Question 1

Since imports are positively related to domestic income, a trade deficit will grow as domestic income expands.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 10-9  
-Refer to Exhibit 10-9. Which dotted-line segment represents an increase in autonomous spending?

Accepted Answer

A) a 
B) b 
C) c 
D) d 
E) e 
A) a 
B) b 
C) c 
D) d 
E) e

Question 3

The marginal propensity to import is defined as

Accepted Answer

A) the fraction of each additional dollar of income that is spent on imported products 
B) the fraction of each additional dollar of income that is spent on exports minus imports 
C) the amount spent on imports at each level of income 
D) the change in income divided by the change in imports 
E) the level of imports divided by the level of income 
A) the fraction of each additional dollar of income that is spent on imported products 
B) the fraction of each additional dollar of income that is spent on exports minus imports 
C) the amount spent on imports at each level of income 
D) the change in income divided by the change in imports 
E) the level of imports divided by the level of income

Question 4

Imports increase as domestic income increases.

Accepted Answer

A) True 
 B)False

Question 5

If the marginal propensity to import (MPM) equals 0.10 and the multiplier equals 5.0, the marginal propensity to consume must equal

Accepted Answer

A) 0.99 
B) 0.95 
C) 0.90 
D) 0.85 
E) 0.50 
A) 0.99 
B) 0.95 
C) 0.90 
D) 0.85 
E) 0.50

Question 6

If the MPC = 0.9 and the MPM = 0.1, then the spending multiplier with variable net exports equals 8.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 10-8
  
-In Exhibit 10-8, the marginal propensity to import is

Accepted Answer

A) 0.3 
B) 0.1 
C) 0.7 
D) 0.4 
E) 0.2 
A) 0.3 
B) 0.1 
C) 0.7 
D) 0.4 
E) 0.2

Question 8

Adding net exports to aggregate expenditure always

Accepted Answer

A) increases real GDP 
B) shifts the aggregate expenditure line down 
C) increases the slope of the aggregate expenditure line 
D) decreases the slope of the aggregate expenditure line 
E) decreases GDP 
A) increases real GDP 
B) shifts the aggregate expenditure line down 
C) increases the slope of the aggregate expenditure line 
D) decreases the slope of the aggregate expenditure line 
E) decreases GDP

Question 9

If the MPS = 0.25 and the MPM = 0.25, the spending multiplier with net exports equals

Accepted Answer

A) 5 
B) 4 
C) 3 
D) 2 
E) 1 
A) 5 
B) 4 
C) 3 
D) 2 
E) 1

Question 10

An economy that engages in international trade will have a steeper aggregate expenditure line than one that is the same in all other respects, except for the absence of international trade.

Accepted Answer

A) True 
 B)False

Question 11

A more realistic approach has net exports varying __________ with income.

Accepted Answer

A) positively 
B) independently 
C) directly 
D) inversely 
E) None of the answers is correct 
A) positively 
B) independently 
C) directly 
D) inversely 
E) None of the answers is correct

Question 12

When net exports are included in the aggregate expenditure function, the spending multiplier

Accepted Answer

A) increases 
B) decreases 
C) is affected only if exports are greater than imports 
D) is affected only if exports are less than imports 
E) is affected only if exports are equal to imports 
A) increases 
B) decreases 
C) is affected only if exports are greater than imports 
D) is affected only if exports are less than imports 
E) is affected only if exports are equal to imports

Question 13

Adding variable net exports to aggregate expenditure always increases the slope of the aggregate expenditure line.

Accepted Answer

A) True 
 B)False

Question 14

Imports are a leakage from the circular flow.

Accepted Answer

A) True 
 B)False

Question 15

Exports are an injection into the circular flow.

Accepted Answer

A) True 
 B)False

Exam 24: Variable Net Exports Revisited

Since imports are positively related to domestic income, a trade deficit will grow as domestic income expands.

Exhibit 10-9 -Refer to Exhibit 10-9. Which dotted-line segment represents an increase in autonomous spending?

The marginal propensity to import is defined as

Imports increase as domestic income increases.

If the marginal propensity to import (MPM) equals 0.10 and the multiplier equals 5.0, the marginal propensity to consume must equal

If the MPC = 0.9 and the MPM = 0.1, then the spending multiplier with variable net exports equals 8.

Exhibit 10-8 -In Exhibit 10-8, the marginal propensity to import is

Adding net exports to aggregate expenditure always

If the MPS = 0.25 and the MPM = 0.25, the spending multiplier with net exports equals

An economy that engages in international trade will have a steeper aggregate expenditure line than one that is the same in all other respects, except for the absence of international trade.

A more realistic approach has net exports varying __________ with income.

When net exports are included in the aggregate expenditure function, the spending multiplier

Adding variable net exports to aggregate expenditure always increases the slope of the aggregate expenditure line.

Imports are a leakage from the circular flow.

Exports are an injection into the circular flow.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Algebra of Income and Expenditure

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

The Algebra of Demand-Side Equilibrium

International Trade

International Finance

Economic Development

National Income Accounts

Understanding Graphs

Variable Net Exports

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