Question 1

Which of the following best explains what will happen if the government purchases share of GDP falls?

Accepted Answer

A)  The net export share of GDP will fall with it. 
B)  The consumption share of GDP will fall with it. 
C)  The investment, consumption, and/or net export share of GDP will rise. 
D)  The investment share of GDP will fall with it. 
E)  It is not clear whether any of the other shares will change since we don't know what happens to GDP. 
A)  The net export share of GDP will fall with it. 
B)  The consumption share of GDP will fall with it. 
C)  The investment, consumption, and/or net export share of GDP will rise. 
D)  The investment share of GDP will fall with it. 
E)  It is not clear whether any of the other shares will change since we don't know what happens to GDP.

Question 2

Suppose the government share of GDP is 20 percent and the consumption, investment, and net export shares of GDP are 60, 15, and 5 percent, respectively. If the federal government introduces a national sales tax (a federal tax on consumption), then we would expect

Accepted Answer

A)  the government share of GDP to increase. 
B)  the interest rate to decrease. 
C)  the interest rate to increase. 
D)  the government share of GDP to decrease. 
E)  the net consumption share of GDP to increase. 
A)  the government share of GDP to increase. 
B)  the interest rate to decrease. 
C)  the interest rate to increase. 
D)  the government share of GDP to decrease. 
E)  the net consumption share of GDP to increase.

Question 3

The consumption share line is very sensitive to changes in inflation.

Accepted Answer

A) True 
 B)False

Question 4

The consumption share of GDP must grow for the living standards of the average person to improve.

Accepted Answer

A) True 
 B)False

Question 5

If the exchange rate between the dollar and the euro is equal to €0.8 per $1.00, then what is the U.S. dollar cost of a German-made Porsche costing €45,000?

Accepted Answer

A)  $36,000 
B)  $39,000 
C)  $45,000 
D)  $56,250 
E)  None of these 
A)  $36,000 
B)  $39,000 
C)  $45,000 
D)  $56,250 
E)  None of these

Question 6

If the exchange rate measured as yen per dollar increases, the dollar has become more expensive.

Accepted Answer

A) True 
 B)False

Which of the following best explains what will happen if the government purchases share of GDP falls?

Suppose the government share of GDP is 20 percent and the consumption, investment, and net export shares of GDP are 60, 15, and 5 percent, respectively. If the federal government introduces a national sales tax (a federal tax on consumption), then we would expect

The consumption share line is very sensitive to changes in inflation.

The consumption share of GDP must grow for the living standards of the average person to improve.

If the exchange rate between the dollar and the euro is equal to €0.8 per $1.00, then what is the U.S. dollar cost of a German-made Porsche costing €45,000?

If the exchange rate measured as yen per dollar increases, the dollar has become more expensive.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth Around the World

International Trade

International Finance

Filters

Exam 7: The Spending Allocation Model

Which of the following best explains what will happen if the government purchases share of GDP falls?

Suppose the government share of GDP is 20 percent and the consumption, investment, and net export shares of GDP are 60, 15, and 5 percent, respectively. If the federal government introduces a national sales tax (a federal tax on consumption), then we would expect

The consumption share line is very sensitive to changes in inflation.

The consumption share of GDP must grow for the living standards of the average person to improve.

If the exchange rate between the dollar and the euro is equal to €0.8 per $1.00, then what is the U.S. dollar cost of a German-made Porsche costing €45,000?

If the exchange rate measured as yen per dollar increases, the dollar has become more expensive.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth Around the World

International Trade

International Finance

Filters