Exam 11: The Aggregate Expenditures Model

Actual investment is $28 billion and saving is $15 billion at the $166 billion level of output in a private closed economy. At this level:

Refer to the graph above for a private closed economy. In this economy, investment is:

The data below is the consumption schedule in an economy. All figures are in billions of dollars. Refer to the above table. Given the level of investment at $34 billion, zero net exports, and a lump-sum tax of $30 billion, the addition of government expenditures of $20 billion at each level of GDP will result in an equilibrium GDP of:

In the flow of income and spending, saving and investment are, respectively:

John Maynard Keynes expressed his ideas about the macroeconomy and attacked classical economics in his book, The:

The effect of a decline in taxes on the level of income will differ somewhat from an increase in government expenditures of the same amount because:

In the aggregate expenditures model of a private closed economy, aggregate expenditures (C + I_g) is always equal to output GDP.

The table shows a consumption schedule. All figures are in billions of dollars. Refer to the above information. If lump-sum taxes were $20 billion, planned investment $45 billion, net exports zero, and government purchases $20 billion, then equilibrium GDP would be:

The investment schedule shows the:

Planned investment is $20 billion and saving is $15 billion when GDP in the economy is $180 billion. The economy is:

Recently, the level of GDP has declined by $60 billion in an economy where the marginal propensity to consume is 0.75. Aggregate expenditures must have fallen by:

The difference between the investment demand curve and the investment schedule is that the former shows:

The table shows a consumption schedule. All figures are in billions of dollars. Refer to the above information. If planned investment was $20 billion, government purchases of goods and services were $20 billion, and taxes and net exports were zero, then the equilibrium level of GDP would be:

In the aggregate expenditure model, which of the following variables is assumed to be independent of real GDP?

A tax-cut will have a greater effect on equilibrium GDP if the:

A downward-sloping investment demand curve and a horizontal investment schedule indicate that investments are inversely related to interest rates but are not affected by the level of income.

One of the most important views expressed by classical macroeconomists was that:

When a private closed economy is at equilibrium, then (GDP - C) is equal to planned investment.

All figures in the table below are in billions of dollars. Refer to the above data. If exports should decrease by $20 billion at each level of GDP, other factors constant, then the equilibrium GDP for the economy will be:

An economy characterized by high unemployment is likely to be: