Answer

A) aggregate expenditures exceed GDP with the result that GDP will rise. 
B) consumption is $350 and planned investment is zero so that aggregate expenditures are $350. 
C) consumption is $300 and planned investment is $50 so that aggregate expenditures are $350. 
D) consumption is $300 and actual investment is $100 so that aggregate expenditures are $400. 
A) aggregate expenditures exceed GDP with the result that GDP will rise. 
B) consumption is $350 and planned investment is zero so that aggregate expenditures are $350. 
C) consumption is $300 and planned investment is $50 so that aggregate expenditures are $350. 
D) consumption is $300 and actual investment is $100 so that aggregate expenditures are $400.

Question 15

In which of the following situations for a mixed open economy will the level of GDP expand?

Accepted Answer

A) when Ig + X + G exceeds Sa + M + T 
B) when Sa + T + M exceeds Ig + G + X 
C) when domestic output exceeds Ca + Ig + G + Xn 
D) when Ig + M + T exceeds Ca + X + S 
A) when Ig + X + G exceeds Sa + M + T 
B) when Sa + T + M exceeds Ig + G + X 
C) when domestic output exceeds Ca + Ig + G + Xn 
D) when Ig + M + T exceeds Ca + X + S

Question 16

Other things equal, if $100 billion of government purchases (G) is added to private spending (C + Ig + Xn), GDP will:

Accepted Answer

A) increase by $100 billion. 
B) increase by more than $100 billion. 
C) increase by less than $100 billion. 
D) fall by $100 billion 
A) increase by $100 billion. 
B) increase by more than $100 billion. 
C) increase by less than $100 billion. 
D) fall by $100 billion

Question 17

In the aggregate expenditures model, an increase in government spending will:

Accepted Answer

A) decrease real GDP. 
B) increase output and employment. 
C) shift the aggregate expenditures schedule downward. 
D) do all of the above. 
A) decrease real GDP. 
B) increase output and employment. 
C) shift the aggregate expenditures schedule downward. 
D) do all of the above.

Question 18

The multiplier for the economy in the above diagram:

Accepted Answer

A) is 3. 
B) is 4. 
C) is 4.8. 
D) is 5.4. 
A) is 3. 
B) is 4. 
C) is 4.8. 
D) is 5.4.

Exam 11: B: The Aggregate Expenditures Model

Refer to the above data.If gross investment is $120, the equilibrium level of GDP will be:

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

At equilibrium real GDP in a private closed economy:

Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3, the:

The economy in the above diagram is incurring:

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Equal increases in government expenditures and tax collections will leave the equilibrium GDP unchanged.

Refer to the above diagram for a private closed economy.Unplanned investment in inventories will:

Refer to the above diagram.The value of the multiplier for this economy is:

In reality, if a nation devalues its currency, then the final result will be that:

Other things equal, the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n):

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1, the:

During the recession of 2008-2009 the federal government undertook various policies intended to stimulate private spending and investment.

Refer to the above diagram for a private closed economy.At the $400 level of GDP:

In which of the following situations for a mixed open economy will the level of GDP expand?

Other things equal, if $100 billion of government purchases (G) is added to private spending (C + Ig + Xn), GDP will:

In the aggregate expenditures model, an increase in government spending will:

The multiplier for the economy in the above diagram:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₃, the:

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₁, the:

Other things equal, if $100 billion of government purchases (G) is added to private spending (C + I_g + X_n), GDP will: