Exam 11: The Aggregate Expenditures Model

The following schedule contains data for a private closed economy.All figures are in billions. Assume that gross investment is $10 billion. -Refer to the above data.If a lump-sum tax of $20 is imposed,the consumption schedule will become:

Which of the following would increase GDP by the greatest amount?

Complete the following table and answer the next question(s)on the basis of the resulting data.All figures are in billions of dollars. -If the above economy was closed to international trade,the equilibrium GDP and the multiplier would be:

If the MPC is .9,a $20 billion increase in a lump-sum tax will reduce GDP by $200 billion.

If S = -60 + .25Y and I_g = 60,where S is saving,I_g is gross investment,and Y is gross domestic product (GDP),then the equilibrium level of GDP is:

If an increase in aggregate expenditures results in no increase in real GDP we can conclude that the:

If the multiplier in an economy is 5,a $20 billion increase in net exports will:

-Refer to the above information.If the real interest rate is 9 percent,the equilibrium level of GDP will be:

-Refer to the above diagram which applies to a private closed economy.If gross investment increases from I_g1 to I_g2,the equilibrium GDP will:

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.In equilibrium,saving will be:

Saving is always equal to:

-The equilibrium level of GDP in the economy in the above diagram:

-Refer to the above information.When the real interest rate is 10 percent,unplanned changes in inventories are equal to:

-Refer to the above diagram.If net exports are X _n2,the GDP in the open economy will exceed GDP in the closed economy by:

Refer to the diagram below for a private closed economy.Saving and planned investment are equal:

The table shows a private,open economy.All figures are in billions of dollars. -Refer to the above table.If the marginal propensity to consume in this economy is 0.8,a $10 increase in its net exports would increase its equilibrium real GDP by:

-Refer to the above diagram for a private closed economy.Aggregate saving in this economy will be zero when:

The recessionary expenditure gap is the amount by which the equilibrium GDP and the full-employment GDP differ.

-The economy in the above diagram is incurring:

During the recession of 2008-2009 the federal government undertook various policies intended to stimulate private spending and investment.