Question 1

-Refer to the above data.If gross investment is $120,the equilibrium level of GDP will be:

Accepted Answer

A)   $380
B)   $370
C)   $360
D)   $400

Question 2

If government increases its tax revenues by $15 billion and the MPC is 2/3,then we can expect the equilibrium GDP to:

Accepted Answer

A)   decrease by $30 billion.
B)   decrease by $45 billion.
C)   decrease by $35 billion.
D)   decrease by $55 billion.

Question 3

Other things being equal,the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n) :

Accepted Answer

A)   rightward shift in the investment-demand schedule.
B)   downward shift in the consumption schedule.
C)   upward shift in the consumption schedule.
D)   upward shift in the investment schedule.

Question 4

If government increases lump-sum taxes by $20 billion and the economy's MPC is .6,then the:

Accepted Answer

A)   consumption schedule will shift upward by $12 billion.
B)   consumption schedule will shift downward by $12 billion.
C)   equilibrium GDP will increase by $40 billion.
D)   equilibrium GDP will decrease by $12 billion.

Question 5

If government increases its purchases by $15 billion and the MPC is 2/3,then we would expect the equilibrium GDP to:

Accepted Answer

A)   increase by $30 billion.
B)   increase by $45 billion.
C)   decrease by $35 billion.
D)   increase by $50 billion.

Question 6

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

Accepted Answer

A)   GDP will increase by $64.
B)   GDP will decrease by $64.
C)   the aggregate expenditures schedule will shift downward by $12.
D)   inflation will occur.

Question 7

An exchange rate:

Accepted Answer

A)   is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports.
B)   measures the interest rate ratios of any two nations.
C)   is the amount which one nation must export to obtain $1 worth of imports.
D)   is the price at which the currencies of any two nations exchange for one another.

Question 8

The letters Y,Ca,Ig,Xn,G,and T stand for GDP,consumption,gross investment,net exports,government purchases,and net taxes respectively.Figures are in billions of dollars.
Ca = 25 + .75(Y - T ) 
Ig = Ig0 = 50
Xn = Xn0 = 10
G = G0 = 70
T = T0 = 30
-Refer to the above information.The equilibrium level of GDP for this economy is:

Accepted Answer

A)   $600
B)   $530
C)   $415
D)   $400

Question 9

-Refer to the above diagrams.Other things equal,Curve B will shift upward when:

Accepted Answer

A)   the level of GDP increases.
B)   the interest rate increases.
C)   curve A shifts to the left.
D)   curve A shifts to the right.

Question 10

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

Accepted Answer

A)   aggregate expenditures and GDP are equal.
B)   consumption is $250 and planned investment is $50.
C)   saving equals investment.
D)   all of the above are true.

Question 11

The equilibrium level of GDP in a private closed economy is where:

Accepted Answer

A)   MPC = APC.
B)   unemployment is about 3 percent of the labor force.
C)   planned consumption equals saving.
D)   saving equals planned investment.

Question 12

The equilibrium GDP is the level of domestic output:

Accepted Answer

A)   where consumption equals saving.
B)   where actual investment equals consumption.
C)   which is sustainable.
D)   where full employment exists.

Question 13

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1,the: 1,the:   A)  inflationary expenditure gap is hg. B)  recessionary expenditure gap is BC. C)  inflationary expenditure gap is zero. D)  inflationary expenditure gap is ed." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   inflationary expenditure gap is hg.
B)   recessionary expenditure gap is BC.
C)   inflationary expenditure gap is zero.
D)   inflationary expenditure gap is ed.

Question 14

-The equilibrium level of GDP in the above open economy:

Accepted Answer

A)   is $100.
B)   is $250.
C)   is $350.
D)   is $500.

Question 15

In a mixed closed economy:

Accepted Answer

A)   government purchases and saving are injections,while investment and taxes are leakages.
B)   taxes and government purchases are leakages,while investment and saving are injections.
C)   taxes and savings are leakages,while investment and government purchases are injections.
D)   taxes and investment are injections,while saving and government purchases are leakages.

Question 16

-If government decreases its purchases by $20 billion and the MPC is 0.8,equilibrium GDP will decrease by $100 billion.

Accepted Answer

A) True 
 B)False

Question 17

-Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Accepted Answer

A)   aggregate expenditures exceed GDP with the result that GDP will rise.
B)   consumption is $350 and planned investment is zero so that aggregate expenditures are $350.
C)   consumption is $300 and planned investment is $50 so that aggregate expenditures are $350.
D)   consumption is $300 and actual investment is $100 so that aggregate expenditures are $400.

Question 18

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
-The multiplier for the above economy is:

Accepted Answer

A)   4.60.
B)   3.33.
C)   5.00.
D)   4.00.

Question 19

In a private closed economy,aggregate expenditures will equal GDP where:

Accepted Answer

A)   consumption equals investment.
B)   consumption plus investment equals aggregate expenditures.
C)   planned investment equals saving.
D)   disposable income equals consumption minus saving.

Question 20

-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:

Accepted Answer

A)   $100
B)   $200
C)   $300
D)   $400

Exam 11: The Aggregate Expenditures Model

An exchange rate:

Correct Answer
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In a private closed economy,aggregate expenditures will equal GDP where:

Correct Answer
verified

-Refer to the above data.If gross investment is $120,the equilibrium level of GDP will be:

Correct Answer
verified

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

Correct Answer
verified

-Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Correct Answer
verified

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

Correct Answer
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Correct Answer
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-Refer to the above diagrams.Other things equal,Curve B will shift upward when:

Correct Answer
verified

-If government decreases its purchases by $20 billion and the MPC is 0.8,equilibrium GDP will decrease by $100 billion.

Correct Answer
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-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:

Correct Answer
verified

If government increases its tax revenues by $15 billion and the MPC is 2/3,then we can expect the equilibrium GDP to:

Correct Answer
verified

In a mixed closed economy:

Correct Answer
verified

Other things being equal,the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n) :

Correct Answer
verified

The equilibrium level of GDP in a private closed economy is where:

Correct Answer
verified

The equilibrium GDP is the level of domestic output:

Correct Answer
verified

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₁,the:

Correct Answer
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If government increases its purchases by $15 billion and the MPC is 2/3,then we would expect the equilibrium GDP to:

Correct Answer
verified

If government increases lump-sum taxes by $20 billion and the economy's MPC is .6,then the:

Correct Answer
verified

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 -The multiplier for the above economy is:

Correct Answer
verified

-The equilibrium level of GDP in the above open economy:

Correct Answer
verified

Exam 11: The Aggregate Expenditures Model

An exchange rate:

Correct AnswerverifiedShow Answer

In a private closed economy,aggregate expenditures will equal GDP where:

Correct AnswerverifiedShow Answer

-Refer to the above data.If gross investment is $120,the equilibrium level of GDP will be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Correct AnswerverifiedShow Answer

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy.We can predict that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Refer to the above diagrams.Other things equal,Curve B will shift upward when:

Correct AnswerverifiedShow Answer

-If government decreases its purchases by $20 billion and the MPC is 0.8,equilibrium GDP will decrease by $100 billion.

Correct AnswerverifiedShow Answer

-Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:

Correct AnswerverifiedShow Answer

If government increases its tax revenues by $15 billion and the MPC is 2/3,then we can expect the equilibrium GDP to:

Correct AnswerverifiedShow Answer

In a mixed closed economy:

Correct AnswerverifiedShow Answer

Other things being equal,the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n) :

Correct AnswerverifiedShow Answer

The equilibrium level of GDP in a private closed economy is where:

Correct AnswerverifiedShow Answer

The equilibrium GDP is the level of domestic output:

Correct AnswerverifiedShow Answer

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1,the:

Correct AnswerverifiedShow Answer

If government increases its purchases by $15 billion and the MPC is 2/3,then we would expect the equilibrium GDP to:

Correct AnswerverifiedShow Answer

If government increases lump-sum taxes by $20 billion and the economy's MPC is .6,then the:

Correct AnswerverifiedShow Answer

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 -The multiplier for the above economy is:

Correct AnswerverifiedShow Answer

-The equilibrium level of GDP in the above open economy:

Correct AnswerverifiedShow Answer

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Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₁,the:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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 -The multiplier for the above economy is:

Correct Answer
verified

Correct Answer
verified