Question 1

The level of aggregate expenditures in the private closed economy is determined by the:

Accepted Answer

A)  expenditures of consumers and businesses. 
B)  intersection of the saving schedule and the 45-degree line. 
C)  equality of the MPC and MPS. 
D)  intersection of the saving and consumption schedules. 
A)  expenditures of consumers and businesses. 
B)  intersection of the saving schedule and the 45-degree line. 
C)  equality of the MPC and MPS. 
D)  intersection of the saving and consumption schedules. A

Question 2

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

Accepted Answer

A)  net exports fall and contribute to demand-pull inflation 
B)  net exports rise and contribute to demand-pull inflation 
C)  net exports fall,but equilibrium GDP rises 
D)  net exports rise,but equilibrium GDP falls 
A)  net exports fall and contribute to demand-pull inflation 
B)  net exports rise and contribute to demand-pull inflation 
C)  net exports fall,but equilibrium GDP rises 
D)  net exports rise,but equilibrium GDP falls B

Question 3

If the MPC is 2/3,the initial impact of an increase of $12 billion in lump-sum taxes will be to cause:

Accepted Answer

A)  a rightward shift in the investment-demand schedule. 
B)  an $8 billion downshift in the consumption schedule. 
C)  a $4 billion upshift in the consumption schedule. 
D)  a $12 billion downshift in the consumption schedule. 
A)  a rightward shift in the investment-demand schedule. 
B)  an $8 billion downshift in the consumption schedule. 
C)  a $4 billion upshift in the consumption schedule. 
D)  a $12 billion downshift in the consumption schedule. B

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

The economy will expand when:

Accepted Answer

A)  actual GDP is less than potential GDP. 
B)  planned investment exceeds saving. 
C)  saving exceeds planned investment. 
D)  unplanned investment occurs. 
A)  actual GDP is less than potential GDP. 
B)  planned investment exceeds saving. 
C)  saving exceeds planned investment. 
D)  unplanned investment occurs.

Question 6

-Refer to the above diagram.The sizes of the multipliers associated with changes in investment and government spending in this economy:

Accepted Answer

A)  are 2.5 and 1.5 respectively. 
B)  are 3 and 2 respectively. 
C)  are both 2.5. 
D)  are 2 and 3 respectively. 
A)  are 2.5 and 1.5 respectively. 
B)  are 3 and 2 respectively. 
C)  are both 2.5. 
D)  are 2 and 3 respectively.

Question 7

The letters Y,C,IS1U1B1gS1U1B0,X,and M stand for GDP,consumption,gross investment,exports,and imports respectively.Figures are in billions of dollars.
C = 26 + .75Y
IS1U1B1gS1U1B0 = 60
X = 24
M = 10
-Refer to the above information.If government desired to raise the equilibrium GDP to $650,it could:

Accepted Answer

A)  raise G by $45 and reduce T by $10. 
B)  raise G by $40 and reduce T by $30. 
C)  raise G by $30 or reduce T by $40. 
D)  raise both G and T by $40. 
A)  raise G by $45 and reduce T by $10. 
B)  raise G by $40 and reduce T by $30. 
C)  raise G by $30 or reduce T by $40. 
D)  raise both G and T by $40.

Question 8

In a mixed open economy,which of the following affect the equilibrium GDP in the same direction?

Accepted Answer

A)  Ca,Ig,Sa,and M 
B)  Sa,T,and M 
C)  Ig,T,and Ca 
D)  Sa,Ig,and X 
A)  Ca,Ig,Sa,and M 
B)  Sa,T,and M 
C)  Ig,T,and Ca 
D)  Sa,Ig,and X

Question 9

Other things equal,if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP:

Accepted Answer

A)  unemployment will decrease domestically. 
B)  Canadian GDP will fall. 
C)  inflation will occur domestically. 
D)  Canadian real GDP will rise. 
A)  unemployment will decrease domestically. 
B)  Canadian GDP will fall. 
C)  inflation will occur domestically. 
D)  Canadian real GDP will rise.

Question 10

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.
C = 60 + .6Y
I = IS1U1B10S1U1B0 = 30
-Refer to the above data.In equilibrium,the level of saving will be:

Accepted Answer

A)  30 
B)  26 
C)  25 
D)  60 
A)  30 
B)  26 
C)  25 
D)  60

Question 11

If government expenditures increase by $20 billion and equilibrium GDP increases by $50 billion as a result,we can conclude that:

Accepted Answer

A)  the expenditures multiplier is 2. 
B)  the MPC for this economy is .6. 
C)  inflation is occurring. 
D)  the MPS for this economy is .6. 
A)  the expenditures multiplier is 2. 
B)  the MPC for this economy is .6. 
C)  inflation is occurring. 
D)  the MPS for this economy is .6.

Question 12

Refer to the below data.Equilibrium Y = (GDP)is:
The letters Y,C,and,I are used to represent GDP,consumption,and,investment respectively.

Accepted Answer

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

Question 13

If an unplanned increase in business inventories occurs at some level of GDP,then GDP:

Accepted Answer

A)  entails a rate of aggregate expenditures in excess of the rate of aggregate production. 
B)  may be either above or below the equilibrium output. 
C)  is too low for equilibrium. 
D)  will decrease. 
A)  entails a rate of aggregate expenditures in excess of the rate of aggregate production. 
B)  may be either above or below the equilibrium output. 
C)  is too low for equilibrium. 
D)  will decrease.

Question 14

If unplanned investment in business inventories occurs,we can expect:

Accepted Answer

A)  a decline in GDP. 
B)  inflation. 
C)  an increase in consumption. 
D)  an offsetting increase in planned investment. 
A)  a decline in GDP. 
B)  inflation. 
C)  an increase in consumption. 
D)  an offsetting increase in planned investment.

Question 15

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 16

-Refer to the above diagram.The value of the multiplier for this economy is:

Accepted Answer

A)  BC/hg. 
B)  BC/AB. 
C)  ed/di. 
D)  df/BC. 
A)  BC/hg. 
B)  BC/AB. 
C)  ed/di. 
D)  df/BC.

Question 17

Taxes represent:

Accepted Answer

A)  a leakage of purchasing power,like saving. 
B)  an injection of purchasing power,like investment. 
C)  an injection of purchasing power,like government spending. 
D)  a leakage of purchasing power,like government spending. 
A)  a leakage of purchasing power,like saving. 
B)  an injection of purchasing power,like investment. 
C)  an injection of purchasing power,like government spending. 
D)  a leakage of purchasing power,like government spending.

Question 18

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income,consumption spending would decrease by:

Accepted Answer

A)  $100 billion. 
B)  $40 billion. 
C)  $90 billion 
D)  $50 billion. 
A)  $100 billion. 
B)  $40 billion. 
C)  $90 billion 
D)  $50 billion.

Question 19

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.
C = 60 + .6Y
I = IS1U1B10S1U1B0 = 30
-Refer to the above data.The equilibrium level of income (Y )is:

Accepted Answer

A)  360 
B)  225 
C)  200 
D)  135 
A)  360 
B)  225 
C)  200 
D)  135

Question 20

-Refer to the above diagrams.Other things equal,an interest rate increase will:

Accepted Answer

A)  shift curve A to the right and shift curve B upward. 
B)  shift curve A to the left and shift curve B downward. 
C)  leave curve A in place but shift curve B downward. 
D)  leave curve A in place but shift curve A upward. 
A)  shift curve A to the right and shift curve B upward. 
B)  shift curve A to the left and shift curve B downward. 
C)  leave curve A in place but shift curve B downward. 
D)  leave curve A in place but shift curve A upward.

The level of aggregate expenditures in the private closed economy is determined by the:

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

If the MPC is 2/3,the initial impact of an increase of $12 billion in lump-sum taxes will be to cause:

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.

The economy will expand when:

-Refer to the above diagram.The sizes of the multipliers associated with changes in investment and government spending in this 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. C = 26 + .75Y I_g = 60 X = 24 M = 10 -Refer to the above information.If government desired to raise the equilibrium GDP to $650,it could:

In a mixed open economy,which of the following affect the equilibrium GDP in the same direction?

Other things equal,if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars. C = 60 + .6Y I = I₀ = 30 -Refer to the above data.In equilibrium,the level of saving will be:

If government expenditures increase by $20 billion and equilibrium GDP increases by $50 billion as a result,we can conclude that:

Refer to the below data.Equilibrium Y = (GDP)is: The letters Y,C,and,I are used to represent GDP,consumption,and,investment respectively.

If an unplanned increase in business inventories occurs at some level of GDP,then GDP:

If unplanned investment in business inventories occurs,we can expect:

If net exports are positive:

-Refer to the above diagram.The value of the multiplier for this economy is:

Taxes represent:

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income,consumption spending would decrease by:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars. C = 60 + .6Y I = I₀ = 30 -Refer to the above data.The equilibrium level of income (Y )is:

-Refer to the above diagrams.Other things equal,an interest rate increase will:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 11: The Aggregate Expenditures Model

The level of aggregate expenditures in the private closed economy is determined by the:

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

If the MPC is 2/3,the initial impact of an increase of $12 billion in lump-sum taxes will be to cause:

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.

The economy will expand when:

-Refer to the above diagram.The sizes of the multipliers associated with changes in investment and government spending in this 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. C = 26 + .75Y Ig = 60 X = 24 M = 10 -Refer to the above information.If government desired to raise the equilibrium GDP to $650,it could:

In a mixed open economy,which of the following affect the equilibrium GDP in the same direction?

Other things equal,if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars. C = 60 + .6Y I = I0 = 30 -Refer to the above data.In equilibrium,the level of saving will be:

If government expenditures increase by $20 billion and equilibrium GDP increases by $50 billion as a result,we can conclude that:

Refer to the below data.Equilibrium Y = (GDP)is: The letters Y,C,and,I are used to represent GDP,consumption,and,investment respectively.

If an unplanned increase in business inventories occurs at some level of GDP,then GDP:

If unplanned investment in business inventories occurs,we can expect:

If net exports are positive:

-Refer to the above diagram.The value of the multiplier for this economy is:

Taxes represent:

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income,consumption spending would decrease by:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars. C = 60 + .6Y I = I0 = 30 -Refer to the above data.The equilibrium level of income (Y )is:

-Refer to the above diagrams.Other things equal,an interest rate increase will:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

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.

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. C = 26 + .75Y I_g = 60 X = 24 M = 10 -Refer to the above information.If government desired to raise the equilibrium GDP to $650,it could:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars. C = 60 + .6Y I = I₀ = 30 -Refer to the above data.In equilibrium,the level of saving will be:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars. C = 60 + .6Y I = I₀ = 30 -Refer to the above data.The equilibrium level of income (Y )is: