Question 1

Refer to the diagram below.The change in aggregate expenditures as shown from (C + Ig + Xn2)  to (C + Ig + Xn1)  might be caused by: g + Xn2)  to (C + Ig + Xn1)  might be caused by:   A) an appreciation of this nation's currency relative to the currencies of its trading partners. B) a depreciation of this nation's currency relative to the currencies of its trading partners. C) a decrease in this nation's price level relative to price levels abroad. D) a rightward shift in this nation's aggregate supply curve." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  an appreciation of this nation's currency relative to the currencies of its trading partners.
B)  a depreciation of this nation's currency relative to the currencies of its trading partners.
C)  a decrease in this nation's price level relative to price levels abroad.
D)  a rightward shift in this nation's aggregate supply curve.E) A) and B)
F) None of the above

Question 2

Which of the following statements is correct for a private closed economy?

Accepted Answer

A)  Saving equals planned investment only at the equilibrium level of domestic output.
B)  All levels of domestic output where planned investment exceeds saving will be too high for equilibrium.
C)  Planned and actual investment are identical at all possible levels of domestic output.
D)  Saving equals actual investment only at the equilibrium level of domestic output.E) C) and D)
F) A) and C)

Question 3

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income, consumption spending would decrease by:

Accepted Answer

A)  $100 billion.
B)  $40 billion.
C)  $90 billion
D)  $50 billion.E) B) and C)
F) A) and B)

Question 4

Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y3.

Accepted Answer

A) True 
 B)False

Question 5

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports 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.If government desired to raise the equilibrium GDP to $650, it could:

Accepted Answer

A)  raise G by $45 and reduce T by $10.
B)  raise G by $40 and reduce T by $30.
C)  raise G by $30 or reduce T by $40.
D)  raise both G and T by $40.E) C) and D)
F) None of the above

Question 6

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.E) None of the above
F) All of the above

Question 7

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) B) and D)
F) B) and C)

Question 8

Investment and saving are, respectively:

Accepted Answer

A)  income and wealth.
B)  stocks and flows.
C)  injections and leakages.
D)  leakages and injections.E) B) and D)
F) A) and B)

Question 9

If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then:

Accepted Answer

A)  unplanned investment must be occurring.
B)  net exports must be $300 billion.
C)  S + C must equal $300 billion.
D)  Ig + Xn must equal $300 billion.E) All of the above
F) A) and B)

Question 10

If the marginal propensity to consume is.80 and both taxes and government purchases increase by $50 billion, GDP will:

Accepted Answer

A)  increase by $50 billion.
B)  decrease by $50 billion.
C)  increase by $10 billion.
D)  decrease by $10 billion.E) C) and D)
F) None of the above

Question 11

The investment schedule of an economy is:

Accepted Answer

A)  horizontal.
B)  vertical.
C)  downward sloping.
D)  upward sloping.E) A) and B)
F) B) and D)

Question 12

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports 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.If the economy's tax schedule was T = 0.2Y rather than T = T0 = 30, the equilibrium GDP would be:

Accepted Answer

A)  $387.3.
B)  $518.5.
C)  $316
D)  $412E) B) and C)
F) B) and D)

Question 13

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

Accepted Answer

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

Question 14

The equilibrium level of GDP in the economy in the above diagram:

Accepted Answer

A)  is $100.
B)  is $200.
C)  is $240.
D)  is $320.E) B) and D)
F) A) and C)

Question 15

n2, the GDP in the open economy will exceed GDP in the closed economy by: A) AB. B) AD. C) FG. D) BD." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If net exports are Xn2, the GDP in the open economy will exceed GDP in the closed economy by:

Accepted Answer

A)  AB.
B)  AD.
C)  FG.
D)  BD.E) All of the above
F) None of the above

Question 16

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.E) B) and C)
F) A) and B)

Question 17

Which of the following occurred during the recession of 2008-2009?

Accepted Answer

A)  Both after-tax consumption and government expenditures declined.
B)  Both after-tax consumption and investment expenditures declined.
C)  Both government expenditures and investment expenditures declined.
D)  Government expenditures declined but after-tax consumption increasedE) A) and B)
F) A) and C)

Question 18

If net exports decrease from zero to some negative amount, the aggregate expenditures schedule would:

Accepted Answer

A)  shift upward.
B)  shift downward.
C)  not move (net exports do not affect aggregate expenditures) .
D)  shift upward or downward, depending on whether the negative net exports resulted from a decline in exports or an increase in imports.E) C) and D)
F) B) and C)

Question 19

Refer to the above diagram for a private closed economy.At the $200 level of GDP:

Accepted Answer

A)  consumption is $200 and planned investment is $50 so that aggregate expenditures are $250.
B)  consumption is $200 and planned investment is $100 so that aggregate expenditures are $300.
C)  consumption is $250 and actual investment is $50 so that aggregate expenditures are $300.
D)  aggregate expenditures is equal to the GDP.E) All of the above
F) A) and D)

Question 20

Saving is always equal to:

Accepted Answer

A)  planned less unintended investment.
B)  actual investment.
C)  planned investment.
D)  unintended investment.E) A) and B)
F) B) and D)

Exam 11: B: The Aggregate Expenditures Model

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

Correct Answer
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Refer to the above diagram.If net exports are X_n2, the GDP in the open economy will exceed GDP in the closed economy by:

Correct Answer
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Which of the following statements is correct for a private closed economy?

Correct Answer
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If net exports decrease from zero to some negative amount, the aggregate expenditures schedule would:

Correct Answer
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If the marginal propensity to consume is.80 and both taxes and government purchases increase by $50 billion, GDP will:

Correct Answer
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Which of the following occurred during the recession of 2008-2009?

Correct Answer
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Refer to the above diagram for a private closed economy.At the $200 level of GDP:

Correct Answer
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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
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Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income, consumption spending would decrease by:

Correct Answer
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Saving is always equal to:

Correct Answer
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Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y₃.

Correct Answer
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What do investment and government expenditures have in common?

Correct Answer
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Refer to the diagram below.The change in aggregate expenditures as shown from (C + I_g + X_n2) to (C + I_g + X_n1) might be caused by:

Correct Answer
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The investment schedule of an economy is:

Correct Answer
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Investment and saving are, respectively:

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The equilibrium level of GDP in the economy in the above diagram:

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

Correct Answer
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If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then:

Correct Answer
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Exam 11: B: The Aggregate Expenditures Model

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

Correct AnswerverifiedShow Answer

Refer to the above diagram.If net exports are Xn2, the GDP in the open economy will exceed GDP in the closed economy by:

Correct AnswerverifiedShow Answer

Which of the following statements is correct for a private closed economy?

Correct AnswerverifiedShow Answer

If net exports decrease from zero to some negative amount, the aggregate expenditures schedule would:

Correct AnswerverifiedShow Answer

If the marginal propensity to consume is.80 and both taxes and government purchases increase by $50 billion, GDP will:

Correct AnswerverifiedShow Answer

Which of the following occurred during the recession of 2008-2009?

Correct AnswerverifiedShow Answer

Refer to the above diagram for a private closed economy.At the $200 level of GDP:

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

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income, consumption spending would decrease by:

Correct AnswerverifiedShow Answer

Saving is always equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y3.

Correct AnswerverifiedShow Answer

What do investment and government expenditures have in common?

Correct AnswerverifiedShow Answer

Refer to the diagram below.The change in aggregate expenditures as shown from (C + Ig + Xn2) to (C + Ig + Xn1) might be caused by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The investment schedule of an economy is:

Correct AnswerverifiedShow Answer

Investment and saving are, respectively:

Correct AnswerverifiedShow Answer

The equilibrium level of GDP in the economy in the above diagram:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then:

Correct AnswerverifiedShow Answer

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Refer to the above diagram.If net exports are X_n2, the GDP in the open economy will exceed GDP in the closed economy by:

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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:

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Refer to the above diagram.The equilibrium level of GDP for this private open economy is Y₃.

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Refer to the diagram below.The change in aggregate expenditures as shown from (C + I_g + X_n2) to (C + I_g + X_n1) might be caused by:

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