Exam 9: The Aggregate Expenditures Model

Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion. If the MPC is 0.6, what change in aggregate expenditures is needed to achieve full employment?

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. The equilibrium GDP will be:

Refer to the above information. In equilibrium, the level of consumption is:

Refer to the above diagram for a private closed economy. At the $300 level of GDP:

In reality, if a nation imposes tariffs, then the final result will be that net exports and GDP will decrease.

If net exports decrease from zero to some negative amount, the aggregate expenditures schedule would:

-Refer to the above information. When the real interest rate is 10 percent, unplanned changes in inventories are equal to:

If the multiplier in an economy is 5, a $20 billion increase in net exports will:

For an open mixed economy the equilibrium level of GDP is determined where S_a + I_g + X = T + G.

In a private closed economy (a) the marginal propensity to save is 0.25, (b) consumption equals income when consumption is $120 billion, and (c) the level of investment is $40 billion. What is the equilibrium level of income?

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

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

-Refer to the above diagram. In equilibrium net exports are positive.

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

-The equilibrium level of GDP for the above private open economy is: