Exam 22: Adding Government and Trade to the Simple Macro Model

Consider the general form of the consumption function in a simple macro model.Once government and taxes are included in the model,desired consumption can be expressed as ________,where a = autonomous consumption,t = net tax rate,Y = national income, = disposable income,and MPC = marginal propensity to consume.

Consider a macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = 0.2Y,X = 130,and IM = 0.14Y.Equilibrium national income in this model is

Consider the simplest macro with demand-determined output.If the marginal propensity to consume out of disposable income (MPC)is equal to the marginal propensity to spend out of national income (z),then

In an open economy with government and demand-determined output,a decrease in the equilibrium level of national income could be caused by

Consider the following news headline: "China signs deal to buy more Canadian wheat." Assuming that aggregate output is demand-determined,what effect will this have,all other things equal,on the AE function and on equilibrium national income?

Exports are treated as autonomous expenditure in our simple macro model because

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.7 and a net tax rate of 30% of national income,the marginal propensity to consume out of national income is

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Equilibrium national income is

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.Equilibrium national income is

Suppose exports are $200 and imports are given by IM = 0.2Y.At what level of national income will net exports equal zero?

Suppose output is demand determined.An increase in the net tax rate ________ the marginal propensity to spend and thus ________ the simple multiplier.

In a simple macro model with a constant price level,an increase in the net tax rate causes the AE curve to

In our simple macro model with government,which statement correctly describes the following equation: = (0.75)Y?

In our simple macro model with government,which statement is correct regarding the following equation: T = (0.2)Y?

In a macro model where the marginal propensity to consume out of disposable income is 0.8,the net tax rate is 0.25,and the marginal propensity to import is 0.12,the simple multiplier will be

In our simple macro model with government and foreign trade,the marginal propensity to consume out of disposable income is ________ whereas the marginal propensity to consume out of national income is ________.

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.Desired consumption expenditure at equilibrium national income is

If the government's net tax rate increases,then for a given level of national income disposable income will ________ and net tax revenue will ________.

In a simple macro model with government and demand-determined output,to raise equilibrium national income by $100 billion,G must be

Consider the following macro model with demand-determined output: C = 150 + 0.9 , = 0.8Y,I = 400,G = 700,T = (0.2)Y,X = 130,IM = (0.08)Y.Equilibrium national income is