Question 1

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

Accepted Answer

A) net exports fall and contribute to demand-pull inflation 
B) net exports rise and contribute to demand-pull inflation 
C) net exports fall, but equilibrium GDP rises 
D) net exports rise, but equilibrium GDP falls 
A) net exports fall and contribute to demand-pull inflation 
B) net exports rise and contribute to demand-pull inflation 
C) net exports fall, but equilibrium GDP rises 
D) net exports rise, but equilibrium GDP falls

Question 2

Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If gross investment is $15, the equilibrium level of GDP:

Accepted Answer

A) is $30. 
B) is $380. 
C) is $300. 
D) is $340. 
A) is $30. 
B) is $380. 
C) is $300. 
D) is $340.

Question 3

Other things equal, if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP:

Accepted Answer

A) unemployment will decrease domestically. 
B) Canadian GDP will fall. 
C) inflation will occur domestically. 
D) Canadian real GDP will rise. 
A) unemployment will decrease domestically. 
B) Canadian GDP will fall. 
C) inflation will occur domestically. 
D) Canadian real GDP will rise.

Question 4

In moving from a private closed to a mixed closed economy in the aggregate expenditures model, taxes:

Accepted Answer

A) must be added to gross investment. 
B) must be added to saving. 
C) must be added to consumption and gross investment. 
D) have no impact upon the equilibrium GDP. 
A) must be added to gross investment. 
B) must be added to saving. 
C) must be added to consumption and gross investment. 
D) have no impact upon the equilibrium GDP.

Question 5

The effect of imposing a lump-sum tax is to:

Accepted Answer

A) reduce the absolute levels of consumption and saving at each level of GDP and to reduce the size of the multiplier. 
B) reduce the absolute levels of consumption and saving at each level of GDP, but to not change the size of the multiplier. 
C) reduce the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier. 
D) increase the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier. 
A) reduce the absolute levels of consumption and saving at each level of GDP and to reduce the size of the multiplier. 
B) reduce the absolute levels of consumption and saving at each level of GDP, but to not change the size of the multiplier. 
C) reduce the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier. 
D) increase the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier.

Question 6

Refer to the above diagram for a private closed economy.At the $100 level of GDP:

Accepted Answer

A) aggregate expenditures will exceed GDP, causing GDP to fall. 
B) planned investment will exceed saving, but actual investment will be equal to saving. 
C) households will consume more than their income. 
D) saving will be $40. 
A) aggregate expenditures will exceed GDP, causing GDP to fall. 
B) planned investment will exceed saving, but actual investment will be equal to saving. 
C) households will consume more than their income. 
D) saving will be $40.

Question 7

The open economy multiplier is:

Accepted Answer

A) larger than the simple multiplier because the latter embodies fewer leakages. 
B) larger than the simple multiplier because the latter embodies more leakages. 
C) smaller than the simple multiplier because the latter embodies fewer leakages. 
D) smaller than the simple multiplier because the latter embodies more leakages. 
A) larger than the simple multiplier because the latter embodies fewer leakages. 
B) larger than the simple multiplier because the latter embodies more leakages. 
C) smaller than the simple multiplier because the latter embodies fewer leakages. 
D) smaller than the simple multiplier because the latter embodies more leakages.

Question 8

For a private closed economy aggregate expenditures consist of:

Accepted Answer

A) C + Ig. 
B) C - Ig. 
C) C + S. 
D) C - S. 
A) C + Ig. 
B) C - Ig. 
C) C + S. 
D) C - S.

Question 9

Actual investment equals saving:

Accepted Answer

A) at all levels of GDP. 
B) at all below-equilibrium levels of GDP. 
C) at all above-equilibrium levels of GDP. 
D) only at the equilibrium GDP. 
A) at all levels of GDP. 
B) at all below-equilibrium levels of GDP. 
C) at all above-equilibrium levels of GDP. 
D) only at the equilibrium GDP.

Question 10

The inequality of saving and planned investment:

Accepted Answer

A) is attributable to a low MPC. 
B) may be of considerable significance because of the subsequent changes in income, employment, and the price level. 
C) is of no consequence because a compensating inequality of tax collections and government spending will always occur. 
D) is of no consequence because saving and actual investment will always be equal. 
A) is attributable to a low MPC. 
B) may be of considerable significance because of the subsequent changes in income, employment, and the price level. 
C) is of no consequence because a compensating inequality of tax collections and government spending will always occur. 
D) is of no consequence because saving and actual investment will always be equal.

Question 11

Refer to the above information.If the real interest rate is 20 percent, the equilibrium level of GDP will be:

Accepted Answer

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

Question 12

The equilibrium level of GDP is associated with:

Accepted Answer

A) an excess of planned investment over saving. 
B) no unintended investment in inventories. 
C) an unintended decrease in business inventories. 
D) an unintended increase in business inventories. 
A) an excess of planned investment over saving. 
B) no unintended investment in inventories. 
C) an unintended decrease in business inventories. 
D) an unintended increase in business inventories.

Question 13

Refer to the information below.The multiplier for this economy:

Accepted Answer

A) is 2. 
B) is 2.5. 
C) is 3. 
D) is 4. 
A) is 2. 
B) is 2.5. 
C) is 3. 
D) is 4.

Question 14

In an aggregate expenditures diagram the imposition of a lump-sum tax (T) will:

Accepted Answer

A) not affect the C + Ig + Xn line. 
B) shift the C + Ig + Xn line upward by an amount equal to T. 
C) shift the C + Ig + Xn line downward by an amount equal to T. 
D) shift the C + Ig + Xn line downward by an amount equal to T * MPC. 
A) not affect the C + Ig + Xn line. 
B) shift the C + Ig + Xn line upward by an amount equal to T. 
C) shift the C + Ig + Xn line downward by an amount equal to T. 
D) shift the C + Ig + Xn line downward by an amount equal to T * MPC.

Question 15

Equal increases in government purchases and taxes will:

Accepted Answer

A) increase the equilibrium GDP and the size of that increase varies directly with the size of the MPC. 
B) increase the equilibrium GDP and the size of that increase is independent of the size of the MPC. 
C) increase the equilibrium GDP and the size of that increase varies inversely with the size of the MPC. 
D) decrease the equilibrium GDP and the size of that decrease is independent of the size of the MPC. 
A) increase the equilibrium GDP and the size of that increase varies directly with the size of the MPC. 
B) increase the equilibrium GDP and the size of that increase is independent of the size of the MPC. 
C) increase the equilibrium GDP and the size of that increase varies inversely with the size of the MPC. 
D) decrease the equilibrium GDP and the size of that decrease is independent of the size of the MPC.

Question 16

For an open mixed economy the equilibrium level of GDP is determined where Sa + Ig + X = T +G.

Accepted Answer

A) True 
 B)False

Question 17

Refer to the above diagram.International trade has an expansionary effect on this economy.

Accepted Answer

A) True 
 B)False

Question 18

If S = -60 + 0.25Y and Ig = 60, where S is saving, Ig is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is:

Accepted Answer

A) $200. 
B) $320. 
C) $360. 
D) $480. 
A) $200. 
B) $320. 
C) $360. 
D) $480.

Question 19

The relationship between investment and GDP is shown by the:

Accepted Answer

A) consumption of fixed capital schedule. 
B) saving schedule. 
C) investment schedule. 
D) consumption schedule. 
A) consumption of fixed capital schedule. 
B) saving schedule. 
C) investment schedule. 
D) consumption schedule.

Question 20

In a private closed economy, saving is always equal to:

Accepted Answer

A) the sum of planned investment and unplanned changes in inventories. 
B) the difference between planned investment and unplanned changes in inventories. 
C) the sum of planned investment and planned changes in inventories. 
D) the difference between planned investment and planned changes in inventories. 
A) the sum of planned investment and unplanned changes in inventories. 
B) the difference between planned investment and unplanned changes in inventories. 
C) the sum of planned investment and planned changes in inventories. 
D) the difference between planned investment and planned changes in inventories.

Exam 11: B: The Aggregate Expenditures Model

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If gross investment is $15, the equilibrium level of GDP:

Other things equal, if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP:

In moving from a private closed to a mixed closed economy in the aggregate expenditures model, taxes:

The effect of imposing a lump-sum tax is to:

Refer to the above diagram for a private closed economy.At the $100 level of GDP:

The open economy multiplier is:

For a private closed economy aggregate expenditures consist of:

Actual investment equals saving:

The inequality of saving and planned investment:

Refer to the above information.If the real interest rate is 20 percent, the equilibrium level of GDP will be:

The equilibrium level of GDP is associated with:

Refer to the information below.The multiplier for this economy:

In an aggregate expenditures diagram the imposition of a lump-sum tax (T) will:

Equal increases in government purchases and taxes will:

For an open mixed economy the equilibrium level of GDP is determined where Sa + Ig + X = T +G.

Refer to the above diagram.International trade has an expansionary effect on this economy.

If S = -60 + 0.25Y and Ig = 60, where S is saving, Ig is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is:

The relationship between investment and GDP is shown by the:

In a private closed economy, saving is always equal to:

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

For an open mixed economy the equilibrium level of GDP is determined where S_a + I_g + X = T +G.

If S = -60 + 0.25Y and I_g = 60, where S is saving, I_g is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is: