Question 1

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the

Accepted Answer

A)  saving schedule will shift upward by $5 billion. 
B)  consumption schedule will shift downward by $25 billion. 
C)  consumption schedule will shift downward by $20 billion. 
D)  consumption schedule will shift upward by $25 billion. 
A)  saving schedule will shift upward by $5 billion. 
B)  consumption schedule will shift downward by $25 billion. 
C)  consumption schedule will shift downward by $20 billion. 
D)  consumption schedule will shift upward by $25 billion.

Question 2

Planned investment plus unintended increases in inventories equals

Accepted Answer

A)  actual investment. 
B)  consumption. 
C)  consumption minus saving. 
D)  unintended saving. 
A)  actual investment. 
B)  consumption. 
C)  consumption minus saving. 
D)  unintended saving.

Question 3

If net exports are positive,

Accepted Answer

A)  the equilibrium GDP must be greater than the full-employment GDP. 
B)  imports must exceed exports. 
C)  aggregate expenditures are greater at each level of GDP than when net exports are zero or negative. 
D)  some other component of aggregate expenditures must be negative. 
A)  the equilibrium GDP must be greater than the full-employment GDP. 
B)  imports must exceed exports. 
C)  aggregate expenditures are greater at each level of GDP than when net exports are zero or negative. 
D)  some other component of aggregate expenditures must be negative.

Question 4

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

Accepted Answer

A)  a decline in the rate of interest 
B)  an unintended accumulation of inventories by businesses 
C)  a rise in the real GDP 
D)  The federal budget will automatically move toward a deﬁcit. 
A)  a decline in the rate of interest 
B)  an unintended accumulation of inventories by businesses 
C)  a rise in the real GDP 
D)  The federal budget will automatically move toward a deﬁcit.

Question 5

The equilibrium level of GDP is associated with

Accepted Answer

A)  an excess of planned investment over saving. 
B)  no unintended changes in inventories. 
C)  an unintended decrease in business inventories. 
D)  an unintended increase in business inventories. 
A)  an excess of planned investment over saving. 
B)  no unintended changes in inventories. 
C)  an unintended decrease in business inventories. 
D)  an unintended increase in business inventories.

Question 6

Refer to the diagrams. Other things equal, curve B will shift upward when

Accepted Answer

A)  the level of GDP increases. 
B)  the interest rate increases. 
C)  curve A shifts to the left. 
D)  curve A shifts to the right. 
A)  the level of GDP increases. 
B)  the interest rate increases. 
C)  curve A shifts to the left. 
D)  curve A shifts to the right.

Question 7

If the multiplier in an economy is 5, a $20 billion increase in net exports will

Accepted Answer

A)  increase GDP by $100 billion. 
B)  reduce GDP by $4 billion. 
C)  decrease GDP by $100 billion. 
D)  increase GDP by $20 billion. 
A)  increase GDP by $100 billion. 
B)  reduce GDP by $4 billion. 
C)  decrease GDP by $100 billion. 
D)  increase GDP by $20 billion.

Question 8

A private closed economy includes

Accepted Answer

A)  households, businesses, and government, but not international trade. 
B)  households, businesses, and international trade, but not government. 
C)  households and businesses, but not government or international trade. 
D)  households only. 
A)  households, businesses, and government, but not international trade. 
B)  households, businesses, and international trade, but not government. 
C)  households and businesses, but not government or international trade. 
D)  households only.

Question 9

Refer to the diagram for a private closed economy. Unplanned changes in inventories will be zero

Accepted Answer

A)  only at the $300 level of GDP. 
B)  only at the $200 level of GDP. 
C)  at all levels of GDP. 
D)  only at the $400 level of GDP. 
A)  only at the $300 level of GDP. 
B)  only at the $200 level of GDP. 
C)  at all levels of GDP. 
D)  only at the $400 level of GDP.

Question 10

$$\begin{array} { | c | c | c | } 
\hline \text { GDP } ( Y ) & \text { Consumption } ( C ) & \text { Investment (I) } \
\hline \$ 0 & \$ 60 & \$ 30 \
\hline 100 & 120 & 40 \
\hline 200 & 180 & 50 \
\hline 300 & 240 & 60 \
\hline 400 & 300 & 70 \
\hline 500 & 360 & 80 \
\hline
\end{array}$$ (Advanced analysis) The table gives data for a private closed economy. The letters Y, C, S, and I are used to represent real GDP, consumption, saving, and investment, respectively. The equation
Representing the consumption schedule for the economy is

Accepted Answer

A)  C = Y ? 0.6S. 
B)  Y = C + S. 
C)  C = 60 + 0.4Y. 
D)  C = 60 + 0.6Y. 
A)  C = Y ? 0.6S. 
B)  Y = C + S. 
C)  C = 60 + 0.4Y. 
D)  C = 60 + 0.6Y.

Question 11

C = 40 + 0.8Y Ig = 60 − 2i
I = 10
(Advanced analysis) The equations are for a private closed economy, where C is consumption, Y is the
Gross domestic product, Ig is gross investment, and i is the interest rate. The equilibrium level of GDP
In this economy is

Accepted Answer

A)  $240. 
B)  $300. 
C)  $360. 
D)  $400. 
A)  $240. 
B)  $300. 
C)  $360. 
D)  $400.

Question 12

If the United States wants to increase its net exports, it might take steps to

Accepted Answer

A)  increase its GDP. 
B)  reduce existing tariffs and import quotas. 
C)  appreciate the dollar compared to foreign currencies. 
D)  depreciate the dollar compared to foreign currencies. 
A)  increase its GDP. 
B)  reduce existing tariffs and import quotas. 
C)  appreciate the dollar compared to foreign currencies. 
D)  depreciate the dollar compared to foreign currencies.

Question 13

C = 26 + 0.75Y 
Ig = 60
X = 24
M = A
(Advanced analysis) The equations give information for a private open economy. The letters Y, C, Ig, X,
And M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in
Billions of dollars. The multiplier for the economy is

Accepted Answer

A)  4.6. 
B)  3.33. 
C)  5.0. 
D)  4.0. 
A)  4.6. 
B)  3.33. 
C)  5.0. 
D)  4.0.

Question 14

If the equilibrium level of GDP in a private open economy is $1,000 billion and consumption is $700 billion at that level of GDP, then

Accepted Answer

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

Question 15

$\begin{array} { l } 
C = 40 + 0.8 Y \
I _ { g } = 40 \
X = 20 \
M = 30
\end{array}$
(Advanced analysis) The equations give information for a private open economy. 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. This nation is experiencing

Accepted Answer

A)  a trade surplus. 
B)  balance in its international trade. 
C)  a trade de?cit. 
D)  unemployment. 
A)  a trade surplus. 
B)  balance in its international trade. 
C)  a trade de?cit. 
D)  unemployment.

Question 16

All else equal, a large decline in the real interest rate will shift the

Accepted Answer

A)  investment demand curve leftward. 
B)  investment demand curve rightward. 
C)  investment schedule upward. 
D)  investment schedule downward. 
A)  investment demand curve leftward. 
B)  investment demand curve rightward. 
C)  investment schedule upward. 
D)  investment schedule downward.

Question 17

Actual investment equals saving

Accepted Answer

A)  at all levels of GDP. 
B)  at all below-equilibrium levels of GDP. 
C)  at all above-equilibrium levels of GDP. 
D)  only at the equilibrium GDP. 
A)  at all levels of GDP. 
B)  at all below-equilibrium levels of GDP. 
C)  at all above-equilibrium levels of GDP. 
D)  only at the equilibrium GDP.

Question 18

A private closed economy will expand when

Accepted Answer

A)  actual GDP is less than potential GDP. 
B)  unplanned decreases in inventories occur. 
C)  aggregate expenditures are less than GDP. 
D)  unplanned increases in inventories occur. 
A)  actual GDP is less than potential GDP. 
B)  unplanned decreases in inventories occur. 
C)  aggregate expenditures are less than GDP. 
D)  unplanned increases in inventories occur.

Question 19

Ig = 80 
SA=−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, consumption will be

Accepted Answer

A)  $400. 
B)  $280. 
C)  $320. 
D)  $360. 
A)  $400. 
B)  $280. 
C)  $320. 
D)  $360.

Question 20

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.

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the

Planned investment plus unintended increases in inventories equals

If net exports are positive,

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

The equilibrium level of GDP is associated with

Refer to the diagrams. Other things equal, curve B will shift upward when

If the multiplier in an economy is 5, a $20 billion increase in net exports will

A private closed economy includes

Refer to the diagram for a private closed economy. Unplanned changes in inventories will be zero

C = 40 + 0.8Y Ig = 60 − 2i I = 10 (Advanced analysis) The equations are for a private closed economy, where C is consumption, Y is the Gross domestic product, Ig is gross investment, and i is the interest rate. The equilibrium level of GDP In this economy is

If the United States wants to increase its net exports, it might take steps to

C = 26 + 0.75Y Ig = 60 X = 24 M = A (Advanced analysis) The equations give information for a private open economy. The letters Y, C, Ig, X, And M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in Billions of dollars. The multiplier for the economy is

If the equilibrium level of GDP in a private open economy is $1,000 billion and consumption is $700 billion at that level of GDP, then

C=40+0.8Y =40 X=20 M=30 (Advanced analysis) The equations give information for a private open economy. 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. This nation is experiencing

All else equal, a large decline in the real interest rate will shift the

Actual investment equals saving

A private closed economy will expand when

Ig = 80 SA=−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, consumption will be

Investment and saving are, respectively,

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

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Exam 11: The Aggregate Expenditures Model

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the

Planned investment plus unintended increases in inventories equals

If net exports are positive,

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

The equilibrium level of GDP is associated with

Refer to the diagrams. Other things equal, curve B will shift upward when

If the multiplier in an economy is 5, a $20 billion increase in net exports will

A private closed economy includes

Refer to the diagram for a private closed economy. Unplanned changes in inventories will be zero

C = 40 + 0.8Y Ig = 60 − 2i I = 10 (Advanced analysis) The equations are for a private closed economy, where C is consumption, Y is the Gross domestic product, Ig is gross investment, and i is the interest rate. The equilibrium level of GDP In this economy is

If the United States wants to increase its net exports, it might take steps to

C = 26 + 0.75Y Ig = 60 X = 24 M = A (Advanced analysis) The equations give information for a private open economy. The letters Y, C, Ig, X, And M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in Billions of dollars. The multiplier for the economy is

If the equilibrium level of GDP in a private open economy is $1,000 billion and consumption is $700 billion at that level of GDP, then

All else equal, a large decline in the real interest rate will shift the

Actual investment equals saving

A private closed economy will expand when

Ig = 80 SA=−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, consumption will be

Investment and saving are, respectively,

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