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

Consider the government's budget balance.Suppose G = 400 and the government's net tax revenue is 20% of national income (Y).Government saving is negative for all values of Y

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is equal to 0.14Y.When Y = 2000,the government is running a budget

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through ________ and indirectly through ________.

A parallel downward shift in the net export (NX)function can be caused by

A rise in the Canadian-dollar price of foreign currency,other things being equal,causes Canada's net export (NX)function to shift ________ and ________.

Consider the following news headline: "Finance minister announces that the federal income-tax rate will rise by three percentage points." Assuming that aggregate output is demand-determined,what will be the effect of this action,all other things equal,on the AE function and equilibrium national income?

Suppose exports are $940 and imports are given by IM = 0.1Y.At what level of national income will net exports equal zero?

Consider the government's budget balance.Suppose G = 500 and the government's net tax revenue is equal to 0.2Y.The government budget is balanced when Y equals

Consider the net export function.An increase in domestic national income,other things being equal,is assumed to cause

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

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: ∙ marginal propensity to consume (mpc)= 0.75 ∙ net tax rate (t)= 0.20 ∙ no foreign trade ∙ fixed price level ∙ all expenditure and income figures are in billions of dollars. FIGURE 22-2 -Refer to Figure 22-2.What is the equilibrium national income in this economy?

Consider a model with demand-determined output and a constant price level.A decrease in the net tax rate causes ________ in autonomous spending and a ________ in the simple multiplier.

Consider a macro model with a constant price level and demand-determined output.A rise in the net tax rate ________ the simple multiplier and ________ equilibrium national income.

A fall in domestic prices relative to foreign prices,other things being equal,causes the net export (NX)function to shift ________ and ________.

Consider a simple macro model with government and demand-determined output.If the government wants to reduce equilibrium national income by $20 billion,G must be

The table below shows national income and imports.The level of exports is fixed at $300.All figures (in table and questions)are in millions of dollars. TABLE 22-1 -Refer to Table 22-1.What are the correct values for the level of net exports (a,b,c,and d)at each level of national income?

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import).

In a simple macro model,the net export (NX)function indicates a ________ relationship between net exports and ________.

When economists use the term "budget surplus" they are referring to

Fiscal policy involves the government's use of ________ to affect economic outcomes.