Question 1

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

Accepted Answer

A)  planned investment will exceed saving, but actual investment will be equal to saving. 
B)  aggregate expenditures will exceed GDP, causing GDP to rise. 
C)  actual investment will exceed planned investment. 
D)  households will consume in excess of their incomes. 
A)  planned investment will exceed saving, but actual investment will be equal to saving. 
B)  aggregate expenditures will exceed GDP, causing GDP to rise. 
C)  actual investment will exceed planned investment. 
D)  households will consume in excess of their incomes.

Question 2

If government expenditures increase by $20 billion and equilibrium GDP increases by $50 billion as a result, we can conclude that:

Accepted Answer

A)  the expenditures multiplier is 2. 
B)  the MPC for this economy is .6. 
C)  inflation is occurring. 
D)  the MPS for this economy is .6. 
A)  the expenditures multiplier is 2. 
B)  the MPC for this economy is .6. 
C)  inflation is occurring. 
D)  the MPS for this economy is .6.

Question 3

For a private closed economy aggregate expenditures consist of:

Accepted Answer

A)  C + Ig. 
B)  C - Ig. 
C)  C + S. 
D)  C - S. 
A)  C + Ig. 
B)  C - Ig. 
C)  C + S. 
D)  C - S.

Question 4

Which event would most likely decrease an economy's exports?

Accepted Answer

A)  a decline in the tariff on products imported from abroad 
B)  an increase the prosperity of trading partners for this economy 
C)  an appreciation of a nation's currency relative to foreign currencies 
D)  a depreciation of a nation's currency relative to foreign currencies 
A)  a decline in the tariff on products imported from abroad 
B)  an increase the prosperity of trading partners for this economy 
C)  an appreciation of a nation's currency relative to foreign currencies 
D)  a depreciation of a nation's currency relative to foreign currencies

Question 5

If S = -60 + .25Y and Ig = 60, where S is saving, Ig is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is:

Accepted Answer

A)  $200. 
B)  $320. 
C)  $360. 
D)  $480. 
A)  $200. 
B)  $320. 
C)  $360. 
D)  $480.

Question 6

The following schedule contains data for a private closed economy. All figures are in billions.
Assume that gross investment is $10 billion.
  
-Refer to the above data. If a lump-sum tax of $20 is imposed, the consumption schedule will become:

Accepted Answer

A)  Column A 
B)  Column B 
C)  Column C 
D)  Column D 
A)  Column A 
B)  Column B 
C)  Column C 
D)  Column D

Question 7

The following information is for a private closed economy, where IS1U1B1gS1U1B0 is gross investment, S is saving, and Y is gross domestic product (GDP).
IS1U1B1gS1U1B0 = 80
S = -80 + .4Y
-Refer to the above information. In equilibrium, consumption will be:

Accepted Answer

A)  $400. 
B)  $280. 
C)  $320. 
D)  $360. 
A)  $400. 
B)  $280. 
C)  $320. 
D)  $360.

Question 8

An increase in taxes will have a greater effect on the equilibrium GDP:

Accepted Answer

A)  if the tax revenues are redistributed through transfer payments. 
B)  the larger the MPS. 
C)  the smaller the MPC. 
D)  the larger the MPC. 
A)  if the tax revenues are redistributed through transfer payments. 
B)  the larger the MPS. 
C)  the smaller the MPC. 
D)  the larger the MPC.

Question 9

-Refer to the above diagram for a private closed economy. Unplanned investment in inventories will:

Accepted Answer

A)  occur at all levels of GDP in excess of $200. 
B)  occur at all levels of GDP in excess of $600. 
C)  occur at all levels of GDP below $600. 
D)  not occur because the economy is necessarily in equilibrium. 
A)  occur at all levels of GDP in excess of $200. 
B)  occur at all levels of GDP in excess of $600. 
C)  occur at all levels of GDP below $600. 
D)  not occur because the economy is necessarily in equilibrium.

Question 10

The table shows a private, open economy. All figures are in billions of dollars.
  
-Refer to the above table. If the marginal propensity to consume in this economy is 0.8, a $10 increase in its net exports would increase its equilibrium real GDP by:

Accepted Answer

A)  $25. 
B)  $50. 
C)  $100. 
D)  $200. 
A)  $25. 
B)  $50. 
C)  $100. 
D)  $200.

Question 11

Other things equal, an increase in an economy's exports will:

Accepted Answer

A)  lower the marginal propensity to import. 
B)  have no effect on domestic GDP because imports will change by an offsetting amount. 
C)  decrease its domestic aggregate expenditures and therefore decrease its equilibrium GDP. 
D)  increase its domestic aggregate expenditures and therefore increase its equilibrium GDP. 
A)  lower the marginal propensity to import. 
B)  have no effect on domestic GDP because imports will change by an offsetting amount. 
C)  decrease its domestic aggregate expenditures and therefore decrease its equilibrium GDP. 
D)  increase its domestic aggregate expenditures and therefore increase its equilibrium GDP.

Question 12

The economy will expand when:

Accepted Answer

A)  actual GDP is less than potential GDP. 
B)  planned investment exceeds saving. 
C)  saving exceeds planned investment. 
D)  unplanned investment occurs. 
A)  actual GDP is less than potential GDP. 
B)  planned investment exceeds saving. 
C)  saving exceeds planned investment. 
D)  unplanned investment occurs.

Question 13

-Refer to the above diagram. The equilibrium level of GDP for this private open economy is Y3.

Accepted Answer

A) True 
 B)False

Question 14

The letters Y, C, IS1U1B1gS1U1B0, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars.
C = 26 + .75Y
IS1U1B1gS1U1B0 = 60
X = 24
M = 10
-Refer to the above information. If government desired to raise the equilibrium GDP to $650, it could:

Accepted Answer

A)  raise G by $45 and reduce T by $10. 
B)  raise G by $40 and reduce T by $30. 
C)  raise G by $30 or reduce T by $40. 
D)  raise both G and T by $40. 
A)  raise G by $45 and reduce T by $10. 
B)  raise G by $40 and reduce T by $30. 
C)  raise G by $30 or reduce T by $40. 
D)  raise both G and T by $40.

Question 15

In a private closed economy _____ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _____ investment is equal to saving.

Accepted Answer

A)  planned; actual 
B)  actual; planned 
C)  gross; net 
D)  net; gross 
A)  planned; actual 
B)  actual; planned 
C)  gross; net 
D)  net; gross

Question 16

The equilibrium level of GDP is associated with:

Accepted Answer

A)  an excess of planned investment over saving. 
B)  no unintended investment in inventories. 
C)  an unintended decrease in business inventories. 
D)  an unintended increase in business inventories. 
A)  an excess of planned investment over saving. 
B)  no unintended investment in inventories. 
C)  an unintended decrease in business inventories. 
D)  an unintended increase in business inventories.

Question 17

-Refer to the above diagram for a private closed economy. The equilibrium level of GDP in this economy:

Accepted Answer

A)  is $60 billion. 
B)  is $180 billion. 
C)  is between $60 and $180 billion. 
D)  cannot be determined from the information given. 
A)  is $60 billion. 
B)  is $180 billion. 
C)  is between $60 and $180 billion. 
D)  cannot be determined from the information given.

Question 18

An "inflationary expenditure gap" is the amount by which:

Accepted Answer

A)  equilibrium GDP falls short of the full-employment GDP. 
B)  aggregate expenditures exceed those just necessary to achieve full-employment GDP. 
C)  saving exceeds investment at the full-employment GDP. 
D)  aggregate expenditures are less than the full-employment GDP. 
A)  equilibrium GDP falls short of the full-employment GDP. 
B)  aggregate expenditures exceed those just necessary to achieve full-employment GDP. 
C)  saving exceeds investment at the full-employment GDP. 
D)  aggregate expenditures are less than the full-employment GDP.

Question 19

Equal increases in government purchases and taxes will:

Accepted Answer

A)  increase the equilibrium GDP and the size of that increase varies directly with the size of the MPC. 
B)  increase the equilibrium GDP and the size of that increase is independent of the size of the MPC. 
C)  increase the equilibrium GDP and the size of that increase varies inversely with the size of the MPC. 
D)  decrease the equilibrium GDP and the size of that decrease is independent of the size of the MPC. 
A)  increase the equilibrium GDP and the size of that increase varies directly with the size of the MPC. 
B)  increase the equilibrium GDP and the size of that increase is independent of the size of the MPC. 
C)  increase the equilibrium GDP and the size of that increase varies inversely with the size of the MPC. 
D)  decrease the equilibrium GDP and the size of that decrease is independent of the size of the MPC.

Question 20

-Refer to the above information. If the real interest rate is 9 percent, the equilibrium level of GDP will be:

Accepted Answer

A)  $600. 
B)  $500. 
C)  $400. 
D)  $300. 
A)  $600. 
B)  $500. 
C)  $400. 
D)  $300.

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

If government expenditures increase by $20 billion and equilibrium GDP increases by $50 billion as a result, we can conclude that:

For a private closed economy aggregate expenditures consist of:

Which event would most likely decrease an economy's exports?

If S = -60 + .25Y and I_g = 60, where S is saving, I_g is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is:

The following schedule contains data for a private closed economy. All figures are in billions. Assume that gross investment is $10 billion. -Refer to the above data. If a lump-sum tax of $20 is imposed, the consumption schedule will become:

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. In equilibrium, consumption will be:

An increase in taxes will have a greater effect on the equilibrium GDP:

-Refer to the above diagram for a private closed economy. Unplanned investment in inventories will:

The table shows a private, open economy. All figures are in billions of dollars. -Refer to the above table. If the marginal propensity to consume in this economy is 0.8, a $10 increase in its net exports would increase its equilibrium real GDP by:

Other things equal, an increase in an economy's exports will:

The economy will expand when:

-Refer to the above diagram. The equilibrium level of GDP for this private open economy is Y₃.

The letters Y, C, I_g, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars. C = 26 + .75Y I_g = 60 X = 24 M = 10 -Refer to the above information. If government desired to raise the equilibrium GDP to $650, it could:

In a private closed economy _ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _ investment is equal to saving.

The equilibrium level of GDP is associated with:

-Refer to the above diagram for a private closed economy. The equilibrium level of GDP in this economy:

An "inflationary expenditure gap" is the amount by which:

Equal increases in government purchases and taxes will:

-Refer to the above information. If the real interest rate is 9 percent, the equilibrium level of GDP will be:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 9: The Aggregate Expenditures Model

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

If government expenditures increase by $20 billion and equilibrium GDP increases by $50 billion as a result, we can conclude that:

For a private closed economy aggregate expenditures consist of:

Which event would most likely decrease an economy's exports?

If S = -60 + .25Y and Ig = 60, where S is saving, Ig is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is:

The following schedule contains data for a private closed economy. All figures are in billions. Assume that gross investment is $10 billion. -Refer to the above data. If a lump-sum tax of $20 is imposed, the consumption schedule will become:

The following information is for a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP). Ig = 80 S = -80 + .4Y -Refer to the above information. In equilibrium, consumption will be:

An increase in taxes will have a greater effect on the equilibrium GDP:

-Refer to the above diagram for a private closed economy. Unplanned investment in inventories will:

The table shows a private, open economy. All figures are in billions of dollars. -Refer to the above table. If the marginal propensity to consume in this economy is 0.8, a $10 increase in its net exports would increase its equilibrium real GDP by:

Other things equal, an increase in an economy's exports will:

The economy will expand when:

-Refer to the above diagram. The equilibrium level of GDP for this private open economy is Y3.

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars. C = 26 + .75Y Ig = 60 X = 24 M = 10 -Refer to the above information. If government desired to raise the equilibrium GDP to $650, it could:

In a private closed economy _____ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _____ investment is equal to saving.

The equilibrium level of GDP is associated with:

-Refer to the above diagram for a private closed economy. The equilibrium level of GDP in this economy:

An "inflationary expenditure gap" is the amount by which:

Equal increases in government purchases and taxes will:

-Refer to the above information. If the real interest rate is 9 percent, the equilibrium level of GDP will be:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

If S = -60 + .25Y and I_g = 60, where S is saving, I_g is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is:

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. In equilibrium, consumption will be:

-Refer to the above diagram. The equilibrium level of GDP for this private open economy is Y₃.

The letters Y, C, I_g, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars. C = 26 + .75Y I_g = 60 X = 24 M = 10 -Refer to the above information. If government desired to raise the equilibrium GDP to $650, it could:

In a private closed economy _ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _ investment is equal to saving.