Exam 9: The Aggregate Expenditures Model

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

Actual investment may be defined as:

Which of the following statements is correct for a private closed economy?

In a mixed open economy, where aggregate expenditures exceed GDP:

In reality, if a nation devalues its currency, then the final result will be that:

If unplanned investment in business inventories occurs, we can expect:

-Refer to the above diagram. The sizes of the multipliers associated with changes in investment and government spending in this economy:

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

In an aggregate expenditures diagram the imposition of a lump-sum tax (T) will:

-The above economy is characterized by:

The multiplier for the above economy is:

The letters Y, C_a, I_g, X_n, G, and T stand for GDP, consumption, gross investment, net exports, government purchases, and net taxes respectively. Figures are in billions of dollars. C_a = 25 + .75(Y - T ) I_g = I_g0 = 50 X_n = X_n0 = 10 G = G₀ = 70 T = T₀ = 30 -Refer to the above information. The equilibrium level of GDP for this economy is:

-Refer to the above diagram. The value of the multiplier for this economy is:

During the recession of 2008 - 2009:

All else equal, a large decline in the real interest rate will shift the:

At the equilibrium GDP for an open economy:

A "recessionary expenditure gap" is:

-Refer to the above diagram. The impact of the public sector on the equilibrium GDP:

Which of the following will cause the investment schedule to shift downward?

Taxes represent: