Question 1

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.The vertical intercept of the AE function is

Accepted Answer

A) 120.0. 
B) 420.0. 
C) 600.0. 
D) 828.8. 
E) 1120.0.

Question 2

Consider the governmentʹs budget balance.Suppose G = 600 and the governmentʹs net tax revenue is 10% of Y.The government budget is balanced when Y equals

Accepted Answer

A) 660. 
B) 1320. 
C) 3000. 
D) 4500. 
E) 6000.

Question 3

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory ________ will induce firms to________ the rate of output production.

Accepted Answer

A) depletion; lower 
B) depletion; raise 
C) buildup; lower 
D) buildup; raise 
E) at zero; maintain the current

Question 4

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.If national income is 2400,then desired aggregate expenditure is

Accepted Answer

A) 1120. 
B) 1776. 
C) 2896. 
D) 3184. 
E) 3472.

Question 5

Consider the governmentʹs budget balance.Suppose G = 500 and the governmentʹs net tax revenue is equal to 0.25Y.When Y = 2920,the government is running a budget

Accepted Answer

A) deficit of 730. 
B) surplus of 230. 
C) balance. 
D) deficit of 230. 
E) surplus of 730.

Question 6

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import).

Accepted Answer

A) z = MPC(1 - t - m) 
B) z = tY - mY 
C) z = MPC - (1 - t- m)Y 
D) z = MPC - (1 - t - m) 
E) z = MPC(1 - t)- m

Question 7

When compared to a simple macroeconomic model (with only consumption and investment),adding government and foreign trade to the AE function causes

Accepted Answer

A) the autonomous component of AE to increase. 
B) the autonomous component of AE to fall. 
C) the AE function to become downward sloping. 
D) the AE function to become perfectly horizontal. 
E) no change in the AE function.

Question 8

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.9 and a net tax rate of 10% of national income,the marginal propensity to consume out of national income is

Accepted Answer

A) 0.09. 
B) 0.72. 
C) 0.81. 
D) 0.90. 
E) 1.00.

Question 9

Suppose exports are $940 and imports are given by IM = 0.1Y.At what level of national income will net exports equal zero?

Accepted Answer

A) $0 
B) $9400 
C) $15 730 
D) $94 
E) $27 750

Question 10

Suppose exports are $1850 and imports are given by IM = 0.13Y.At what level of national income will net exports equal zero?

Accepted Answer

A) $0 
B) $277 
C) $1573 
D) $14 231 
E) $27 750

Question 11

Transfer payments made by the government affect its net tax revenues

Accepted Answer

A) directly. 
B) indirectly through government purchases. 
C) indirectly through net exports. 
D) indirectly through the investment function. 
E) indirectly through the consumption function.

Question 12

A downward shift and steepening of the net export (NX)function can be caused by

Accepted Answer

A) an increase in domestic national income. 
B) a decrease in foreign national income. 
C) an increase in domestic prices relative to foreign prices. 
D) a decrease in the Canadian-dollar price of foreign currency. 
E) both C and D are correct.

Question 13

A rise in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX)function to shift ________ and ________.

Accepted Answer

A) upward; become flatter 
B) upward; become steeper 
C) downward; become flatter 
D) downward; keep the same slope 
E) downward; become steeper

Question 14

In the simple macro model that is considered in Chapters 21 and 22 of the textbook,

Accepted Answer

A) the economy is always in equilibrium. 
B) there is no government or foreign trade. 
C) the price level is determined within the model. 
D) there are no supply-side influences on national income. 
E) the simple multiplier is always equal to 1.

Question 15

Consider the simplest macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = .2Y,X = 130,and IM = 0.14Y.Autonomous expenditures in this model are

Accepted Answer

A) 1120. 
B) 1350. 
C) 1380. 
D) 2700. 
E) 5400.

Question 16

A fall in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX)function to shift ________ and ________.

Accepted Answer

A) upward; become flatter 
B) upward; become steeper 
C) downward; become flatter 
D) downward; keep the same slope 
E) downward; become steeper

Question 17

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Total autonomous spending in this model is

Accepted Answer

A) 120.0. 
B) 1120.0. 
C) 420.0. 
D) 600.0. 
E) 828.8.

Question 18

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.The trade balance at equilibrium national income is a

Accepted Answer

A) deficit of 504.8. 
B) deficit of 460.0. 
C) deficit of 330.0. 
D) surplus of 125.0. 
E) surplus of 15.3.

Question 19

Suppose exports (X)=100,Y=500,and imports are equal to mY,where m is the marginal propensity to import.Net exports would be equal to zero if the marginal propensity to import were

Accepted Answer

A) 1%. 
B) 5%. 
C) 10%. 
D) 20%. 
E) 50%.

Question 20

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The trade balance at equilibrium national income is

Accepted Answer

A) a deficit of 36.67. 
B) a deficit of 21.43. 
C) zero. 
D) a surplus of 21.43. 
E) a surplus of 36.67.

Exam 22: Adding Government and Trade to the Simple Macro Model

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.The vertical intercept of the AE function is

Consider the governmentʹs budget balance.Suppose G = 600 and the governmentʹs net tax revenue is 10% of Y.The government budget is balanced when Y equals

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory will induce firms to the rate of output production.

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.If national income is 2400,then desired aggregate expenditure is

Consider the governmentʹs budget balance.Suppose G = 500 and the governmentʹs net tax revenue is equal to 0.25Y.When Y = 2920,the government is running a budget

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import) .

When compared to a simple macroeconomic model (with only consumption and investment) ,adding government and foreign trade to the AE function causes

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.9 and a net tax rate of 10% of national income,the marginal propensity to consume out of national income is

Suppose exports are $940 and imports are given by IM = 0.1Y.At what level of national income will net exports equal zero?

Suppose exports are $1850 and imports are given by IM = 0.13Y.At what level of national income will net exports equal zero?

Transfer payments made by the government affect its net tax revenues

A downward shift and steepening of the net export (NX) function can be caused by

A rise in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX) function to shift and .

In the simple macro model that is considered in Chapters 21 and 22 of the textbook,

Consider the simplest macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = .2Y,X = 130,and IM = 0.14Y.Autonomous expenditures in this model are

A fall in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX) function to shift and .

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Total autonomous spending in this model is

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.The trade balance at equilibrium national income is a

Suppose exports (X) =100,Y=500,and imports are equal to mY,where m is the marginal propensity to import.Net exports would be equal to zero if the marginal propensity to import were

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The trade balance at equilibrium national income is

Exam 22: Adding Government and Trade to the Simple Macro Model

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.The vertical intercept of the AE function is

Consider the governmentʹs budget balance.Suppose G = 600 and the governmentʹs net tax revenue is 10% of Y.The government budget is balanced when Y equals

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory ________ will induce firms to________ the rate of output production.

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.If national income is 2400,then desired aggregate expenditure is

Consider the governmentʹs budget balance.Suppose G = 500 and the governmentʹs net tax revenue is equal to 0.25Y.When Y = 2920,the government is running a budget

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import) .

When compared to a simple macroeconomic model (with only consumption and investment) ,adding government and foreign trade to the AE function causes

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.9 and a net tax rate of 10% of national income,the marginal propensity to consume out of national income is

Suppose exports are $940 and imports are given by IM = 0.1Y.At what level of national income will net exports equal zero?

Suppose exports are $1850 and imports are given by IM = 0.13Y.At what level of national income will net exports equal zero?

Transfer payments made by the government affect its net tax revenues

A downward shift and steepening of the net export (NX) function can be caused by

A rise in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX) function to shift ________ and ________.

In the simple macro model that is considered in Chapters 21 and 22 of the textbook,

Consider the simplest macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = .2Y,X = 130,and IM = 0.14Y.Autonomous expenditures in this model are

A fall in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX) function to shift ________ and ________.

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Total autonomous spending in this model is

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.The trade balance at equilibrium national income is a

Suppose exports (X) =100,Y=500,and imports are equal to mY,where m is the marginal propensity to import.Net exports would be equal to zero if the marginal propensity to import were

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The trade balance at equilibrium national income is

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory will induce firms to the rate of output production.

A rise in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX) function to shift and .

A fall in the Canadian-dollar price of foreign currency,other things being equal,causes Canadaʹs net export (NX) function to shift and .