Question 1

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

Accepted Answer

A) GDP will increase by $64. 
B) GDP will decrease by $64. 
C) the aggregate expenditures schedule will shift downward by $12. 
D) inflation will occur. 
A) GDP will increase by $64. 
B) GDP will decrease by $64. 
C) the aggregate expenditures schedule will shift downward by $12. 
D) inflation will occur.

Question 2

The table shows a private, open economy.All figures are in billions of dollars.   Refer to the above table.The equilibrium real GDP is:

Accepted Answer

A) $550 
B) $600 
C) $650 
D) $700 
A) $550 
B) $600 
C) $650 
D) $700

Question 3

Refer to the above diagrams.Other things equal, Curve B will shift upward when:

Accepted Answer

A) the level of GDP increases. 
B) the interest rate increases. 
C) curve A shifts to the left. 
D) curve A shifts to the right. 
A) the level of GDP increases. 
B) the interest rate increases. 
C) curve A shifts to the left. 
D) curve A shifts to the right.

Question 4

In the aggregate expenditures model, it is assumed that the planned investment:

Accepted Answer

A) automatically changes in response to changes in the current level of real domestic output. 
B) changes by less in percentage terms than changes in the level of real domestic output. 
C) does not respond to changes in interest rates. 
D) does not change when the level of real domestic output changes. 
A) automatically changes in response to changes in the current level of real domestic output. 
B) changes by less in percentage terms than changes in the level of real domestic output. 
C) does not respond to changes in interest rates. 
D) does not change when the level of real domestic output changes.

Question 5

The following information is for a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP).Ig = 80 S = -80 + 0.4Y
Refer to the above information.The equilibrium GDP will be:

Accepted Answer

A) $160. 
B) $400. 
C) $360. 
D) $480. 
A) $160. 
B) $400. 
C) $360. 
D) $480.

Question 6

The above economy is characterized by:

Accepted Answer

A) built-in stability. 
B) taxes which vary directly with GDP, but government spending which is independent of GDP. 
C) taxes which are independent of GDP, but government spending which varies directly with GDP. 
D) a multiplier of 2.5. 
A) built-in stability. 
B) taxes which vary directly with GDP, but government spending which is independent of GDP. 
C) taxes which are independent of GDP, but government spending which varies directly with GDP. 
D) a multiplier of 2.5.

Question 7

Assume that an economy is operating at less than its full-employment level of output.Which event would most likely increase an economy's exports?

Accepted Answer

A) a rise in the tariff on products imported from abroad 
B) a fall in the prosperity of trading partners for this economy 
C) an appreciation of a nation's currency relative to foreign currencies 
D) a depreciation of a nation's currency relative to foreign currencies 
A) a rise in the tariff on products imported from abroad 
B) a fall in the prosperity of trading partners for this economy 
C) an appreciation of a nation's currency relative to foreign currencies 
D) a depreciation of a nation's currency relative to foreign currencies

Question 8

Refer to the above diagrams.Other things equal, an interest rate increase will:

Accepted Answer

A) shift curve A to the right and shift curve B upward. 
B) shift curve A to the left and shift curve B downward. 
C) leave curve A in place but shift curve B downward. 
D) leave curve A in place but shift curve A upward. 
A) shift curve A to the right and shift curve B upward. 
B) shift curve A to the left and shift curve B downward. 
C) leave curve A in place but shift curve B downward. 
D) leave curve A in place but shift curve A upward.

Question 9

For a private closed economy, an unplanned decline in inventories suggests that:

Accepted Answer

A) aggregate expenditures are less than the business sector expected them to be. 
B) planned investment is greater than saving. 
C) actual investment exceeds saving. 
D) planned investment is greater than consumption. 
A) aggregate expenditures are less than the business sector expected them to be. 
B) planned investment is greater than saving. 
C) actual investment exceeds saving. 
D) planned investment is greater than consumption.

Question 10

Refer to the below data.Equilibrium Y = (GDP) is: The letters Y, C, and, I are used to represent GDP, consumption, and, investment respectively.

Accepted Answer

A) $100 
B) $200 
C) $300 
D) $400 
A) $100 
B) $200 
C) $300 
D) $400

Question 11

Refer to the above diagram.The sizes of the multipliers associated with changes in investment and government spending in this economy:

Accepted Answer

A) are 2.5 and 1.5 respectively. 
B) are 3 and 2 respectively. 
C) are both 2.5. 
D) are 2 and 3 respectively. 
A) are 2.5 and 1.5 respectively. 
B) are 3 and 2 respectively. 
C) are both 2.5. 
D) are 2 and 3 respectively.

Question 12

Refer to the diagram below for a private closed economy.In equilibrium the level of consumption:

Accepted Answer

A) will be $100. 
B) will be $500. 
C) will be $600. 
D) cannot be determined from the information given. 
A) will be $100. 
B) will be $500. 
C) will be $600. 
D) cannot be determined from the information given.

Question 13

Other things equal, the multiplier effect associated with a change in government spending is:

Accepted Answer

A) the same as that associated with a change in taxes. 
B) equal to that associated with a change in investment or consumption. 
C) less than that associated with a change in investment. 
D) greater than that associated with a change in investment. 
A) the same as that associated with a change in taxes. 
B) equal to that associated with a change in investment or consumption. 
C) less than that associated with a change in investment. 
D) greater than that associated with a change in investment.

Question 14

An increase in taxes will have a greater effect on the equilibrium GDP:

Accepted Answer

A) if the tax revenues are redistributed through transfer payments. 
B) the larger the MPS. 
C) the smaller the MPC. 
D) the larger the MPC. 
A) if the tax revenues are redistributed through transfer payments. 
B) the larger the MPS. 
C) the smaller the MPC. 
D) the larger the MPC.

Question 15

The equilibrium GDP is the level of domestic output:

Accepted Answer

A) where consumption equals saving. 
B) where actual investment equals consumption. 
C) which is sustainable. 
D) where full employment exists. 
A) where consumption equals saving. 
B) where actual investment equals consumption. 
C) which is sustainable. 
D) where full employment exists.

Question 16

In the above private open economy, international trade:

Accepted Answer

A) is inflationary. 
B) is a source of additional jobs for domestic workers. 
C) has no effect on GDP. 
D) has a contractionary effect on GDP. 
A) is inflationary. 
B) is a source of additional jobs for domestic workers. 
C) has no effect on GDP. 
D) has a contractionary effect on GDP.

Question 17

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively.Figures are in billions of dollars.Ca = 25.75(Y - T ) Ig = Ig0 = 50
Xn = Xn0 = 10
G = G0 = 70
T = T0 = 30
Refer to the above information.The multiplier for this economy:

Accepted Answer

A) is 4. 
B) is 3. 
C) is 2. 
D) is 2.33. 
A) is 4. 
B) is 3. 
C) is 2. 
D) is 2.33.

Question 18

Planned investment is $75 billion and saving is $62 billion in a private closed economy.In equilibrium actual investment must be:

Accepted Answer

A) $13 billion. 
B) $75 billion. 
C) $62 billion. 
D) minus $13 billion. 
A) $13 billion. 
B) $75 billion. 
C) $62 billion. 
D) minus $13 billion.

Question 19

Exports have the same macroeconomic effect on GDP as:

Accepted Answer

A) imports. 
B) investment. 
C) taxes. 
D) saving. 
A) imports. 
B) investment. 
C) taxes. 
D) saving.

Question 20

The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively.   The equation representing the consumption schedule for the above economy is:

Accepted Answer

A) C = Y -.6S. 
B) Y = C + S. 
C) C = 60 + .4Y. 
D) C = 60 + .6Y. 
A) C = Y -.6S. 
B) Y = C + S. 
C) C = 60 + .4Y. 
D) C = 60 + .6Y.

Exam 11: B: The Aggregate Expenditures Model

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

The table shows a private, open economy.All figures are in billions of dollars. Refer to the above table.The equilibrium real GDP is:

Refer to the above diagrams.Other things equal, Curve B will shift upward when:

In the aggregate expenditures model, it is assumed that the planned investment:

The following information is for a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP).Ig = 80 S = -80 + 0.4Y Refer to the above information.The equilibrium GDP will be:

The above economy is characterized by:

Assume that an economy is operating at less than its full-employment level of output.Which event would most likely increase an economy's exports?

Refer to the above diagrams.Other things equal, an interest rate increase will:

For a private closed economy, an unplanned decline in inventories suggests that:

Refer to the below data.Equilibrium Y = (GDP) is: The letters Y, C, and, I are used to represent GDP, consumption, and, investment respectively.

Refer to the above diagram.The sizes of the multipliers associated with changes in investment and government spending in this economy:

Refer to the diagram below for a private closed economy.In equilibrium the level of consumption:

Other things equal, the multiplier effect associated with a change in government spending is:

An increase in taxes will have a greater effect on the equilibrium GDP:

The equilibrium GDP is the level of domestic output:

In the above private open economy, international trade:

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively.Figures are in billions of dollars.Ca = 25.75(Y - T ) Ig = Ig0 = 50 Xn = Xn0 = 10 G = G0 = 70 T = T0 = 30 Refer to the above information.The multiplier for this economy:

Planned investment is $75 billion and saving is $62 billion in a private closed economy.In equilibrium actual investment must be:

Exports have the same macroeconomic effect on GDP as:

The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively. The equation representing the consumption schedule for the above economy is:

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

The following information is for a private closed economy, where I_g is gross investment, S is saving, and Y is gross domestic product (GDP).I_g = 80 S = -80 + 0.4Y Refer to the above information.The equilibrium GDP will be:

The letters Y, C, I_g, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively.Figures are in billions of dollars.Ca = 25.75(Y - T ) Ig = Ig0 = 50 Xn = Xn0 = 10 G = G0 = 70 T = T0 = 30 Refer to the above information.The multiplier for this economy: