Question 1

The marginal propensity to import

Accepted Answer

A)  is negative 
B)  is positive 
C)  is likely to be larger than the MPC 
D)  depends on the value of domestic income 
E)  depends on the value of exports

Question 2

What is the impact of net exports on the aggregate expenditure line?

Accepted Answer

A)  They cause the line to shift upward in a parallel fashion. 
B)  They cause the line to shift downward in a parallel fashion. 
C)  They make the line steeper. 
D)  They make the line flatter. 
E)  They make the slope of the line equal 1.

Question 3

Adding variable net exports to aggregate expenditure always increases the slope of the aggregate expenditure line.

Accepted Answer

A) True 
 B)False

Question 4

If the MPC = 0.9 and the MPM = 0.1,then the spending multiplier with variable net exports equals 8.

Accepted Answer

A) True 
 B)False

Question 5

Imports are a leakage from the circular flow.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true concerning the impact of net exports in the model with AE = C + I + NX + G?

Accepted Answer

A)  Net exports are a leakage from the economy if imports exceed exports. 
B)  Net exports are always positive. 
C)  Net exports are negative because exports are assumed to be autonomous. 
D)  Net exports must be negative if planned investment is positive. 
E)  Net exports are an injection into the economy if imports equal exports.

Question 7

Exhibit 10-8 
-Refer to Exhibit 10-8.Which dotted-line segment represents an increase in autonomous spending?

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  d 
E)  e

Question 8

Exports are an injection into the circular flow.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 10-7
 
-In Exhibit 10-7,the spending multiplier equals

Accepted Answer

A)  1.43 
B)  2.50 
C)  3.33 
D)  5 
E)  10

Question 10

The concept of variable net exports is that as domestic income (Y)increases,

Accepted Answer

A)  exports will increase 
B)  exports will decrease 
C)  imports will decrease 
D)  imports will increase 
E)  imports and exports will remain constant

Question 11

The formula for the spending multiplier when variable net exports are included in aggregate expenditures is

Accepted Answer

A)  1/(MPS + MPM) 
B)  1/MPS 
C)  MPS * MPM 
D)  1/(MPC* MPM) 
E)  1/(1 - MPC - MPM)

Question 12

If net exports increase by $350 billion at every level of income,the net export line will

Accepted Answer

A)  shift upward by $350 billion 
B)  shift downward by $350 billion 
C)  shift upward by more than $350 billion because of the multiplier effect 
D)  shift upward by less than $350 billion 
E)  shift downward by more than $350 billion because of the multiplier effect

Question 13

Since imports are positively related to domestic income,a trade deficit will grow as domestic income expands.

Accepted Answer

A) True 
 B)False

Exam 24: Variable Net Exports Revisited

The marginal propensity to import

What is the impact of net exports on the aggregate expenditure line?

Adding variable net exports to aggregate expenditure always increases the slope of the aggregate expenditure line.

If the MPC = 0.9 and the MPM = 0.1,then the spending multiplier with variable net exports equals 8.

Imports are a leakage from the circular flow.

Which of the following is true concerning the impact of net exports in the model with AE = C + I + NX + G?

Exhibit 10-8 -Refer to Exhibit 10-8.Which dotted-line segment represents an increase in autonomous spending?

Exports are an injection into the circular flow.

Exhibit 10-7 -In Exhibit 10-7,the spending multiplier equals

The concept of variable net exports is that as domestic income (Y) increases,

The formula for the spending multiplier when variable net exports are included in aggregate expenditures is

If net exports increase by $350 billion at every level of income,the net export line will

Since imports are positively related to domestic income,a trade deficit will grow as domestic income expands.