Question 1

Assume that in a private closed economy consumption is $240 billion and investment is $50 billion at the $280 billion level of domestic output.Thus:

Accepted Answer

A)  saving is $10 billion. 
B)  unplanned disinvestment of $10 billion will occur. 
C)  the MPC is .80. 
D)  unplanned investment of $10 billion will occur. 
A)  saving is $10 billion. 
B)  unplanned disinvestment of $10 billion will occur. 
C)  the MPC is .80. 
D)  unplanned investment of $10 billion will occur.

Question 2

Equal increases in government purchases and taxes will:

Accepted Answer

A)  increase the equilibrium GDP and the size of that increase varies directly with the size of the MPC. 
B)  increase the equilibrium GDP and the size of that increase is independent of the size of the MPC. 
C)  increase the equilibrium GDP and the size of that increase varies inversely with the size of the MPC. 
D)  decrease the equilibrium GDP and the size of that decrease is independent of the size of the MPC. 
A)  increase the equilibrium GDP and the size of that increase varies directly with the size of the MPC. 
B)  increase the equilibrium GDP and the size of that increase is independent of the size of the MPC. 
C)  increase the equilibrium GDP and the size of that increase varies inversely with the size of the MPC. 
D)  decrease the equilibrium GDP and the size of that decrease is independent of the size of the MPC.

Question 3

-Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y3.

Accepted Answer

A) True 
 B)False

Question 4

Assume that an economy is operating at less than its full-employment level of output.Which event would most likely increase an economy's exports?

Accepted Answer

A)  a rise in the tariff on products imported from abroad 
B)  a fall in the prosperity of trading partners for this economy 
C)  an appreciation of a nation's currency relative to foreign currencies 
D)  a depreciation of a nation's currency relative to foreign currencies 
A)  a rise in the tariff on products imported from abroad 
B)  a fall in the prosperity of trading partners for this economy 
C)  an appreciation of a nation's currency relative to foreign currencies 
D)  a depreciation of a nation's currency relative to foreign currencies

Question 5

Other things equal,if $100 billion of government purchases (G)is added to private spending (C + Ig + Xn),GDP will:

Accepted Answer

A)  increase by $100 billion. 
B)  increase by more than $100 billion. 
C)  increase by less than $100 billion. 
D)  fall by $100 billion 
A)  increase by $100 billion. 
B)  increase by more than $100 billion. 
C)  increase by less than $100 billion. 
D)  fall by $100 billion

Question 6

-Refer to the above diagram for a private closed economy.At the $300 level of GDP:

Accepted Answer

A)  planned investment will exceed saving,but actual investment will be equal to saving. 
B)  aggregate expenditures will exceed GDP,causing GDP to rise. 
C)  actual investment will exceed planned investment. 
D)  households will consume in excess of their incomes. 
A)  planned investment will exceed saving,but actual investment will be equal to saving. 
B)  aggregate expenditures will exceed GDP,causing GDP to rise. 
C)  actual investment will exceed planned investment. 
D)  households will consume in excess of their incomes.

Question 7

If the economy is in equilibrium at the $400 billion level of GDP and the full-employment level of GDP is $500 billion:

Accepted Answer

A)  real and nominal GDP will both increase. 
B)  economy does not reach full-employment unless aggregate expenditures increases. 
C)  real GDP will increase,but nominal GDP will decrease. 
D)  the price level will increase. 
A)  real and nominal GDP will both increase. 
B)  economy does not reach full-employment unless aggregate expenditures increases. 
C)  real GDP will increase,but nominal GDP will decrease. 
D)  the price level will increase.

Question 8

-In the above private open economy exports are __________ and imports are __________ domestic GDP:

Accepted Answer

A)  inversely related to;directly related to 
B)  independent of;inversely related to 
C)  independent of;dependent of 
D)  directly related to;independent of 
A)  inversely related to;directly related to 
B)  independent of;inversely related to 
C)  independent of;dependent of 
D)  directly related to;independent of

Question 9

Which event would most likely decrease an economy's exports?

Accepted Answer

A)  a decline in the tariff on products imported from abroad 
B)  an increase the prosperity of trading partners for this economy 
C)  an appreciation of a nation's currency relative to foreign currencies 
D)  a depreciation of a nation's currency relative to foreign currencies 
A)  a decline in the tariff on products imported from abroad 
B)  an increase the prosperity of trading partners for this economy 
C)  an appreciation of a nation's currency relative to foreign currencies 
D)  a depreciation of a nation's currency relative to foreign currencies

Question 10

Planned 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 11

-Refer to the above diagram for a private closed economy.Planned and actual investment will be equal at:

Accepted Answer

A)  all levels of GDP below $200. 
B)  all levels of GDP above $200. 
C)  all levels of GDP between $200 and $600. 
D)  $600 only. 
A)  all levels of GDP below $200. 
B)  all levels of GDP above $200. 
C)  all levels of GDP between $200 and $600. 
D)  $600 only.

Question 12

The following information is for a private closed economy,where IS1U1B1gS1U1B0 is gross investment,S is saving,and Y is gross domestic product (GDP).
IS1U1B1gS1U1B0 = 80
S = -80 + .4Y
-Refer to the above information.The equilibrium GDP will be:

Accepted Answer

A)  $160 
B)  $400 
C)  $360 
D)  $480 
A)  $160 
B)  $400 
C)  $360 
D)  $480

Question 13

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result,we can conclude that:

Accepted Answer

A)  the expenditures multiplier is 4. 
B)  the MPC for this economy is .8. 
C)  the MPC for this economy is .6. 
D)  the expenditures multiplier is 3. 
A)  the expenditures multiplier is 4. 
B)  the MPC for this economy is .8. 
C)  the MPC for this economy is .6. 
D)  the expenditures multiplier is 3.

Question 14

Complete the following table and answer the next question(s)on the basis of the resulting data.All figures are in billions of dollars.
  
-Refer to the above table.For the open economy the equilibrium GDP and the multiplier will be:

Accepted Answer

A)  $300 and 2.5. 
B)  $450 and 5. 
C)  $400 and 4. 
D)  $400 and 5. 
A)  $300 and 2.5. 
B)  $450 and 5. 
C)  $400 and 4. 
D)  $400 and 5.

Question 15

If a lump-sum tax of $40 billion is imposed and the MPC is 0.6,the saving schedule will:

Accepted Answer

A)  shift downward by $24 billion. 
B)  shift upward by $24 billion. 
C)  shift downward by $16 billion. 
D)  shift upward by $16 billion. 
A)  shift downward by $24 billion. 
B)  shift upward by $24 billion. 
C)  shift downward by $16 billion. 
D)  shift upward by $16 billion.

Question 16

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

Accepted Answer

A) True 
 B)False

Question 17

-If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP,then:

Accepted Answer

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

Question 18

In moving from a private closed to a mixed closed economy in the aggregate expenditures model,taxes:

Accepted Answer

A)  must be added to gross investment. 
B)  must be added to saving. 
C)  must be added to consumption and gross investment. 
D)  have no impact upon the equilibrium GDP. 
A)  must be added to gross investment. 
B)  must be added to saving. 
C)  must be added to consumption and gross investment. 
D)  have no impact upon the equilibrium GDP.

Question 19

-The multiplier for the economy in the above diagram:

Accepted Answer

A)  is 3. 
B)  is 4. 
C)  is 4.8. 
D)  is 5.4. 
A)  is 3. 
B)  is 4. 
C)  is 4.8. 
D)  is 5.4.

Question 20

During the recession of 2008 - 2009:

Accepted Answer

A)  both after-tax consumption and government expenditures declined. 
B)  both after-tax consumption and investment expenditures declined. 
C)  both government expenditures and investment expenditures declined. 
D)  government expenditures declined but after- tax consumption 
A)  both after-tax consumption and government expenditures declined. 
B)  both after-tax consumption and investment expenditures declined. 
C)  both government expenditures and investment expenditures declined. 
D)  government expenditures declined but after- tax consumption

Assume that in a private closed economy consumption is $240 billion and investment is $50 billion at the $280 billion level of domestic output.Thus:

Equal increases in government purchases and taxes will:

-Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y₃.

Assume that an economy is operating at less than its full-employment level of output.Which event would most likely increase an economy's exports?

Other things equal,if $100 billion of government purchases (G)is added to private spending (C + I_g + X_n),GDP will:

-Refer to the above diagram for a private closed economy.At the $300 level of GDP:

If the economy is in equilibrium at the $400 billion level of GDP and the full-employment level of GDP is $500 billion:

-In the above private open economy exports are and imports are domestic GDP:

Which event would most likely decrease an economy's exports?

Planned investment equals saving:

-Refer to the above diagram for a private closed economy.Planned and actual investment will be equal at:

The following information is for a private closed economy,where I_g is gross investment,S is saving,and Y is gross domestic product (GDP). I_g = 80 S = -80 + .4Y -Refer to the above information.The equilibrium GDP will be:

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result,we can conclude that:

Complete the following table and answer the next question(s)on the basis of the resulting data.All figures are in billions of dollars. -Refer to the above table.For the open economy the equilibrium GDP and the multiplier will be:

If a lump-sum tax of $40 billion is imposed and the MPC is 0.6,the saving schedule will:

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

-If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP,then:

In moving from a private closed to a mixed closed economy in the aggregate expenditures model,taxes:

-The multiplier for the economy in the above diagram:

During the recession of 2008 - 2009:

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

Assume that in a private closed economy consumption is $240 billion and investment is $50 billion at the $280 billion level of domestic output.Thus:

Equal increases in government purchases and taxes will:

-Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y3.

Assume that an economy is operating at less than its full-employment level of output.Which event would most likely increase an economy's exports?

Other things equal,if $100 billion of government purchases (G)is added to private spending (C + Ig + Xn),GDP will:

-Refer to the above diagram for a private closed economy.At the $300 level of GDP:

If the economy is in equilibrium at the $400 billion level of GDP and the full-employment level of GDP is $500 billion:

-In the above private open economy exports are __________ and imports are __________ domestic GDP:

Which event would most likely decrease an economy's exports?

Planned investment equals saving:

-Refer to the above diagram for a private closed economy.Planned and actual investment will be equal at:

The following information is for a private closed economy,where Ig is gross investment,S is saving,and Y is gross domestic product (GDP). Ig = 80 S = -80 + .4Y -Refer to the above information.The equilibrium GDP will be:

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result,we can conclude that:

Complete the following table and answer the next question(s)on the basis of the resulting data.All figures are in billions of dollars. -Refer to the above table.For the open economy the equilibrium GDP and the multiplier will be:

If a lump-sum tax of $40 billion is imposed and the MPC is 0.6,the saving schedule will:

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

-If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP,then:

In moving from a private closed to a mixed closed economy in the aggregate expenditures model,taxes:

-The multiplier for the economy in the above diagram:

During the recession of 2008 - 2009:

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

-Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y₃.

Other things equal,if $100 billion of government purchases (G)is added to private spending (C + I_g + X_n),GDP will:

-In the above private open economy exports are and imports are domestic GDP:

The following information is for a private closed economy,where I_g is gross investment,S is saving,and Y is gross domestic product (GDP). I_g = 80 S = -80 + .4Y -Refer to the above information.The equilibrium GDP will be: