Question 1

-Refer to the above diagrams.Other things equal,Curve B will shift upward when:

Accepted Answer

A)  the level of GDP increases. 
B)  the interest rate increases. 
C)  curve A shifts to the left. 
D)  curve A shifts to the right. 
A)  the level of GDP increases. 
B)  the interest rate increases. 
C)  curve A shifts to the left. 
D)  curve A shifts to the right.

Question 2

An exchange rate:

Accepted Answer

A)  is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports. 
B)  measures the interest rate ratios of any two nations. 
C)  is the amount which one nation must export to obtain $1 worth of imports. 
D)  is the price at which the currencies of any two nations exchange for one another. 
A)  is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports. 
B)  measures the interest rate ratios of any two nations. 
C)  is the amount which one nation must export to obtain $1 worth of imports. 
D)  is the price at which the currencies of any two nations exchange for one another.

Question 3

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1,the:

Accepted Answer

A)  inflationary expenditure gap is hg. 
B)  recessionary expenditure gap is BC. 
C)  inflationary expenditure gap is zero. 
D)  inflationary expenditure gap is ed. 
A)  inflationary expenditure gap is hg. 
B)  recessionary expenditure gap is BC. 
C)  inflationary expenditure gap is zero. 
D)  inflationary expenditure gap is ed.

Question 4

In a mixed closed economy:

Accepted Answer

A)  government purchases and saving are injections,while investment and taxes are leakages. 
B)  taxes and government purchases are leakages,while investment and saving are injections. 
C)  taxes and savings are leakages,while investment and government purchases are injections. 
D)  taxes and investment are injections,while saving and government purchases are leakages. 
A)  government purchases and saving are injections,while investment and taxes are leakages. 
B)  taxes and government purchases are leakages,while investment and saving are injections. 
C)  taxes and savings are leakages,while investment and government purchases are injections. 
D)  taxes and investment are injections,while saving and government purchases are leakages.

Question 5

If government increases its purchases by $15 billion and the MPC is 2/3,then we would expect the equilibrium GDP to:

Accepted Answer

A)  increase by $30 billion. 
B)  increase by $45 billion. 
C)  decrease by $35 billion. 
D)  increase by $50 billion. 
A)  increase by $30 billion. 
B)  increase by $45 billion. 
C)  decrease by $35 billion. 
D)  increase by $50 billion.

Question 6

The letters Y,CS1U1B1aS1U1B0,IS1U1B1gS1U1B0,XS1U1B1nS1U1B0,G,and T stand for GDP,consumption,gross investment,net exports,government purchases,and net taxes respectively.Figures are in billions of dollars.
CS1U1B1aS1U1B0 = 25 + .75(Y - T )
IS1U1B1gS1U1B0 = IS1U1B1g0S1U1B0 = 50
XS1U1B1nS1U1B0 = XS1U1B1n0S1U1B0 = 10
G = GS1U1B10S1U1B0 = 70
T = TS1U1B10S1U1B0 = 30
-Refer to the above information.The equilibrium level of GDP for this economy is:

Accepted Answer

A)  $600 
B)  $530 
C)  $415 
D)  $400 
A)  $600 
B)  $530 
C)  $415 
D)  $400

Question 7

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

Accepted Answer

A)  is $100. 
B)  is $250. 
C)  is $350. 
D)  is $500. 
A)  is $100. 
B)  is $250. 
C)  is $350. 
D)  is $500.

Question 8

In a private closed economy,aggregate expenditures will equal GDP where:

Accepted Answer

A)  consumption equals investment. 
B)  consumption plus investment equals aggregate expenditures. 
C)  planned investment equals saving. 
D)  disposable income equals consumption minus saving. 
A)  consumption equals investment. 
B)  consumption plus investment equals aggregate expenditures. 
C)  planned investment equals saving. 
D)  disposable income equals consumption minus saving.

Question 9

If government increases lump-sum taxes by $20 billion and the economy's MPC is .6,then the:

Accepted Answer

A)  consumption schedule will shift upward by $12 billion. 
B)  consumption schedule will shift downward by $12 billion. 
C)  equilibrium GDP will increase by $40 billion. 
D)  equilibrium GDP will decrease by $12 billion. 
A)  consumption schedule will shift upward by $12 billion. 
B)  consumption schedule will shift downward by $12 billion. 
C)  equilibrium GDP will increase by $40 billion. 
D)  equilibrium GDP will decrease by $12 billion.

Question 10

The equilibrium GDP is the level of domestic output:

Accepted Answer

A)  where consumption equals saving. 
B)  where actual investment equals consumption. 
C)  which is sustainable. 
D)  where full employment exists. 
A)  where consumption equals saving. 
B)  where actual investment equals consumption. 
C)  which is sustainable. 
D)  where full employment exists.

Question 11

-Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Accepted Answer

A)  aggregate expenditures exceed GDP with the result that GDP will rise. 
B)  consumption is $350 and planned investment is zero so that aggregate expenditures are $350. 
C)  consumption is $300 and planned investment is $50 so that aggregate expenditures are $350. 
D)  consumption is $300 and actual investment is $100 so that aggregate expenditures are $400. 
A)  aggregate expenditures exceed GDP with the result that GDP will rise. 
B)  consumption is $350 and planned investment is zero so that aggregate expenditures are $350. 
C)  consumption is $300 and planned investment is $50 so that aggregate expenditures are $350. 
D)  consumption is $300 and actual investment is $100 so that aggregate expenditures are $400.

Question 12

If government increases its tax revenues by $15 billion and the MPC is 2/3,then we can expect the equilibrium GDP to:

Accepted Answer

A)  decrease by $30 billion. 
B)  decrease by $45 billion. 
C)  decrease by $35 billion. 
D)  decrease by $55 billion. 
A)  decrease by $30 billion. 
B)  decrease by $45 billion. 
C)  decrease by $35 billion. 
D)  decrease by $55 billion.

Question 13

-If government decreases its purchases by $20 billion and the MPC is 0.8,equilibrium GDP will decrease by $100 billion.

Accepted Answer

A) True 
 B)False

Question 14

The equilibrium level of GDP in a private closed economy is where:

Accepted Answer

A)  MPC = APC. 
B)  unemployment is about 3 percent of the labor force. 
C)  planned consumption equals saving. 
D)  saving equals planned investment. 
A)  MPC = APC. 
B)  unemployment is about 3 percent of the labor force. 
C)  planned consumption equals saving. 
D)  saving equals planned investment.

Question 15

Other things being equal,the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n):

Accepted Answer

A)  rightward shift in the investment-demand schedule. 
B)  downward shift in the consumption schedule. 
C)  upward shift in the consumption schedule. 
D)  upward shift in the investment schedule. 
A)  rightward shift in the investment-demand schedule. 
B)  downward shift in the consumption schedule. 
C)  upward shift in the consumption schedule. 
D)  upward shift in the investment schedule.

Question 16

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

Accepted Answer

A)  aggregate expenditures and GDP are equal. 
B)  consumption is $250 and planned investment is $50. 
C)  saving equals investment. 
D)  all of the above are true. 
A)  aggregate expenditures and GDP are equal. 
B)  consumption is $250 and planned investment is $50. 
C)  saving equals investment. 
D)  all of the above are true.

Question 17

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
-The multiplier for the above economy is:

Accepted Answer

A)  4.60. 
B)  3.33. 
C)  5.00. 
D)  4.00. 
A)  4.60. 
B)  3.33. 
C)  5.00. 
D)  4.00.

Question 18

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

Accepted Answer

A)  GDP will increase by $64. 
B)  GDP will decrease by $64. 
C)  the aggregate expenditures schedule will shift downward by $12. 
D)  inflation will occur. 
A)  GDP will increase by $64. 
B)  GDP will decrease by $64. 
C)  the aggregate expenditures schedule will shift downward by $12. 
D)  inflation will occur.

Question 19

-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:

Accepted Answer

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

Question 20

-Refer to the above data.If gross investment is $120,the equilibrium level of GDP will be:

Accepted Answer

A)  $380 
B)  $370 
C)  $360 
D)  $400 
A)  $380 
B)  $370 
C)  $360 
D)  $400

-Refer to the above diagrams.Other things equal,Curve B will shift upward when:

An exchange rate:

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₁,the:

In a mixed closed economy:

If government increases its purchases by $15 billion and the MPC is 2/3,then we would expect the equilibrium GDP to:

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

In a private closed economy,aggregate expenditures will equal GDP where:

If government increases lump-sum taxes by $20 billion and the economy's MPC is .6,then the:

The equilibrium GDP is the level of domestic output:

-Refer to the above diagram for a private closed economy.At the $400 level of GDP:

If government increases its tax revenues by $15 billion and the MPC is 2/3,then we can expect the equilibrium GDP to:

-If government decreases its purchases by $20 billion and the MPC is 0.8,equilibrium GDP will decrease by $100 billion.

The equilibrium level of GDP in a private closed economy is where:

Other things being equal,the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n):

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

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 -The multiplier for the above economy is:

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:

-Refer to the above data.If gross investment is $120,the equilibrium level of GDP will be:

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 diagrams.Other things equal,Curve B will shift upward when:

An exchange rate:

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1,the:

In a mixed closed economy:

If government increases its purchases by $15 billion and the MPC is 2/3,then we would expect the equilibrium GDP to:

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

In a private closed economy,aggregate expenditures will equal GDP where:

If government increases lump-sum taxes by $20 billion and the economy's MPC is .6,then the:

The equilibrium GDP is the level of domestic output:

-Refer to the above diagram for a private closed economy.At the $400 level of GDP:

If government increases its tax revenues by $15 billion and the MPC is 2/3,then we can expect the equilibrium GDP to:

-If government decreases its purchases by $20 billion and the MPC is 0.8,equilibrium GDP will decrease by $100 billion.

The equilibrium level of GDP in a private closed economy is where:

Other things being equal,the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n):

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

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 -The multiplier for the above economy is:

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:

-Refer to the above data.If gross investment is $120,the equilibrium level of GDP will be:

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 diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₁,the:

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 -The multiplier for the above economy is: