Question 1

Refer to the above diagram for a private closed economy.The equilibrium level of GDP is:

Accepted Answer

A)  $400
B)  $300
C)  $250
D)  $375E) B) and D)
F) B) and C)

Question 2

Other things equal, the multiplier effect associated with a change in government spending is:

Accepted Answer

A)  the same as that associated with a change in taxes.
B)  equal to that associated with a change in investment or consumption.
C)  less than that associated with a change in investment.
D)  greater than that associated with a change in investment.E) A) and B)
F) A) and C)

Question 3

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  ×	imes×  MPC. E) B) and C)
F) None of the above

Question 4

Planned plus unplanned investment equals:

Accepted Answer

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

Question 5

When investment remains the same at each level of GDP in a private closed economy, the slope of the aggregate expenditures schedule:

Accepted Answer

A)  exceeds the MPC.
B)  is less than the MPC.
C)  equals the MPS.
D)  equals the MPC.E) B) and C)
F) C) and D)

Question 6

If an unplanned increase in business inventories occurs at some level of GDP, then GDP:

Accepted Answer

A)  entails a rate of aggregate expenditures in excess of the rate of aggregate production.
B)  may be either above or below the equilibrium output.
C)  is too low for equilibrium.
D)  will decrease.E) All of the above
F) B) and D)

Question 7

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) A) and B)
F) All of the above

Question 8

Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If businesses were willing to invest $30 at each possible level of GDP, the equilibrium level of GDP would be:

Accepted Answer

A)  $462.5.
B)  $435.
C)  $420.
D)  $380.E) A) and B)
F) A) and C)

Question 9

Refer to the diagram below for a private closed economy.The multiplier is:

Accepted Answer

A)  GF/DE.
B)  GF/GB.
C)  FE/GF.
D)  AB/GF.E) A) and B)
F) A) and C)

Question 10

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the:

Accepted Answer

A)  saving schedule will shift upward by $5 billion.
B)  consumption schedule will shift downward by $25 billion.
C)  consumption schedule will shift downward by $20 billion.
D)  consumption schedule will shift upward by $25 billion.E) B) and C)
F) A) and D) C

Question 11

An upward shift of the aggregate expenditures schedule might be caused by:

Accepted Answer

A)  a decrease in exports, with no change in imports.
B)  a decrease in imports, with no change in exports.
C)  an increase in exports, with an equal decrease in investment spending.
D)  an increase in imports, with no change in exports.E) B) and C)
F) None of the above

Question 12

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

Accepted Answer

A) True 
 B)False  False

Question 13

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) A) and B)
F) A) and C)

Question 14

4. B) Y3. C) Y2. D) Y1." class="answers-bank-image d-inline" rel="preload" > The equilibrium level of GDP for the above private open economy is:

Accepted Answer

A)  Y4.
B)  Y3.
C)  Y2.
D)  Y1.E) C) and D)
F) B) and D)

Question 15

g cuts the 45-degree line. B) GDP is $180 billion. C) GDP is $60 billion. D) GDP is also zero." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram for a private closed economy.Aggregate saving in this economy will be zero when:

Accepted Answer

A)  C + Ig cuts the 45-degree line.
B)  GDP is $180 billion.
C)  GDP is $60 billion.
D)  GDP is also zero.E) B) and D)
F) C) and D)

Question 16

Refer to the above diagram.The level of government spending:

Accepted Answer

A)  is equal to tax collections at each level of GDP.
B)  is the same at all levels of GDP.
C)  varies inversely with the level of GDP.
D)  varies directly with the level of GDP.E) A) and C)
F) A) and B)

Question 17

The recessionary expenditure gap is the amount by which the equilibrium GDP and the full-employment GDP differ.

Accepted Answer

A) True 
 B)False  False

Question 18

3, the: A) inflationary GDP gap is BC. B) recessionary GDP gap is BC. C) recessionary GDP gap is AB. D) inflationary expenditure gap is ed." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3, the:

Accepted Answer

A)  inflationary GDP gap is BC.
B)  recessionary GDP gap is BC.
C)  recessionary GDP gap is AB.
D)  inflationary expenditure gap is ed.E) None of the above
F) C) and D)

Question 19

Complete the following table and answer the next question(s)  on the basis of the resulting data.All figures are in billions of dollars.  Refer to the above table.For the open economy the equilibrium GDP and the multiplier will be:

Accepted Answer

A)  $300 and 2.5.
B)  $450 and 5.
C)  $400 and 4.
D)  $400 and 5.E) B) and C)
F) A) and D)

Question 20

The tax in the above economy is a:

Accepted Answer

A)  10 percent proportional tax.
B)  lump-sum tax of $20.
C)  lump-sum tax of $10.
D)  progressive tax.E) C) and D)
F) All of the above

Exam 11: Part B: The Aggregate Expenditures Model

Refer to the above diagram for a private closed economy.The equilibrium level of GDP is:

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Other things equal, the multiplier effect associated with a change in government spending is:

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

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Planned plus unplanned investment equals:

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When investment remains the same at each level of GDP in a private closed economy, the slope of the aggregate expenditures schedule:

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If an unplanned increase in business inventories occurs at some level of GDP, then GDP:

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

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Refer to the above diagram which is for a private closed economy.All figures are in billions of dollars.If businesses were willing to invest $30 at each possible level of GDP, the equilibrium level of GDP would be:

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Refer to the diagram below for a private closed economy.The multiplier is:

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If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the:

Correct AnswerverifiedC

An upward shift of the aggregate expenditures schedule might be caused by:

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

Correct AnswerverifiedFalse

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

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The equilibrium level of GDP for the above private open economy is:

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Refer to the above diagram for a private closed economy.Aggregate saving in this economy will be zero when:

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Refer to the above diagram.The level of government spending:

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The recessionary expenditure gap is the amount by which the equilibrium GDP and the full-employment GDP differ.

Correct AnswerverifiedFalse

Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3, the:

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Complete the following table and answer the next question(s) on the basis of the resulting data.All figures are in billions of dollars. Refer to the above table.For the open economy the equilibrium GDP and the multiplier will be:

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The tax in the above economy is a:

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C

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

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False

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False

Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₃, the:

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