Question 1

In a private closed economy _____ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _____ investment is equal to saving.

Accepted Answer

A)  planned; actual
B)  actual; planned
C)  gross; net
D)  net; grossE) A) and B)
F) All of the above

Question 2

Assuming the MPC is .75, an equal $10 billion increases in government spending and tax collections will:

Accepted Answer

A)  leave the equilibrium GDP unchanged.
B)  increase the equilibrium GDP by $10 billion.
C)  increase the equilibrium GDP by $2.5 billion.
D)  reduce the equilibrium GDP by $10 billion.E) A) and B)
F) All of the above

Question 3

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)  $400E) A) and B)
F) A) and C)

Question 4

In equilibrium in the above private open economy:

Accepted Answer

A)  imports exceed exports.
B)  net exports are a positive amount.
C)  a balance of payments surplus exists.
D)  exports exceed imports.E) B) and C)
F) All of the above

Question 5

Refer to the above diagram.In equilibrium net exports are positive.

Accepted Answer

A) True 
 B)False

Question 6

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I0 = 30
Refer to the above data.In equilibrium, the level of saving will be:

Accepted Answer

A)  30
B)  26
C)  25
D)  60E) None of the above
F) B) and D)

Question 7

In reality, if a nation imposes tariffs, then the final result will be that net exports and GDP will decrease.

Accepted Answer

A) True 
 B)False

Question 8

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 B)
F) A) and C)

Question 9

Suppose that a mixed open economy is producing at its equilibrium level of income and that net exports are zero.If at the equilibrium income level the public sector's budget shows a surplus:

Accepted Answer

A)  Ca + Ig + Xn + G must exceed GDP.
B)  planned investment must exceed saving.
C)  a recessionary expenditure gap must exist.
D)  saving must exceed planned investment.E) A) and D)
F) None of the above

Question 10

The following schedule contains data for a private closed economy.All figures are in billions.Assume that gross investment is $10 billion.  Refer to the above data.If a lump-sum tax of $20 is imposed, the consumption schedule will become:

Accepted Answer

A)  Column A
B)  Column B
C)  Column C
D)  Column DE) None of the above
F) B) and D)

Question 11

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 C)
F) A) and B)

Question 12

g)  are the private expenditures in the closed economy and Xn2 are the net exports in the open economy: A) exports are negative. B) net exports are positive. C) net exports are negative. D) exports are positive." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If (C + Ig)  are the private expenditures in the closed economy and Xn2 are the net exports in the open economy:

Accepted Answer

A)  exports are negative.
B)  net exports are positive.
C)  net exports are negative.
D)  exports are positive.E) A) and C)
F) A) and B)

Question 13

In an open economy, the multiplier is 1 divided by:

Accepted Answer

A)  MPS + MPM.
B)  MPS.
C)  MPM.
D)  MPC.E) All of the above
F) A) and B)

Question 14

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) A) and D)
F) A) and C)

Question 15

Exports have the same macroeconomic effect on GDP as:

Accepted Answer

A)  imports.
B)  investment.
C)  taxes.
D)  saving.E) A) and B)
F) None of the above

Question 16

If the dollar appreciates relative to foreign currencies, we would expect:

Accepted Answer

A)  the multiplier to decrease.
B)  a country's exports and imports to both fall.
C)  a country's net exports to rise.
D)  a country's net exports to fall.E) A) and B)
F) A) and C)

Question 17

Complete the following table and answer the next question(s)  on the basis of the resulting data.All figures are in billions of dollars.  Other things equal, an increase in an economy's exports will:

Accepted Answer

A)  lower the marginal propensity to import.
B)  have no effect on domestic GDP because imports will change by an offsetting amount.
C)  decrease its domestic aggregate expenditures and therefore decrease its equilibrium GDP.
D)  increase its domestic aggregate expenditures and therefore increase its equilibrium GDP.E) None of the above
F) B) and D)

Question 18

Which of the following statements is incorrect?

Accepted Answer

A)  Given the economy's MPS, a $15 billion reduction in government spending will reduce the equilibrium GDP by more than would a $15 billion increase in taxes.
B)  Other things unchanged, a tax reduction of $10 billion will increase the equilibrium GDP by $25 billion when the MPS is 0.4.
C)  If the MPC is 0.8 and GDP has declined by $40 billion, this was caused by a decline in aggregate expenditures of $8 billion.
D)  A government surplus is anti-inflationary; a government deficit is expansionary.E) B) and D)
F) A) and C)

Question 19

Imports have the same macroeconomic effect on GDP as:

Accepted Answer

A)  exports.
B)  investment.
C)  consumption.
D)  saving.E) A) and B)
F) A) and C)

Question 20

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.E) A) and B)
F) None of the above

Exam 11: Part B: The Aggregate Expenditures Model

Refer to the above diagram.In equilibrium net exports are positive.

Correct Answer
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Which of the following statements is incorrect?

Correct Answer
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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. Other things equal, an increase in an economy's exports will:

Correct Answer
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The following schedule contains data for a private closed economy.All figures are in billions.Assume that gross investment is $10 billion. Refer to the above data.If a lump-sum tax of $20 is imposed, the consumption schedule will become:

Correct Answer
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The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I₀ = 30 Refer to the above data.In equilibrium, the level of saving will be:

Correct Answer
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Refer to the above diagram.If (C + I_g) are the private expenditures in the closed economy and X_n2 are the net exports in the open economy:

Correct Answer
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Correct Answer
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In a private closed economy _ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _ investment is equal to saving.

Correct Answer
verified

If the dollar appreciates relative to foreign currencies, we would expect:

Correct Answer
verified

Assuming the MPC is .75, an equal $10 billion increases in government spending and tax collections will:

Correct Answer
verified

Suppose that a mixed open economy is producing at its equilibrium level of income and that net exports are zero.If at the equilibrium income level the public sector's budget shows a surplus:

Correct Answer
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In an open economy, the multiplier is 1 divided by:

Correct Answer
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Exports have the same macroeconomic effect on GDP as:

Correct Answer
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The equilibrium GDP is the level of domestic output:

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

Correct Answer
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In reality, if a nation imposes tariffs, then the final result will be that net exports and GDP will decrease.

Correct Answer
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Imports have the same macroeconomic effect on GDP as:

Correct Answer
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Actual investment equals saving:

Correct Answer
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In equilibrium in the above private open economy:

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

Correct Answer
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Exam 11: Part B: The Aggregate Expenditures Model

Refer to the above diagram.In equilibrium net exports are positive.

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Complete the following table and answer the next question(s) on the basis of the resulting data.All figures are in billions of dollars. Other things equal, an increase in an economy's exports will:

Correct AnswerverifiedShow Answer

The following schedule contains data for a private closed economy.All figures are in billions.Assume that gross investment is $10 billion. Refer to the above data.If a lump-sum tax of $20 is imposed, the consumption schedule will become:

Correct AnswerverifiedShow Answer

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I0 = 30 Refer to the above data.In equilibrium, the level of saving will be:

Correct AnswerverifiedShow Answer

Refer to the above diagram.If (C + Ig) are the private expenditures in the closed economy and Xn2 are the net exports in the open economy:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a private closed economy _____ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _____ investment is equal to saving.

Correct AnswerverifiedShow Answer

If the dollar appreciates relative to foreign currencies, we would expect:

Correct AnswerverifiedShow Answer

Assuming the MPC is .75, an equal $10 billion increases in government spending and tax collections will:

Correct AnswerverifiedShow Answer

Suppose that a mixed open economy is producing at its equilibrium level of income and that net exports are zero.If at the equilibrium income level the public sector's budget shows a surplus:

Correct AnswerverifiedShow Answer

In an open economy, the multiplier is 1 divided by:

Correct AnswerverifiedShow Answer

Exports have the same macroeconomic effect on GDP as:

Correct AnswerverifiedShow Answer

The equilibrium GDP is the level of domestic output:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In reality, if a nation imposes tariffs, then the final result will be that net exports and GDP will decrease.

Correct AnswerverifiedShow Answer

Imports have the same macroeconomic effect on GDP as:

Correct AnswerverifiedShow Answer

Actual investment equals saving:

Correct AnswerverifiedShow Answer

In equilibrium in the above private open economy:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I₀ = 30 Refer to the above data.In equilibrium, the level of saving will be:

Correct Answer
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Refer to the above diagram.If (C + I_g) are the private expenditures in the closed economy and X_n2 are the net exports in the open economy:

Correct Answer
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Correct Answer
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In a private closed economy _ investment is equal to saving at all levels of GDP and equilibrium occurs only at that level of GDP where _ investment is equal to saving.

Correct Answer
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Correct Answer
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