Question 1

Other things equal,the slope of the aggregate expenditures schedule will increase as a result of:

Accepted Answer

A)   a decline in the size of the inflationary gap.
B)   an increase in the MPC.
C)   an increase in the MPS.
D)   a decline in the general price level.E) A) and B)
F) B) and D)

Question 2

The equilibrium level of GDP is associated with:

Accepted Answer

A)   an excess of planned investment over saving.
B)   no unintended changes in inventories.
C)   an unintended decrease in business inventories.
D)   an unintended increase in business inventories.E) B) and C)
F) All of the above

Question 3

If the United States wants to increase its net exports in the short term,it might take steps to:

Accepted Answer

A)   increase its GDP.
B)   reduce existing tariffs and import quotas.
C)   appreciate the dollar compared to foreign currencies.
D)   depreciate the dollar compared to foreign currencies.E) None of the above
F) All of the above

Question 4

If a $10 billion decrease in lump-sum taxes increases equilibrium GDP by $40 billion,then:

Accepted Answer

A)   the multiplier is 4.
B)   the MPC for this economy is .8.
C)   the MPC for this economy is .6.
D)   the multiplier is 3.E) C) and D)
F) All of the above

Question 5

Answer the question on the basis of the following information for a private closed economy:   Gross Domestic Product ‾ Consumption ‾$100$100200160300220400280500340600440 Expected Rate of Return ‾ Amount of Investment ‾15%$01240980612031600200\begin{array}{l}\begin{array} { c c } \underline{	ext { Gross Domestic Product } }& \underline{	ext { Consumption } }\\$100& \$ 100 \200 & 160 \300 & 220 \400 & 280 \500 & 340 \600 & 440\end{array}\\begin{array} { c c c } \underline{	ext { Expected Rate of Return }} & \underline{	ext { Amount of Investment }} \15 \% & \$ 0 \12 & 40 \9 & 80 \6 & 120 \3 & 160 \0 & 200\end{array}\end{array} Gross Domestic Product ​$100200300400500600​ Consumption ​$100160220280340440​ Expected Rate of Return ​15%129630​ Amount of Investment ​$04080120160200​​  Refer to the information.In this economy,a 3 percentage point decrease in the interest rate will:

Accepted Answer

A)   increase equilibrium GDP by $200.
B)   increase equilibrium GDP by $50.
C)   increase equilibrium GDP by $100.
D)   decrease equilibrium GDP by $50. E) B) and C)
F) B) and D)

Question 6

Answer the question below on the basis of the following information for a private closed economy:   Gross Domestic Product ‾ Consumption ‾$100$120200180300240400300500360 Expected Rate of Return ‾ Amount of Investment ‾25%$0202015401060580\begin{array}{l}\begin{array} { c c } \underline{	ext { Gross Domestic Product }} &\underline{ 	ext { Consumption }} \\$100& \$ 120 \200 & 180 \300 & 240 \400 & 300 \500 & 360\end{array}\\begin{array} { c c } \underline{	ext { Expected Rate of Return }} &\underline{ 	ext { Amount of Investment }} \ 25 \% & \$ 0 \20 & 20 \15 & 40 \10 & 60 \5 & 80\end{array}\end{array} Gross Domestic Product ​$100200300400500​ Consumption ​$120180240300360​ Expected Rate of Return ​25%2015105​ Amount of Investment ​$020406080​​  Refer to the information.The multiplier for this economy is:

Accepted Answer

A)   2.
B)   2.5.
C)   3.
D)   4. E) A) and B)
F) C) and D)

Question 7

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

Accepted Answer

A)   increase GDP by $100 billion.
B)   reduce GDP by $4 billion.
C)   decrease GDP by $100 billion.
D)   increase GDP by $20 billion.E) B) and D)
F) None of the above

Question 8

(Advanced analysis) Answer the question on the basis of the following information for a private open economy.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=40+0.8Ytg=Ig‾=40X=Xˉ=20M=Mˉ=30\begin{array} { l } C = 40 + 0.8 Y \t _ { g } = \overline { I _ { g } } = 40 \X = \bar { X } = 20 \M = \bar { M } = 30\end{array}C=40+0.8Ytg​=Ig​​=40X=Xˉ=20M=Mˉ=30​  Refer to the information.In equilibrium,saving is:

Accepted Answer

A)   $20.
B)   $30.
C)   $40.
D)   $50. E) All of the above
F) A) and D)

Question 9

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

Accepted Answer

A)   reduce the absolute levels of consumption and saving at each level of GDP and to reduce the size of the multiplier.
B)   reduce the absolute levels of consumption and saving at each level of GDP but to not change the size of the multiplier.
C)   reduce the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier.
D)   increase the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier.E) A) and B)
F) A) and C)

Question 10

(Advanced analysis) Answer the question on the basis of the following information for a private open economy.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=40+0.8Ytg=Ig‾=40X=Xˉ=20M=Mˉ=30\begin{array} { l } C = 40 + 0.8 Y \t _ { g } = \overline { I _ { g } } = 40 \X = \bar { X } = 20 \M = \bar { M } = 30\end{array}C=40+0.8Ytg​=Ig​​=40X=Xˉ=20M=Mˉ=30​  Refer to the information.This nation is incurring:

Accepted Answer

A)   a trade surplus.
B)   balance in its international trade.
C)   a trade deficit.
D)   unemployment. E) B) and C)
F) All of the above

Question 11

If the marginal propensity to consume in an economy is .8,net exports are zero,and government spending is $33 billion at each level of real GDP,the slope of the economy's aggregate expenditures schedule will be:

Accepted Answer

A)   .8.
B)   .2.
C)   5.
D)   .125.E) All of the above
F) C) and D)

Question 12

In the aggregate expenditures model presented in the textbook,investment is assumed to rise with increases in real GDP and fall with decreases in real GDP.

Accepted Answer

A) True 
 B)False

Question 13

If a $20 billion increase in government expenditures increases equilibrium GDP by $50 billion,then:

Accepted Answer

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

Question 14

If a lump-sum tax of $40 billion is imposed and the MPC is .6,the saving schedule will shift:

Accepted Answer

A)   downward by $24 billion.
B)   upward by $24 billion.
C)   downward by $16 billion.
D)   upward by $16 billion.E) A) and D)
F) B) and C)

Question 15

(Advanced analysis) Answer the question on the basis of the following information for a private closed economy.  S=−20+0.4YIg=25−3i\begin{array} { l } S = - 20 + 0.4 Y \I _ { g } = 25 - 3 i\end{array}S=−20+0.4YIg​=25−3i​  where S is saving,Ig is gross investment,i is the real interest rate,and Y is GDP. Refer to the information.In equilibrium,the level of consumption will be:

Accepted Answer

A)   $80.
B)   $95.
C)   $65.
D)   $70. E) None of the above
F) B) and D)

Question 16

What do investment and government expenditures have in common?

Accepted Answer

A)   Both represent injections to the circular flow.
B)   Both represent leakages from the circular flow.
C)   Neither is subject to the multiplier effect.
D)   Both represent a decline in indebtedness.E) C) and D)
F) All of the above

Question 17

At the $180 billion equilibrium level of income,saving is $38 billion in a private closed economy.Planned investment must be:

Accepted Answer

A)   $138 billion.
B)   $126 billion.
C)   $38 billion.
D)   $180 billion.E) B) and C)
F) A) and C)

Question 18

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

Accepted Answer

A)   $280 billion.
B)   $320 billion.
C)   $262 billion.
D)   $198 billion.E) C) and D)
F) A) and B)

Question 19

For an open mixed economy,the equilibrium level of GDP is determined where Sa + Ig + X = T +
G.

Accepted Answer

A) True 
 B)False

Question 20

If aggregate expenditures exceed GDP in a private closed economy:

Accepted Answer

A)   leakages will exceed injections.
B)   planned investment will exceed saving.
C)   unplanned investment in inventories will occur.
D)   saving will exceed planned investment.E) A) and D)
F) B) and C)

Exam 30: The Aggregate Expenditures Model

At the $180 billion equilibrium level of income,saving is $38 billion in a private closed economy.Planned investment must be:

Correct Answer
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Correct Answer
verified

In the aggregate expenditures model presented in the textbook,investment is assumed to rise with increases in real GDP and fall with decreases in real GDP.

Correct Answer
verified

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

Correct Answer
verified

The equilibrium level of GDP is associated with:

Correct Answer
verified

If a $20 billion increase in government expenditures increases equilibrium GDP by $50 billion,then:

Correct Answer
verified

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

Correct Answer
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Correct Answer
verified

If the United States wants to increase its net exports in the short term,it might take steps to:

Correct Answer
verified

If a lump-sum tax of $40 billion is imposed and the MPC is .6,the saving schedule will shift:

Correct Answer
verified

What do investment and government expenditures have in common?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

If a $10 billion decrease in lump-sum taxes increases equilibrium GDP by $40 billion,then:

Correct Answer
verified

Other things equal,the slope of the aggregate expenditures schedule will increase as a result of:

Correct Answer
verified

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

Correct Answer
verified

If aggregate expenditures exceed GDP in a private closed economy:

Correct Answer
verified

Correct Answer
verified

If the marginal propensity to consume in an economy is .8,net exports are zero,and government spending is $33 billion at each level of real GDP,the slope of the economy's aggregate expenditures schedule will be:

Correct Answer
verified

Correct Answer
verified

Exam 30: The Aggregate Expenditures Model

At the $180 billion equilibrium level of income,saving is $38 billion in a private closed economy.Planned investment must be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the aggregate expenditures model presented in the textbook,investment is assumed to rise with increases in real GDP and fall with decreases in real GDP.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The equilibrium level of GDP is associated with:

Correct AnswerverifiedShow Answer

If a $20 billion increase in government expenditures increases equilibrium GDP by $50 billion,then:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the United States wants to increase its net exports in the short term,it might take steps to:

Correct AnswerverifiedShow Answer

If a lump-sum tax of $40 billion is imposed and the MPC is .6,the saving schedule will shift:

Correct AnswerverifiedShow Answer

What do investment and government expenditures have in common?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For an open mixed economy,the equilibrium level of GDP is determined where Sa + Ig + X = T + G.

Correct AnswerverifiedShow Answer

If a $10 billion decrease in lump-sum taxes increases equilibrium GDP by $40 billion,then:

Correct AnswerverifiedShow Answer

Other things equal,the slope of the aggregate expenditures schedule will increase as a result of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If aggregate expenditures exceed GDP in a private closed economy:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the marginal propensity to consume in an economy is .8,net exports are zero,and government spending is $33 billion at each level of real GDP,the slope of the economy's aggregate expenditures schedule will be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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