Exam 11: The Aggregate Expenditures Model

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

-Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If businesses were willing to invest $30 at each possible level of GDP,the equilibrium level of GDP would be:

-Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₃,the:

In reality,if a nation imposes tarrifs,then the final result will be that:

Suppose the economy is operating at its full-employment-noninflationary GDP and the MPC is 0.75.The federal government now finds that it must increase spending on military goods by $21 billion in response to a deterioration in the international political situation.To sustain full-employment-noninflationary GDP government must:

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

The table shows a private,open economy.All figures are in billions of dollars. -Refer to the above table.If net exports increased by $10 billion at each level of GDP,the equilibrium real GDP would be:

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,consumption will be:

In a mixed open economy the equilibrium level of GDP exists where:

A recessionary expenditure gap exists if:

A lump-sum tax causes the after-tax consumption schedule to be flatter than the before-tax consumption schedule.

Refer to the below diagram,which aggregate expenditure (AE)schedule for a private closed economy implies the largest MPC?

The effect of imposing a lump-sum tax is to:

At equilibrium real GDP in a private closed economy:

-Refer to the above diagram for a private closed economy.At the $200 level of GDP:

-The tax in the above economy is a:

-In equilibrium in the above private open economy:

Exports have the same macroeconomic effect on GDP as:

If at some level of GDP the economy is experiencing an unplanned decrease in inventories:

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 $5,government purchases of goods and services $10,planned investment $6,and net exports zero,equilibrium real GDP would be: