Question 1

-Refer to the above table.If an additional lump-sum tax of $20 were imposed,we would expect:

Accepted Answer

A)  equilibrium GDP to fall by $30. 
B)  equilibrium GDP to fall by $20. 
C)  equilibrium GDP to fall by $50. 
D)  equilibrium GDP to rise by $24. 
A)  equilibrium GDP to fall by $30. 
B)  equilibrium GDP to fall by $20. 
C)  equilibrium GDP to fall by $50. 
D)  equilibrium GDP to rise by $24.

Question 2

For a private closed economy aggregate expenditures consist of:

Accepted Answer

A)  C + Ig. 
B)  C - Ig. 
C)  C + S. 
D)  C - S. 
A)  C + Ig. 
B)  C - Ig. 
C)  C + S. 
D)  C - S.

Question 3

During the recession of 2008-2009,both after-tax consumption and government expenditures declined.

Accepted Answer

A) True 
 B)False

Question 4

-Refer to the above diagrams.Curve A:

Accepted Answer

A)  is an investment schedule and curve B is a consumption of fixed capital schedule. 
B)  is an investment demand curve and curve B is an investment schedule. 
C)  and B are totally unrelated. 
D)  shifts to the left when curve B shifts upward. 
A)  is an investment schedule and curve B is a consumption of fixed capital schedule. 
B)  is an investment demand curve and curve B is an investment schedule. 
C)  and B are totally unrelated. 
D)  shifts to the left when curve B shifts upward.

Question 5

Other things equal,an increase in an economy's exports will:

Accepted Answer

A)  lower the marginal propensity to import. 
B)  have no effect on domestic GDP because imports will change by an offsetting amount. 
C)  decrease its domestic aggregate expenditures and therefore decrease its equilibrium GDP. 
D)  increase its domestic aggregate expenditures and therefore increase its equilibrium GDP. 
A)  lower the marginal propensity to import. 
B)  have no effect on domestic GDP because imports will change by an offsetting amount. 
C)  decrease its domestic aggregate expenditures and therefore decrease its equilibrium GDP. 
D)  increase its domestic aggregate expenditures and therefore increase its equilibrium GDP.

Question 6

-Refer to the above diagram.In equilibrium net exports are positive.

Accepted Answer

A) True 
 B)False

Question 7

If an unplanned increase in business inventories occurs:

Accepted Answer

A)  we can expect aggregate production to be unaffected. 
B)  we can expect businesses to increase the level of production. 
C)  we can expect businesses to lower the level of production. 
D)  aggregate expenditures must exceed the domestic output. 
A)  we can expect aggregate production to be unaffected. 
B)  we can expect businesses to increase the level of production. 
C)  we can expect businesses to lower the level of production. 
D)  aggregate expenditures must exceed the domestic output.

Question 8

If APC = .6 and MPC = .7,the immediate impact of an increase in personal taxes of $20 will be to:

Accepted Answer

A)  have no effect on consumption. 
B)  decrease consumption by $14. 
C)  decrease consumption by $12. 
D)  increase consumption by $14. 
A)  have no effect on consumption. 
B)  decrease consumption by $14. 
C)  decrease consumption by $12. 
D)  increase consumption by $14.

Question 9

The equilibrium level of GDP is associated with:

Accepted Answer

A)  an excess of planned investment over saving. 
B)  no unintended investment in inventories. 
C)  an unintended decrease in business inventories. 
D)  an unintended increase in business inventories. 
A)  an excess of planned investment over saving. 
B)  no unintended investment in inventories. 
C)  an unintended decrease in business inventories. 
D)  an unintended increase in business inventories.

Question 10

-Refer to the above diagram,which applies to a private closed economy.If the initial gross investment Ig1 increases to Ig2,the equilibrium GDP will increase by:

Accepted Answer

A)  FE. 
B)  AB. 
C)  AD. 
D)  GE. 
A)  FE. 
B)  AB. 
C)  AD. 
D)  GE.

Question 11

The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars.
  
-Refer to the above table.If taxes were zero,government purchases of goods and services $10,planned investment $6,and net exports zero,equilibrium real GDP would be:

Accepted Answer

A)  $620 
B)  $630 
C)  $640 
D)  $650 
A)  $620 
B)  $630 
C)  $640 
D)  $650

Question 12

Exports are added to,and imports are subtracted from,aggregate expenditures in moving from a closed to an open economy.

Accepted Answer

A) True 
 B)False

Question 13

The following information is for a closed economy:
  
-Refer to the above information.If government now spends $80 billion at each level of GDP and taxes remain at zero,the equilibrium GDP:

Accepted Answer

A)  will rise to $700. 
B)  will rise to $600. 
C)  will rise to $500. 
D)  may either rise or fall. 
A)  will rise to $700. 
B)  will rise to $600. 
C)  will rise to $500. 
D)  may either rise or fall.

Question 14

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 consumption spending will be:

Accepted Answer

A)  170 
B)  270 
C)  160 
D)  195 
A)  170 
B)  270 
C)  160 
D)  195

Question 15

Refer to the diagram below for a private closed economy.The multiplier is:

Accepted Answer

A)  GF/DE. 
B)  GF/GB. 
C)  FE/GF. 
D)  AB/GF. 
A)  GF/DE. 
B)  GF/GB. 
C)  FE/GF. 
D)  AB/GF.

Question 16

-Refer to the above diagram where Ig is gross investment,X is exports,G is government purchases,S and Sa are saving before and after taxes respectively,M is imports,and T is net taxes,that is,taxes less transfers.The equilibrium level of GDP for this economy is:

Accepted Answer

A)  Y4. 
B)  Y3. 
C)  Y2. 
D)  Y1. 
A)  Y4. 
B)  Y3. 
C)  Y2. 
D)  Y1.

Question 17

An "inflationary expenditure gap" is the amount by which:

Accepted Answer

A)  equilibrium GDP falls short of the full-employment GDP. 
B)  aggregate expenditures exceed those just necessary to achieve full-employment GDP. 
C)  saving exceeds investment at the full-employment GDP. 
D)  aggregate expenditures are less than the full-employment GDP. 
A)  equilibrium GDP falls short of the full-employment GDP. 
B)  aggregate expenditures exceed those just necessary to achieve full-employment GDP. 
C)  saving exceeds investment at the full-employment GDP. 
D)  aggregate expenditures are less than the full-employment GDP.

Question 18

In the aggregate expenditures model,a reduction in taxes may:

Accepted Answer

A)  increase saving. 
B)  increase real GDP. 
C)  reduce unemployment. 
D)  do all of the above. 
A)  increase saving. 
B)  increase real GDP. 
C)  reduce unemployment. 
D)  do all of the above.

Question 19

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 gross investment remains at $10 at all levels of GDP,the after-tax equilibrium level of GDP will be:

Accepted Answer

A)  $220 
B)  $190 
C)  $180 
D)  $160 
A)  $220 
B)  $190 
C)  $180 
D)  $160

Question 20

-The above diagram represents a:

Accepted Answer

A)  mixed closed economy. 
B)  mixed open economy. 
C)  private closed economy. 
D)  private open economy. 
A)  mixed closed economy. 
B)  mixed open economy. 
C)  private closed economy. 
D)  private open economy.

-Refer to the above table.If an additional lump-sum tax of $20 were imposed,we would expect:

For a private closed economy aggregate expenditures consist of:

During the recession of 2008-2009,both after-tax consumption and government expenditures declined.

-Refer to the above diagrams.Curve A:

Other things equal,an increase in an economy's exports will:

-Refer to the above diagram.In equilibrium net exports are positive.

If an unplanned increase in business inventories occurs:

If APC = .6 and MPC = .7,the immediate impact of an increase in personal taxes of $20 will be to:

The equilibrium level of GDP is associated with:

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

The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars. -Refer to the above table.If taxes were zero,government purchases of goods and services $10,planned investment $6,and net exports zero,equilibrium real GDP would be:

Exports are added to,and imports are subtracted from,aggregate expenditures in moving from a closed to an open economy.

The following information is for a closed economy: -Refer to the above information.If government now spends $80 billion at each level of GDP and taxes remain at zero,the equilibrium 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 consumption spending will be:

Refer to the diagram below for a private closed economy.The multiplier is:

-Refer to the above diagram where I_g is gross investment,X is exports,G is government purchases,S and S_a are saving before and after taxes respectively,M is imports,and T is net taxes,that is,taxes less transfers.The equilibrium level of GDP for this economy is:

An "inflationary expenditure gap" is the amount by which:

In the aggregate expenditures model,a reduction in taxes may:

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 gross investment remains at $10 at all levels of GDP,the after-tax equilibrium level of GDP will be:

-The above diagram represents a:

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

-Refer to the above table.If an additional lump-sum tax of $20 were imposed,we would expect:

For a private closed economy aggregate expenditures consist of:

During the recession of 2008-2009,both after-tax consumption and government expenditures declined.

-Refer to the above diagrams.Curve A:

Other things equal,an increase in an economy's exports will:

-Refer to the above diagram.In equilibrium net exports are positive.

If an unplanned increase in business inventories occurs:

If APC = .6 and MPC = .7,the immediate impact of an increase in personal taxes of $20 will be to:

The equilibrium level of GDP is associated with:

-Refer to the above diagram,which applies to a private closed economy.If the initial gross investment Ig1 increases to Ig2,the equilibrium GDP will increase by:

The table shows the consumption schedule for a hypothetical economy.All figures are in billions of dollars. -Refer to the above table.If taxes were zero,government purchases of goods and services $10,planned investment $6,and net exports zero,equilibrium real GDP would be:

Exports are added to,and imports are subtracted from,aggregate expenditures in moving from a closed to an open economy.

The following information is for a closed economy: -Refer to the above information.If government now spends $80 billion at each level of GDP and taxes remain at zero,the equilibrium 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 consumption spending will be:

Refer to the diagram below for a private closed economy.The multiplier is:

-Refer to the above diagram where Ig is gross investment,X is exports,G is government purchases,S and Sa are saving before and after taxes respectively,M is imports,and T is net taxes,that is,taxes less transfers.The equilibrium level of GDP for this economy is:

An "inflationary expenditure gap" is the amount by which:

In the aggregate expenditures model,a reduction in taxes may:

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 gross investment remains at $10 at all levels of GDP,the after-tax equilibrium level of GDP will be:

-The above diagram represents a:

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,which applies to a private closed economy.If the initial gross investment I_g1 increases to I_g2,the equilibrium GDP will increase 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.In equilibrium,the level of consumption spending will be:

-Refer to the above diagram where I_g is gross investment,X is exports,G is government purchases,S and S_a are saving before and after taxes respectively,M is imports,and T is net taxes,that is,taxes less transfers.The equilibrium level of GDP for this economy is: