Question 1

Refer to the above diagram for a private closed economy.At the $200 level of GDP:

Accepted Answer

A) consumption is $200 and planned investment is $50 so that aggregate expenditures are $250. 
B) consumption is $200 and planned investment is $100 so that aggregate expenditures are $300. 
C) consumption is $250 and actual investment is $50 so that aggregate expenditures are $300. 
D) aggregate expenditures is equal to the GDP. 
A) consumption is $200 and planned investment is $50 so that aggregate expenditures are $250. 
B) consumption is $200 and planned investment is $100 so that aggregate expenditures are $300. 
C) consumption is $250 and actual investment is $50 so that aggregate expenditures are $300. 
D) aggregate expenditures is equal to the GDP.

Question 2

Which of the following statements is correct for a private closed economy?

Accepted Answer

A) Saving equals planned investment only at the equilibrium level of domestic output. 
B) All levels of domestic output where planned investment exceeds saving will be too high for equilibrium. 
C) Planned and actual investment are identical at all possible levels of domestic output. 
D) Saving equals actual investment only at the equilibrium level of domestic output. 
A) Saving equals planned investment only at the equilibrium level of domestic output. 
B) All levels of domestic output where planned investment exceeds saving will be too high for equilibrium. 
C) Planned and actual investment are identical at all possible levels of domestic output. 
D) Saving equals actual investment only at the equilibrium level of domestic output.

Question 3

Refer to the diagram below.The change in aggregate expenditures as shown from (C + Ig + Xn2) to (C + Ig + Xn1) might be caused by:

Accepted Answer

A) an appreciation of this nation's currency relative to the currencies of its trading partners. 
B) a depreciation of this nation's currency relative to the currencies of its trading partners. 
C) a decrease in this nation's price level relative to price levels abroad. 
D) a rightward shift in this nation's aggregate supply curve. 
A) an appreciation of this nation's currency relative to the currencies of its trading partners. 
B) a depreciation of this nation's currency relative to the currencies of its trading partners. 
C) a decrease in this nation's price level relative to price levels abroad. 
D) a rightward shift in this nation's aggregate supply curve.

Question 4

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.If government desired to raise the equilibrium GDP to $650, it could:

Accepted Answer

A) raise G by $45 and reduce T by $10. 
B) raise G by $40 and reduce T by $30. 
C) raise G by $30 or reduce T by $40. 
D) raise both G and T by $40. 
A) raise G by $45 and reduce T by $10. 
B) raise G by $40 and reduce T by $30. 
C) raise G by $30 or reduce T by $40. 
D) raise both G and T by $40.

Question 5

Saving is always equal to:

Accepted Answer

A) planned less unintended investment. 
B) actual investment. 
C) planned investment. 
D) unintended investment. 
A) planned less unintended investment. 
B) actual investment. 
C) planned investment. 
D) unintended investment.

Question 6

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.If the economy's tax schedule was T = 0.2Y rather than T = T0 = 30, the equilibrium GDP would be:

Accepted Answer

A) $387.3. 
B) $518.5. 
C) $316 
D) $412 
A) $387.3. 
B) $518.5. 
C) $316 
D) $412

Question 7

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively.Figures are in billions of dollars.C = 26 + .75Y Ig = 60
X = 24
M = 10
The multiplier for the above economy is:

Accepted Answer

A) 4.60. 
B) 3.33. 
C) 5.00. 
D) 4.00. 
A) 4.60. 
B) 3.33. 
C) 5.00. 
D) 4.00.

Question 8

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income, consumption spending would decrease by:

Accepted Answer

A) $100 billion. 
B) $40 billion. 
C) $90 billion 
D) $50 billion. 
A) $100 billion. 
B) $40 billion. 
C) $90 billion 
D) $50 billion.

Question 9

Which of the following occurred during the recession of 2008-2009?

Accepted Answer

A) Both after-tax consumption and government expenditures declined. 
B) Both after-tax consumption and investment expenditures declined. 
C) Both government expenditures and investment expenditures declined. 
D) Government expenditures declined but after-tax consumption increased 
A) Both after-tax consumption and government expenditures declined. 
B) Both after-tax consumption and investment expenditures declined. 
C) Both government expenditures and investment expenditures declined. 
D) Government expenditures declined but after-tax consumption increased

Question 10

The equilibrium level of GDP in the economy in the above diagram:

Accepted Answer

A) is $100. 
B) is $200. 
C) is $240. 
D) is $320. 
A) is $100. 
B) is $200. 
C) is $240. 
D) is $320.

Question 11

If net exports decrease from zero to some negative amount, the aggregate expenditures schedule would:

Accepted Answer

A) shift upward. 
B) shift downward. 
C) not move (net exports do not affect aggregate expenditures). 
D) shift upward or downward, depending on whether the negative net exports resulted from a decline in exports or an increase in imports. 
A) shift upward. 
B) shift downward. 
C) not move (net exports do not affect aggregate expenditures). 
D) shift upward or downward, depending on whether the negative net exports resulted from a decline in exports or an increase in imports.

Question 12

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

Accepted Answer

A) the expenditures multiplier is 4. 
B) the MPC for this economy is .8. 
C) the MPC for this economy is .6. 
D) the expenditures multiplier is 3. 
A) the expenditures multiplier is 4. 
B) the MPC for this economy is .8. 
C) the MPC for this economy is .6. 
D) the expenditures multiplier is 3.

Question 13

Investment and saving are, respectively:

Accepted Answer

A) income and wealth. 
B) stocks and flows. 
C) injections and leakages. 
D) leakages and injections. 
A) income and wealth. 
B) stocks and flows. 
C) injections and leakages. 
D) leakages and injections.

Question 14

Refer to the above diagram for a private closed economy.At the $300 level of GDP:

Accepted Answer

A) aggregate expenditures and GDP are equal. 
B) consumption is $250 and planned investment is $50. 
C) saving equals investment. 
D) all of the above are true. 
A) aggregate expenditures and GDP are equal. 
B) consumption is $250 and planned investment is $50. 
C) saving equals investment. 
D) all of the above are true.

Question 15

Refer to the above diagram.If net exports are Xn2, the GDP in the open economy will exceed GDP in the closed economy by:

Accepted Answer

A) AB. 
B) AD. 
C) FG. 
D) BD. 
A) AB. 
B) AD. 
C) FG. 
D) BD.

Question 16

If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then:

Accepted Answer

A) unplanned investment must be occurring. 
B) net exports must be $300 billion. 
C) S + C must equal $300 billion. 
D) Ig + Xn must equal $300 billion. 
A) unplanned investment must be occurring. 
B) net exports must be $300 billion. 
C) S + C must equal $300 billion. 
D) Ig + Xn must equal $300 billion.

Question 17

Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y3.

Accepted Answer

A) True 
 B)False

Question 18

What do investment and government expenditures have in common?

Accepted Answer

A) Both represent injections to the circular flow. 
B) Both represent leakages from the circular flow. 
C) Neither is subject to the multiplier effect. 
D) Both represent a decline in indebtedness. 
A) Both represent injections to the circular flow. 
B) Both represent leakages from the circular flow. 
C) Neither is subject to the multiplier effect. 
D) Both represent a decline in indebtedness.

Question 19

If the marginal propensity to consume is.80 and both taxes and government purchases increase by $50 billion, GDP will:

Accepted Answer

A) increase by $50 billion. 
B) decrease by $50 billion. 
C) increase by $10 billion. 
D) decrease by $10 billion. 
A) increase by $50 billion. 
B) decrease by $50 billion. 
C) increase by $10 billion. 
D) decrease by $10 billion.

Question 20

The investment schedule of an economy is:

Accepted Answer

A) horizontal. 
B) vertical. 
C) downward sloping. 
D) upward sloping. 
A) horizontal. 
B) vertical. 
C) downward sloping. 
D) upward sloping.

Exam 11: B: The Aggregate Expenditures Model

Refer to the above diagram for a private closed economy.At the $200 level of GDP:

Which of the following statements is correct for a private closed economy?

Refer to the diagram below.The change in aggregate expenditures as shown from (C + Ig + Xn2) to (C + Ig + Xn1) might be caused by:

Saving is always equal to:

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively.Figures are in billions of dollars.C = 26 + .75Y Ig = 60 X = 24 M = 10 The multiplier for the above economy is:

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income, consumption spending would decrease by:

Which of the following occurred during the recession of 2008-2009?

The equilibrium level of GDP in the economy in the above diagram:

If net exports decrease from zero to some negative amount, the aggregate expenditures schedule would:

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

Investment and saving are, respectively:

Refer to the above diagram for a private closed economy.At the $300 level of GDP:

Refer to the above diagram.If net exports are Xn2, the GDP in the open economy will exceed GDP in the closed economy by:

If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then:

Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y3.

What do investment and government expenditures have in common?

If the marginal propensity to consume is.80 and both taxes and government purchases increase by $50 billion, GDP will:

The investment schedule of an 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

Refer to the diagram below.The change in aggregate expenditures as shown from (C + I_g + X_n2) to (C + I_g + X_n1) might be caused by:

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.C = 26 + .75Y I_g = 60 X = 24 M = 10 The multiplier for the above economy is:

Refer to the above diagram.If net exports are X_n2, the GDP in the open economy will exceed GDP in the closed economy by:

Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y₃.