Question 1

Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If gross investment is $15, the equilibrium level of GDP:

Accepted Answer

A)  is $30.
B)  is $380.
C)  is $300.
D)  is $340.E) All of the above
F) B) and C)

Question 2

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 3

Refer to the above diagram for a private closed economy.At the $100 level of GDP:

Accepted Answer

A)  aggregate expenditures will exceed GDP, causing GDP to fall.
B)  planned investment will exceed saving, but actual investment will be equal to saving.
C)  households will consume more than their income.
D)  saving will be $40.E) A) and B)
F) None of the above

Question 4

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) None of the above

Question 5

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

Accepted Answer

A)  net exports fall and contribute to demand-pull inflation
B)  net exports rise and contribute to demand-pull inflation
C)  net exports fall, but equilibrium GDP rises
D)  net exports rise, but equilibrium GDP fallsE) A) and D)
F) B) and C)

Question 6

If S = -60 + 0.25Y 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.E) All of the above
F) A) and C)

Question 7

Other things equal, if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP:

Accepted Answer

A)  unemployment will decrease domestically.
B)  Canadian GDP will fall.
C)  inflation will occur domestically.
D)  Canadian real GDP will rise.E) None of the above
F) A) and B)

Question 8

Actual investment equals saving:

Accepted Answer

A)  at all levels of GDP.
B)  at all below-equilibrium levels of GDP.
C)  at all above-equilibrium levels of GDP.
D)  only at the equilibrium GDP.E) A) and B)
F) None of the above

Question 9

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.E) A) and B)
F) B) and D)

Question 10

In moving from a private closed to a mixed closed economy in the aggregate expenditures model, taxes:

Accepted Answer

A)  must be added to gross investment.
B)  must be added to saving.
C)  must be added to consumption and gross investment.
D)  have no impact upon the equilibrium GDP.E) A) and C)
F) None of the above

Question 11

The open economy multiplier is:

Accepted Answer

A)  larger than the simple multiplier because the latter embodies fewer leakages.
B)  larger than the simple multiplier because the latter embodies more leakages.
C)  smaller than the simple multiplier because the latter embodies fewer leakages.
D)  smaller than the simple multiplier because the latter embodies more leakages.E) B) and C)
F) B) and D)

Question 12

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.E) C) and D)
F) A) and D)

Question 13

The inequality of saving and planned investment:

Accepted Answer

A)  is attributable to a low MPC.
B)  may be of considerable significance because of the subsequent changes in income, employment, and the price level.
C)  is of no consequence because a compensating inequality of tax collections and government spending will always occur.
D)  is of no consequence because saving and actual investment will always be equal.E) A) and D)
F) A) and C)

Question 14

In a private closed economy, saving is always equal to:

Accepted Answer

A)  the sum of planned investment and unplanned changes in inventories.
B)  the difference between planned investment and unplanned changes in inventories.
C)  the sum of planned investment and planned changes in inventories.
D)  the difference between planned investment and planned changes in inventories.E) None of the above
F) B) and C)

Question 15

In an aggregate expenditures diagram the imposition of a lump-sum tax (T)  will:

Accepted Answer

A)  not affect the C + Ig + Xn line.
B)  shift the C + Ig + Xn line upward by an amount equal to T.
C)  shift the C + Ig + Xn line downward by an amount equal to T.
D)  shift the C + Ig + Xn line downward by an amount equal to T * MPC.E) A) and C)
F) A) and B)

Question 16

Refer to the above diagram.International trade has an expansionary effect on this economy.

Accepted Answer

A) True 
 B)False

Question 17

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)  $400E) None of the above
F) B) and C)

Question 18

For a private closed economy aggregate expenditures consist of:

Accepted Answer

A)  C + Ig.
B)  C - Ig.
C)  C + S.
D)  C - S.E) A) and B)
F) A) and C)

Question 19

Refer to the information below.The multiplier for this economy:

Accepted Answer

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

Question 20

The relationship between investment and GDP is shown by the:

Accepted Answer

A)  consumption of fixed capital schedule.
B)  saving schedule.
C)  investment schedule.
D)  consumption schedule.E) None of the above
F) A) and C)

Exam 11: B: The Aggregate Expenditures Model

Actual investment equals saving:

Correct AnswerverifiedShow Answer

The open economy multiplier is:

Correct AnswerverifiedShow Answer

Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If gross investment is $15, the equilibrium level of GDP:

Correct AnswerverifiedShow Answer

In an aggregate expenditures diagram the imposition of a lump-sum tax (T) will:

Correct AnswerverifiedShow Answer

In moving from a private closed to a mixed closed economy in the aggregate expenditures model, taxes:

Correct AnswerverifiedShow Answer

The relationship between investment and GDP is shown by the:

Correct AnswerverifiedShow Answer

Refer to the above diagram.International trade has an expansionary effect on this economy.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

Correct AnswerverifiedShow Answer

For a private closed economy aggregate expenditures consist of:

Correct AnswerverifiedShow Answer

If S = -60 + 0.25Y 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:

Correct AnswerverifiedShow Answer

The equilibrium level of GDP is associated with:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things equal, if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP:

Correct AnswerverifiedShow Answer

The inequality of saving and planned investment:

Correct AnswerverifiedShow Answer

Refer to the above diagram for a private closed economy.At the $100 level of GDP:

Correct AnswerverifiedShow Answer

Refer to the information below.The multiplier for this economy:

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

In a private closed economy, saving is always equal to:

Correct AnswerverifiedShow Answer

Equal increases in government purchases and taxes will:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If S = -60 + 0.25Y 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:

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified