Question 1

A higher interest rate

Accepted Answer

A) causes the exchange rate to increase,which causes the share of net exports to rise. 
B) causes the exchange rate to fall,which results in a decline in the share of net exports. 
C) causes the exchange rate to fall,which causes the share of net exports to rise. 
D) causes the exchange rate to increase,which results in a decline in the share of net exports. 
E) has an uncertain effect on both exchange rates and the share of net exports. 
A) causes the exchange rate to increase,which causes the share of net exports to rise. 
B) causes the exchange rate to fall,which results in a decline in the share of net exports. 
C) causes the exchange rate to fall,which causes the share of net exports to rise. 
D) causes the exchange rate to increase,which results in a decline in the share of net exports. 
E) has an uncertain effect on both exchange rates and the share of net exports.

Question 2

The share of GDP purchases is determined by

Accepted Answer

A) the rate of growth of real GDP. 
B) the rate of interest. 
C) the willingness of consumers to save. 
D) the political process. 
E) the exchange rate. 
A) the rate of growth of real GDP. 
B) the rate of interest. 
C) the willingness of consumers to save. 
D) the political process. 
E) the exchange rate.

Question 3

Suppose the share of government purchases increases by 2 percentage points.Why should we predict that the resulting decline in investment will be less than 2 percent?

Accepted Answer

The increase in the share of government

Question 4

Which of the following situations would best explain why the real long-term interest rate would increase?

Accepted Answer

A) An increase in the consumption share of GDP 
B) A decrease in the investment share of GDP 
C) A decrease in the government share of GDP 
D) A decrease in exports 
E) An increase in imports 
A) An increase in the consumption share of GDP 
B) A decrease in the investment share of GDP 
C) A decrease in the government share of GDP 
D) A decrease in exports 
E) An increase in imports

Question 5

In a speech before the National Press Club in February of 2011,Federal Reserve Chairman Ben Bernanke expressed concern about which of the following U.S.economic trends?

Accepted Answer

A) That exports had grown too large compared to imports. 
B) That inflation was getting dangerously large. 
C) About the long-run path of the budget deficits. 
D) About the long-run path of the value of the U.S.dollar. 
A) That exports had grown too large compared to imports. 
B) That inflation was getting dangerously large. 
C) About the long-run path of the budget deficits. 
D) About the long-run path of the value of the U.S.dollar.

Question 6

Suppose that the following equations describe the relationship between shares of spending in GDP (Y)and the interest rate (R),measured in decimal fractions (that is,R = .05 means that the interest rate is 5 percent).   
(A)Use algebra to determine the value of the interest rate and the share of spending in GDP.
(B)Do the calculation again for a government share of 15 percent rather than 20 percent.

Accepted Answer

The answer of Suppose that the following equations describe the...

Question 7

If the sum of the consumption and investment shares of GDP is 78 percent,the government share of GDP has to be less than or equal to 22 percent.

Accepted Answer

A) True 
 B)False

Question 8

Ceteris paribus,a rise in U.S.interest rates

Accepted Answer

A) will cause international investors to decrease their demand for dollar-denominated assets. 
B) has no effect on international investors. 
C) will cause international investors to increase their demand for dollar-denominated assets 
D) will have no effect on dollar-denominated assets but will cause an increase in the demand for yen-denominated assets. 
E) will have an uncertain effect on dollar-denominated assets. 
A) will cause international investors to decrease their demand for dollar-denominated assets. 
B) has no effect on international investors. 
C) will cause international investors to increase their demand for dollar-denominated assets 
D) will have no effect on dollar-denominated assets but will cause an increase in the demand for yen-denominated assets. 
E) will have an uncertain effect on dollar-denominated assets.

Exam 19: The Spending Allocation Model

A higher interest rate

The share of GDP purchases is determined by

Suppose the share of government purchases increases by 2 percentage points.Why should we predict that the resulting decline in investment will be less than 2 percent?

Which of the following situations would best explain why the real long-term interest rate would increase?

In a speech before the National Press Club in February of 2011,Federal Reserve Chairman Ben Bernanke expressed concern about which of the following U.S.economic trends?

If the sum of the consumption and investment shares of GDP is 78 percent,the government share of GDP has to be less than or equal to 22 percent.

Ceteris paribus,a rise in U.S.interest rates

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

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