Exam 8: Aggregate Expenditures

If the marginal propensity to consume is 0.6; full employment income is $1,000; and the current equilibrium is $750, a(n) ___ gap exists, such that a(n) _ in spending equal to ___ is needed to close the gap.

(Multiple Choice)

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Question 41

Joe figures that if the spending multiplier is 5 and the economy needs a $10 billion increase in aggregate expenditures to reach full employment, the proper tax policy is to cut taxes by $2 billion. Critique Joe's logic. How much of a tax cut is required?

(Essay)

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Question 42

Equal changes in government spending and taxation lead to an equal change in income.

(True/False)

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Question 43

Classical economists expect the government to promote full employment, stable prices, and economic growth.

(True/False)

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Question 44

Which equation is correct?

(Multiple Choice)

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Question 45

If the interest rate increases, investment will

(Multiple Choice)

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Question 46

Spending by the government (federal, state, and local) is more than 60% of GDP today.

(True/False)

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Question 47

Tax changes generally have less of an impact on equilibrium income than do changes in government spending.

(True/False)

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Question 48

Changes in government spending and changes in net exports have _____ multiplier effects compared to changes in investment spending.

(Multiple Choice)

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Question 49

Assume that the economy is at equilibrium at $10 trillion, with a marginal propensity to consume of 0.75. If exports rise by $0.5 trillion and imports increase by $0.7 trillion, equilibrium income will

(Multiple Choice)

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Question 50

If the marginal propensity to consume (MPC) rises, the multiplier

(Multiple Choice)

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Question 51

During the Y2K scare of 2000, Rufus reduced his monthly spending by $1,000 and buried his money in the backyard. If the marginal propensity to consume is 0.75, by how much did national income fall?

(Multiple Choice)

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Question 52

The 45-degree line in the Keynesian model represents a set of points where _ equals _.

(Multiple Choice)

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Question 53

Which statement is correct?

(Multiple Choice)

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Question 54

(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given the data in the table, if full employment income is $500 while the current equilibrium is $750, a(n) ___ gap exists, such that a(n) _ in spending equal to ___ is needed to close the gap.

(Multiple Choice)

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Question 55

If income is $22,150 and taxes are $11,000, then disposable income is $11,150.

(True/False)

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Question 56

The multiplier works for increases in spending but not for cuts in spending.

(True/False)

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Question 57

In the simple Keynesian model with no government or foreign sectors, suppose that the economy is in equilibrium at an output level of $10 trillion with a marginal propensity to consume of 0.8. If investment spending increases by $0.5 trillion, what is the new equilibrium output level?

(Multiple Choice)

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Question 58

In the simple Keynesian model, if people earn $4 billion and spend $3.5 billion on consumption goods, then savings is $0.5 billion.

(True/False)

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Question 59

If income rises from $10,000 to $20,000 and savings increases from $9,000 to $16,000, then the marginal propensity to save is

(Multiple Choice)

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Question 60

Showing 41 - 60 of 276

If the marginal propensity to consume is 0.6; full employment income is $1,000; and the current equilibrium is $750, a(n) ___ gap exists, such that a(n) _ in spending equal to ___ is needed to close the gap.

Joe figures that if the spending multiplier is 5 and the economy needs a $10 billion increase in aggregate expenditures to reach full employment, the proper tax policy is to cut taxes by $2 billion. Critique Joe's logic. How much of a tax cut is required?

Equal changes in government spending and taxation lead to an equal change in income.

Classical economists expect the government to promote full employment, stable prices, and economic growth.

Which equation is correct?

If the interest rate increases, investment will

Spending by the government (federal, state, and local) is more than 60% of GDP today.

Tax changes generally have less of an impact on equilibrium income than do changes in government spending.

Changes in government spending and changes in net exports have _____ multiplier effects compared to changes in investment spending.

Assume that the economy is at equilibrium at $10 trillion, with a marginal propensity to consume of 0.75. If exports rise by $0.5 trillion and imports increase by $0.7 trillion, equilibrium income will

If the marginal propensity to consume (MPC) rises, the multiplier

During the Y2K scare of 2000, Rufus reduced his monthly spending by $1,000 and buried his money in the backyard. If the marginal propensity to consume is 0.75, by how much did national income fall?

The 45-degree line in the Keynesian model represents a set of points where _ equals _.

Which statement is correct?

(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given the data in the table, if full employment income is $500 while the current equilibrium is $750, a(n) ___ gap exists, such that a(n) _ in spending equal to ___ is needed to close the gap.

If income is $22,150 and taxes are $11,000, then disposable income is $11,150.

The multiplier works for increases in spending but not for cuts in spending.

In the simple Keynesian model with no government or foreign sectors, suppose that the economy is in equilibrium at an output level of $10 trillion with a marginal propensity to consume of 0.8. If investment spending increases by $0.5 trillion, what is the new equilibrium output level?

In the simple Keynesian model, if people earn $4 billion and spend $3.5 billion on consumption goods, then savings is $0.5 billion.

If income rises from $10,000 to $20,000 and savings increases from $9,000 to $16,000, then the marginal propensity to save is

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 8: Aggregate Expenditures

If the marginal propensity to consume is 0.6; full employment income is $1,000; and the current equilibrium is $750, a(n) _____ gap exists, such that a(n) _____ in spending equal to _____ is needed to close the gap.

Joe figures that if the spending multiplier is 5 and the economy needs a $10 billion increase in aggregate expenditures to reach full employment, the proper tax policy is to cut taxes by $2 billion. Critique Joe's logic. How much of a tax cut is required?

Equal changes in government spending and taxation lead to an equal change in income.

Classical economists expect the government to promote full employment, stable prices, and economic growth.

Which equation is correct?

If the interest rate increases, investment will

Spending by the government (federal, state, and local) is more than 60% of GDP today.

Tax changes generally have less of an impact on equilibrium income than do changes in government spending.

Changes in government spending and changes in net exports have _____ multiplier effects compared to changes in investment spending.

Assume that the economy is at equilibrium at $10 trillion, with a marginal propensity to consume of 0.75. If exports rise by $0.5 trillion and imports increase by $0.7 trillion, equilibrium income will

If the marginal propensity to consume (MPC) rises, the multiplier

During the Y2K scare of 2000, Rufus reduced his monthly spending by $1,000 and buried his money in the backyard. If the marginal propensity to consume is 0.75, by how much did national income fall?

The 45-degree line in the Keynesian model represents a set of points where _____ equals _____.

Which statement is correct?

(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given the data in the table, if full employment income is $500 while the current equilibrium is $750, a(n) _____ gap exists, such that a(n) _____ in spending equal to _____ is needed to close the gap.

If income is $22,150 and taxes are $11,000, then disposable income is $11,150.

The multiplier works for increases in spending but not for cuts in spending.

In the simple Keynesian model with no government or foreign sectors, suppose that the economy is in equilibrium at an output level of $10 trillion with a marginal propensity to consume of 0.8. If investment spending increases by $0.5 trillion, what is the new equilibrium output level?

In the simple Keynesian model, if people earn $4 billion and spend $3.5 billion on consumption goods, then savings is $0.5 billion.

If income rises from $10,000 to $20,000 and savings increases from $9,000 to $16,000, then the marginal propensity to save is

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

If the marginal propensity to consume is 0.6; full employment income is $1,000; and the current equilibrium is $750, a(n) ___ gap exists, such that a(n) _ in spending equal to ___ is needed to close the gap.

The 45-degree line in the Keynesian model represents a set of points where _ equals _.

(Table: Keynesian Equilibrium Analysis with Taxes and Net Exports) Given the data in the table, if full employment income is $500 while the current equilibrium is $750, a(n) ___ gap exists, such that a(n) _ in spending equal to ___ is needed to close the gap.