Exam 5: Keynesian System I: the Role of Aggregate Demand

If the marginal propensity to consume is 0.8 and if government spending (G)rises by 50 while investment (I)falls by 20,by how much will equilibrium income rise?

Discuss two fiscal policies that a government could adopt that would increase both interest rates and aggregate income.

If an increase in government spending of 40 units accompanied by an equal increase in taxes caused equilibrium income to rise by 40 units,the autonomous expenditure multiplier must be

Assuming that C + I_r + G < C + I + G,then

In the simple Keynesian model,total savings equals

If a fall in investment demand of 100 units causes equilibrium income to fall by 150 units in the simple Keynesian model,then the marginal propensity to save must be

A increase in net exports

Assume that people experience a one-time 50 unit increase in their consumption .In this case

In the circular flow model,injections and leakages are associated with

Assuming that C + I_r + G > C + I + G,then

When firms incur unplanned inventories,they typically

Within the simple Keynesian model with lump-sum taxes,if the MPC (b)were 0.75 then if taxes rise by $200 then income

In the open-economy Keynesian model,it always has to be true that

In the simple Keynesian model,if there is an autonomous investment falls by $20 billion and the MPC (b)is 0.60,the equilibrium income level will increase by

At equilibrium income:

According to Keynes,the level of consumer expenditures was a stable function of

Which of the following equations illustrates the equilibrium level of income with respect to the simple Keynesian closed-economy model?

Let C = 200 + .8(Y-T),planned investment equals 150,and T equals 200.If the equilibrium level of income is 2,000,then the level of government spending needed to make this true is

Assume that a government increases both government spending and taxes by $200 billion so that the budget balance remains unchanged.What will happen to aggregate income? Explain the intuition behind this result.

If the consumption function is C = 120 +_.8(Y-T)in the basic Keynesian model,then in the government spending multiplier is: