Question 1

In a mixed open economy, if aggregate expenditures exceed GDP,

Accepted Answer

A)  $I _ { g } + X + G = C _ { a }$ 
B)  $C _ { a } + I _ { g } + X _ { n } + G  S$ 
D)  $I _ { g } + X + G > S _ { a } + M + T$ 
A)  $I _ { g } + X + G = C _ { a }$ 
B)  $C _ { a } + I _ { g } + X _ { n } + G  S$ 
D)  $I _ { g } + X + G > S _ { a } + M + T$ D

Question 2

Refer to the diagram, which applies to a private closed economy. If aggregate expenditures are C + Ig2, the amount of saving at income level J is

Accepted Answer

A)  LK. 
B)  KN. 
C)  KD. 
D)  JD. 
A)  LK. 
B)  KN. 
C)  KD. 
D)  JD. B

Question 3

Refer to the diagram for a private closed economy. In this economy, aggregate expenditures

Accepted Answer

A)  do not change as GDP increases. 
B)  increase by $2 for every $5 increase in GDP. 
C)  increase by $2 for every $4 increase in GDP. 
D)  increase by $2 for every $3 increase in GDP. 
A)  do not change as GDP increases. 
B)  increase by $2 for every $5 increase in GDP. 
C)  increase by $2 for every $4 increase in GDP. 
D)  increase by $2 for every $3 increase in GDP. D

Question 4

In a private closed economy, _____ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _____ investment is equal to saving.

Accepted Answer

A)  planned; actual 
B)  actual; planned 
C)  gross; net 
D)  net; gross 
A)  planned; actual 
B)  actual; planned 
C)  gross; net 
D)  net; gross

Question 5

Other things equal, a serious recession in the economies of U.S. trading partners will

Accepted Answer

A)  have no perceptible impact on the U.S. economy. 
B)  cause inﬂation in the U.S. economy. 
C)  depress real output and employment in the U.S. economy. 
D)  stimulate real output and employment in the U.S. economy. 
A)  have no perceptible impact on the U.S. economy. 
B)  cause inﬂation in the U.S. economy. 
C)  depress real output and employment in the U.S. economy. 
D)  stimulate real output and employment in the U.S. economy.

Question 6

$\begin{array}{|c|c|c|c|c|c|}
\hline
\begin{array}{c}
\text { Domestic Output } \
(G D P=D I)
\end{array} & \begin{array}{c}
\text { Aggregate } \
\text { Expenditures, } \
\text { Closed Economy }
\end{array} & \text { Exports } & \text { Imports } & \text { Net Exports } & \begin{array}{c}
\text { Aggregate } \
\text { Expenditures, Open } \
\text { Economy }
\end{array} \
\hline \$ 200 & \$ 230 & \$ 30 & \$ 20 & \$- &\$- \
\hline 250 & 270 & 30 & 20 & -&- \
\hline 300 & 310 & 30 & 20 & -& - \
\hline 350 & 350 & 30 & 20 & -& - \
\hline 400 & 390 & 30 & 20 & -& - \
\hline 450 & 430 & 30 & 20 & -& - \
\hline 500 & 470 & 30 & 20 & -& - \
\hline
\end{array}$ Complete the accompanying table and answer the question based on the resulting data. All ?gures are in billions of dollars. If the economy was closed to international trade, the equilibrium GDP and the
Multiplier would be

Accepted Answer

A)  $300 and 5. 
B)  $350 and 4. 
C)  $400 and 4. 
D)  $350 and 5. 
A)  $300 and 5. 
B)  $350 and 4. 
C)  $400 and 4. 
D)  $350 and 5.

Question 7

Assume that in a private closed economy, consumption is $240 billion and investment is $50 billion, both at the $280 billion level of domestic output. Thus,

Accepted Answer

A)  saving is $10 billion. 
B)  unplanned decreases in inventories of $10 billion will occur. 
C)  the MPC is 0.80. 
D)  unplanned increases in inventories of $10 billion will occur. 
A)  saving is $10 billion. 
B)  unplanned decreases in inventories of $10 billion will occur. 
C)  the MPC is 0.80. 
D)  unplanned increases in inventories of $10 billion will occur.

Question 8

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

Question 9

Refer to the diagram. If net exports are $X _ { n 2 }$, 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 10

Imports have the same effect on the current size of GDP as

Accepted Answer

A)  exports. 
B)  investment. 
C)  consumption. 
D)  saving. 
A)  exports. 
B)  investment. 
C)  consumption. 
D)  saving.

Question 11

$$\begin{array}{l}
\begin{array} { | c | c | } 
\hline \text { Gross Domestic Product } & \text { Consumption } \
\hline \$ 100 & \$ 120 \
\hline 200 & 180 \
\hline 300 & 240 \
\hline 400 & 300 \
\hline 500 & 360 \
\hline
\end{array}\\
\begin{array} { | c | c | } 
\hline \text { Expected Rate of Return } & \text { Amount of Investment } \
\hline 25 \% & \$ 0 \
\hline 20 & 20 \
\hline 15 & 40 \
\hline 10 & 60 \
\hline 5 & 80 \
\hline
\end{array}
\end{array}$$ Refer to the tables of information for a private closed economy. If the real interest rate is 10 percent, the equilibrium GDP will be

Accepted Answer

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

Question 12

At equilibrium real GDP in a private closed economy,

Accepted Answer

A)  the MPC must equal the APC. 
B)  the slope of the aggregate expenditures schedule equals the MPS. 
C)  aggregate expenditures and real GDP are equal. 
D)  planned saving and consumption are equal. 
A)  the MPC must equal the APC. 
B)  the slope of the aggregate expenditures schedule equals the MPS. 
C)  aggregate expenditures and real GDP are equal. 
D)  planned saving and consumption are equal.

Question 13

$$\begin{array}{l}
\begin{array} { | c | c | } 
\hline \text { Gross Domestic Product } & \text { Consumption } \
\hline \$ 100 & \$ 100 \
\hline 200 & 160 \
\hline 300 & 220 \
\hline 400 & 280 \
\hline 500 & 340 \
\hline 600 & 440 \
\hline
\end{array}\\
\begin{array} { | c | c | } 
\hline \text { Expected Rate of Return } & \text { Amount of Investment } \
\hline 15 \% & \$ 0 \
\hline 12 & 40 \
\hline 9 & 80 \
\hline 6 & 120 \
\hline 3 & 160 \
\hline 0 & 200 \
\hline
\end{array}
\end{array}$$ Refer to the tables of information for a private closed economy. The multiplier in this economy is

Accepted Answer

A)  4. 
B)  5. 
C)  2.5. 
D)  3.5. 
A)  4. 
B)  5. 
C)  2.5. 
D)  3.5.

Question 14

Refer to the diagram for a private closed economy. In this economy, investment

Accepted Answer

A)  decreases as GDP increases. 
B)  increases as GDP increases. 
C)  is $40 billion at all levels of GDP. 
D)  is $60 billion at all levels of GDP. 
A)  decreases as GDP increases. 
B)  increases as GDP increases. 
C)  is $40 billion at all levels of GDP. 
D)  is $60 billion at all levels of GDP.

Question 15

Refer to the diagram. The change in aggregate expenditures as shown from $\left( \mathrm { C } + I _ { g } + X _ { n 2 } \right)$ to $\left( C + I _ { g } + X _ { n 1 } \right) $ 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 45-degree line. 
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 45-degree line.

Question 16

John Maynard Keynes created the aggregate expenditures model based primarily on what historical event?

Accepted Answer

A)  bank panic of 1907 
B)  Great Depression 
C)  spectacular economic growth during World War II 
D)  economic expansion of the 1920s 
A)  bank panic of 1907 
B)  Great Depression 
C)  spectacular economic growth during World War II 
D)  economic expansion of the 1920s

Question 17

Refer to the diagram for a private closed economy. The equilibrium level of GDP is

Accepted Answer

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

Question 18

Other things equal, the multiplier effect associated with a change in government spending is

Accepted Answer

A)  the same as that associated with a change in taxes. 
B)  equal to that associated with a change in investment or consumption. 
C)  less than that associated with a change in investment. 
D)  greater than that associated with a change in investment. 
A)  the same as that associated with a change in taxes. 
B)  equal to that associated with a change in investment or consumption. 
C)  less than that associated with a change in investment. 
D)  greater than that associated with a change in investment.

Question 19

An exchange rate

Accepted Answer

A)  is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports. 
B)  measures the interest rate ratios of any two nations. 
C)  is the amount that one nation must export to obtain $1 worth of imports. 
D)  is the price that the currencies of any two nations exchange for one another. 
A)  is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports. 
B)  measures the interest rate ratios of any two nations. 
C)  is the amount that one nation must export to obtain $1 worth of imports. 
D)  is the price that the currencies of any two nations exchange for one another.

Question 20

Ig = 80 S = −80 + 0.4Y
(Advanced analysis) The equations refer to a private closed economy, where Ig is gross investment, S
Is saving, and Y is gross domestic product (GDP). In equilibrium, saving will be

Accepted Answer

A)  $40. 
B)  $120. 
C)  $60. 
D)  $80. 
A)  $40. 
B)  $120. 
C)  $60. 
D)  $80.

In a mixed open economy, if aggregate expenditures exceed GDP,

Refer to the diagram, which applies to a private closed economy. If aggregate expenditures are C + Ig2, the amount of saving at income level J is

Refer to the diagram for a private closed economy. In this economy, aggregate expenditures

In a private closed economy, _ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _ investment is equal to saving.

Other things equal, a serious recession in the economies of U.S. trading partners will

Assume that in a private closed economy, consumption is $240 billion and investment is $50 billion, both at the $280 billion level of domestic output. Thus,

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

$Refer to the diagram. If net exports are X _ { n 2 } , the GDP in the open economy will exceed GDP in the closed economy by$ Refer to the diagram. If net exports are $X _ { n 2 }$ , the GDP in the open economy will exceed GDP in the closed economy by

Imports have the same effect on the current size of GDP as

Gross Domestic Product Consumption \ 100 \ 120 200 180 300 240 400 300 500 360 Expected Rate of Return Amount of Investment 25\% \ 0 20 20 15 40 10 60 5 80 Refer to the tables of information for a private closed economy. If the real interest rate is 10 percent, the equilibrium GDP will be

At equilibrium real GDP in a private closed economy,

Gross Domestic Product Consumption \ 100 \ 100 200 160 300 220 400 280 500 340 600 440 Expected Rate of Return Amount of Investment 15\% \ 0 12 40 9 80 6 120 3 160 0 200 Refer to the tables of information for a private closed economy. The multiplier in this economy is

Refer to the diagram for a private closed economy. In this economy, investment

John Maynard Keynes created the aggregate expenditures model based primarily on what historical event?

Refer to the diagram for a private closed economy. The equilibrium level of GDP is

Other things equal, the multiplier effect associated with a change in government spending is

An exchange rate

Ig = 80 S = −80 + 0.4Y (Advanced analysis) The equations refer to a private closed economy, where Ig is gross investment, S Is saving, and Y is gross domestic product (GDP). In equilibrium, saving will be

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Exam 11: The Aggregate Expenditures Model

In a mixed open economy, if aggregate expenditures exceed GDP,

Refer to the diagram, which applies to a private closed economy. If aggregate expenditures are C + Ig2, the amount of saving at income level J is

Refer to the diagram for a private closed economy. In this economy, aggregate expenditures

In a private closed economy, _____ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _____ investment is equal to saving.

Other things equal, a serious recession in the economies of U.S. trading partners will

Assume that in a private closed economy, consumption is $240 billion and investment is $50 billion, both at the $280 billion level of domestic output. Thus,

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

Refer to the diagram. If net exports are Xn2X _ { n 2 }Xn2​ , the GDP in the open economy will exceed GDP in the closed economy by

Imports have the same effect on the current size of GDP as

Gross Domestic Product Consumption \ 100 \ 120 200 180 300 240 400 300 500 360 Expected Rate of Return Amount of Investment 25\% \ 0 20 20 15 40 10 60 5 80 Refer to the tables of information for a private closed economy. If the real interest rate is 10 percent, the equilibrium GDP will be

At equilibrium real GDP in a private closed economy,

Gross Domestic Product Consumption \ 100 \ 100 200 160 300 220 400 280 500 340 600 440 Expected Rate of Return Amount of Investment 15\% \ 0 12 40 9 80 6 120 3 160 0 200 Refer to the tables of information for a private closed economy. The multiplier in this economy is

Refer to the diagram for a private closed economy. In this economy, investment

Refer to the diagram. The change in aggregate expenditures as shown from (C+Ig+Xn2)\left( \mathrm { C } + I _ { g } + X _ { n 2 } \right)(C+Ig​+Xn2​) to (C+Ig+Xn1)\left( C + I _ { g } + X _ { n 1 } \right) (C+Ig​+Xn1​) might be caused by

John Maynard Keynes created the aggregate expenditures model based primarily on what historical event?

Refer to the diagram for a private closed economy. The equilibrium level of GDP is

Other things equal, the multiplier effect associated with a change in government spending is

An exchange rate

Ig = 80 S = −80 + 0.4Y (Advanced analysis) The equations refer to a private closed economy, where Ig is gross investment, S Is saving, and Y is gross domestic product (GDP). In equilibrium, saving will be

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

In a private closed economy, _ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _ investment is equal to saving.

$Refer to the diagram. If net exports are X _ { n 2 } , the GDP in the open economy will exceed GDP in the closed economy by$ Refer to the diagram. If net exports are $X _ { n 2 }$ , the GDP in the open economy will exceed GDP in the closed economy by