Question 1

If government expenditures or taxes are assumed to be autonomous,they

Accepted Answer

A) do not depend upon on the level of GDP 
B) may be changed only through direct action by Congress 
C) change only when the price level changes 
D) change only upon executive order by the president of the United States 
E) are autonomous at low levels of GDP but not at higher levels of GDP 
A) do not depend upon on the level of GDP 
B) may be changed only through direct action by Congress 
C) change only when the price level changes 
D) change only upon executive order by the president of the United States 
E) are autonomous at low levels of GDP but not at higher levels of GDP

Question 2

Government military spending affects aggregate demand the same way government payments for Social Security would.

Accepted Answer

A) True 
 B)False

Question 3

If transfer payments and autonomous taxes both increase by identical amounts,

Accepted Answer

A) equilibrium income will increase by the amount of the increase 
B) equilibrium income will increase by more than the increase 
C) equilibrium income will increase by less than the increase 
D) the change in equilibrium income will depend on the value of the MPC 
E) there will be no change in equilibrium income 
A) equilibrium income will increase by the amount of the increase 
B) equilibrium income will increase by more than the increase 
C) equilibrium income will increase by less than the increase 
D) the change in equilibrium income will depend on the value of the MPC 
E) there will be no change in equilibrium income

Question 4

If autonomous net taxes equal $1 trillion at all levels of real GDP,then we can safely assume that net taxes

Accepted Answer

A) are too burdensome 
B) are autonomous 
C) equal transfer payments 
D) depend on the level of real GDP 
E) equal zero when GDP equals zero 
A) are too burdensome 
B) are autonomous 
C) equal transfer payments 
D) depend on the level of real GDP 
E) equal zero when GDP equals zero

Question 5

A $100 increase in government purchases will have exactly the same effect on equilibrium real GDP as a $125 decrease in autonomous net taxes regardless of the value of the MPC.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following assumptions is usually made about government purchases?

Accepted Answer

A) They vary directly with the interest rate. 
B) They are autonomous. 
C) They vary directly with the level of income. 
D) They equal the level of net taxes in equilibrium. 
E) They vary inversely with the level of income. 
A) They vary directly with the interest rate. 
B) They are autonomous. 
C) They vary directly with the level of income. 
D) They equal the level of net taxes in equilibrium. 
E) They vary inversely with the level of income.

Question 7

If autonomous net taxes decrease,which of the following correctly describes the effects?

Accepted Answer

A) Disposable income increases,consumption decreases,and saving decreases. 
B) Disposable income increases,consumption increases,and saving increases. 
C) Disposable income decreases,consumption increases,and saving increases. 
D) Disposable income decreases,consumption decreases,and saving decreases. 
E) There is no effect on either disposable income,consumption,or saving. 
A) Disposable income increases,consumption decreases,and saving decreases. 
B) Disposable income increases,consumption increases,and saving increases. 
C) Disposable income decreases,consumption increases,and saving increases. 
D) Disposable income decreases,consumption decreases,and saving decreases. 
E) There is no effect on either disposable income,consumption,or saving.

Question 8

If the Naval Research Labs fired a chemist and the Environmental Protection Agency hired her at the same salary,the net effect of these events would to be __________ in aggregate demand.

Accepted Answer

A) an increase (rightward shift) 
B) an increase (leftward shift) 
C) a decrease (rightward shift) 
D) a decrease (leftward shift) 
E) no change 
A) an increase (rightward shift) 
B) an increase (leftward shift) 
C) a decrease (rightward shift) 
D) a decrease (leftward shift) 
E) no change

Question 9

Exhibit 11-5  
-In an economy characterized by the aggregate expenditure line in Exhibit 11-5,what would the equilibrium real GDP be equal to if autonomous net taxes increased by $100?

Accepted Answer

A) $400 
B) $500 
C) $600 
D) $700 
E) $800 
A) $400 
B) $500 
C) $600 
D) $700 
E) $800

Question 10

The combined effect of changes in government purchases and net taxes can be determined by adding their individual effects.

Accepted Answer

A) True 
 B)False

Question 11

The effect of a change in net taxes on the quantity of real GDP demanded equals the resulting shift in the consumption function times

Accepted Answer

A) the marginal propensity to consume 
B) the marginal propensity to save 
C) the autonomous net tax multiplier 
D) the simple spending multiplier 
E) the marginal tax rate 
A) the marginal propensity to consume 
B) the marginal propensity to save 
C) the autonomous net tax multiplier 
D) the simple spending multiplier 
E) the marginal tax rate

Question 12

Which component of aggregate expenditure is affected when net taxes are cut?

Accepted Answer

A) net exports; they increase 
B) government purchases; they fall 
C) government purchases; they rise 
D) consumption; it falls 
E) consumption; it rises 
A) net exports; they increase 
B) government purchases; they fall 
C) government purchases; they rise 
D) consumption; it falls 
E) consumption; it rises

If government expenditures or taxes are assumed to be autonomous,they

Government military spending affects aggregate demand the same way government payments for Social Security would.

If transfer payments and autonomous taxes both increase by identical amounts,

If autonomous net taxes equal $1 trillion at all levels of real GDP,then we can safely assume that net taxes

A $100 increase in government purchases will have exactly the same effect on equilibrium real GDP as a $125 decrease in autonomous net taxes regardless of the value of the MPC.

Which of the following assumptions is usually made about government purchases?

If autonomous net taxes decrease,which of the following correctly describes the effects?

If the Naval Research Labs fired a chemist and the Environmental Protection Agency hired her at the same salary,the net effect of these events would to be __________ in aggregate demand.

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,what would the equilibrium real GDP be equal to if autonomous net taxes increased by $100?

The combined effect of changes in government purchases and net taxes can be determined by adding their individual effects.

The effect of a change in net taxes on the quantity of real GDP demanded equals the resulting shift in the consumption function times

Which component of aggregate expenditure is affected when net taxes are cut?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

Filters

Exam 24: The Algebra of Demand-Side Equilibrium

If government expenditures or taxes are assumed to be autonomous,they

Government military spending affects aggregate demand the same way government payments for Social Security would.

If transfer payments and autonomous taxes both increase by identical amounts,

If autonomous net taxes equal $1 trillion at all levels of real GDP,then we can safely assume that net taxes

A $100 increase in government purchases will have exactly the same effect on equilibrium real GDP as a $125 decrease in autonomous net taxes regardless of the value of the MPC.

Which of the following assumptions is usually made about government purchases?

If autonomous net taxes decrease,which of the following correctly describes the effects?

If the Naval Research Labs fired a chemist and the Environmental Protection Agency hired her at the same salary,the net effect of these events would to be __________ in aggregate demand.

Exhibit 11-5 -In an economy characterized by the aggregate expenditure line in Exhibit 11-5,what would the equilibrium real GDP be equal to if autonomous net taxes increased by $100?

The combined effect of changes in government purchases and net taxes can be determined by adding their individual effects.

The effect of a change in net taxes on the quantity of real GDP demanded equals the resulting shift in the consumption function times

Which component of aggregate expenditure is affected when net taxes are cut?

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

Filters