Question 1

Which of the following would reduce GDP by the greatest amount?

Accepted Answer

A)  a $20 billion increase in taxes
B)  $20 billion increases in both government spending and taxes
C)  $20 billion decreases in both government spending and taxes
D)  a $20 billion decrease in government spendingE) A) and C)
F) A) and B)

Question 2

Planned plus unplanned investment equals:

Accepted Answer

A)  actual investment.
B)  consumption of fixed capital.
C)  consumption minus saving.
D)  unintended saving.E) A) and D)
F) A) and B)

Question 3

If net exports are positive:

Accepted Answer

A)  the equilibrium GDP must be greater than the full-employment GDP.
B)  imports must exceed exports.
C)  aggregate expenditures are greater at each level of GDP than when net exports are zero or negative.
D)  some other component of aggregate expenditures must be negative.E) None of the above
F) A) and C)

Question 4

If Canada wants to increase its net exports, other things equal, it might take steps to:

Accepted Answer

A)  increase its GDP.
B)  reduce existing tariffs and import quotas.
C)  decrease the dollar price of foreign currencies.
D)  increase the dollar price of foreign currencies.E) None of the above
F) A) and C)

Question 5

An increase in government expenditures will shift the aggregate expenditures schedule ____ and ____ the equilibrium GDP.

Accepted Answer

A)  upward; raise
B)  downward; raise
C)  downward; lower
D)  upward; lowerE) All of the above
F) A) and B)

Question 6

In the above private open economy exports are __________ and imports are __________ domestic GDP:

Accepted Answer

A)  inversely related to; directly related to
B)  independent of; inversely related to
C)  independent of; dependent of
D)  directly related to; independent ofE) None of the above
F) B) and D)

Question 7

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.The equilibrium level of income (Y )  is:

Accepted Answer

A)  360
B)  225
C)  200
D)  135E) A) and C)
F) A) and D)

Question 8

In a mixed open economy, which of the following affect the equilibrium GDP in the same direction?

Accepted Answer

A)  Ca, Ig, Sa, and M
B)  Sa, T, and M
C)  Ig, T, and Ca
D)  Sa, Ig, and XE) All of the above
F) C) and D)

Question 9

Complete the following table and answer the next question(s)  on the basis of the resulting data.All figures are in billions of dollars.  If the above economy was closed to international trade, the equilibrium GDP and the multiplier would be:

Accepted Answer

A)  $300 and 5.
B)  $350 and 4.
C)  $400 and 4.
D)  $350 and 5.E) B) and C)
F) All of the above

Question 10

Imports have the same macroeconomic effect on GDP as:

Accepted Answer

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

Question 11

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) All of the above
F) C) and D)

Question 12

1, the equilibrium GDP and the level of consumption will be: A) H and HB respectively. B) J and JI respectively. C) J and JK respectively D) H and HF respectively." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram which applies to a private closed economy.If gross investment is Ig1, the equilibrium GDP and the level of consumption will be:

Accepted Answer

A)  H and HB respectively.
B)  J and JI respectively.
C)  J and JK respectively
D)  H and HF respectively.E) A) and B)
F) A) and C)

Question 13

At the equilibrium GDP for an open economy:

Accepted Answer

A)  net exports may be either positive or negative.
B)  imports will always exceed exports.
C)  exports will always exceed imports.
D)  exports and imports will be equal.E) C) and D)
F) All of the above

Question 14

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  planned investment will exceed saving, but actual investment will be equal to saving.
B)  aggregate expenditures will exceed GDP, causing GDP to rise.
C)  actual investment will exceed planned investment.
D)  households will consume in excess of their incomes.E) B) and C)
F) A) and D)

Question 16

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

Question 17

In a mixed open economy the equilibrium level of GDP exists where:

Accepted Answer

A)  Ca + Ig + Xn intersects the 45-degree line.
B)  Ca + Ig = Sa + T + X.
C)  Ca + Ig + Xn + G = GDP.
D)  Ca + Ig + Xn = Sa + T.E) B) and C)
F) A) and D)

Question 18

Refer to the below diagram, which aggregate expenditure (AE)  schedule for a private closed economy implies the largest MPC? 4 B) AE3 C) AE2 D) AE1" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  AE4
B)  AE3
C)  AE2
D)  AE1E) A) and B)
F) A) and C)

Question 19

In a mixed open economy, where aggregate expenditures exceed GDP:

Accepted Answer

A)  Ig + X + G = Ca.
B)  Ca + Ig + Xn + G 
C)  Ig > S.
D)  Ig + X + G > Sa + M + T.E) A) and D)
F) A) and C)

Question 20

All else equal, a large decline in the real interest rate will shift the:

Accepted Answer

A)  investment-demand curve leftward.
B)  investment-demand curve rightward.
C)  investment schedule upward.
D)  investment schedule downward.E) None of the above
F) A) and C)

Exam 11: B: The Aggregate Expenditures Model

In a mixed open economy, where aggregate expenditures exceed GDP:

Correct Answer
verified

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.The equilibrium level of income (Y ) is:

Correct Answer
verified

Refer to the below diagram, which aggregate expenditure (AE) schedule for a private closed economy implies the largest MPC?

Correct Answer
verified

Imports have the same macroeconomic effect on GDP as:

Correct Answer
verified

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

Correct Answer
verified

Complete the following table and answer the next question(s) on the basis of the resulting data.All figures are in billions of dollars. If the above economy was closed to international trade, the equilibrium GDP and the multiplier would be:

Correct Answer
verified

In a mixed open economy, which of the following affect the equilibrium GDP in the same direction?

Correct Answer
verified

Which of the following would reduce GDP by the greatest amount?

Correct Answer
verified

Correct Answer
verified

All else equal, a large decline in the real interest rate will shift the:

Correct Answer
verified

In a mixed open economy the equilibrium level of GDP exists where:

Correct Answer
verified

Planned plus unplanned investment equals:

Correct Answer
verified

Refer to the above diagram which applies to a private closed economy.If gross investment is Ig₁, the equilibrium GDP and the level of consumption will be:

Correct Answer
verified

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

Correct Answer
verified

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

Correct Answer
verified

At the equilibrium GDP for an open economy:

Correct Answer
verified

If net exports are positive:

Correct Answer
verified

In the above private open economy exports are and imports are domestic GDP:

Correct Answer
verified

An increase in government expenditures will shift the aggregate expenditures schedule and the equilibrium GDP.

Correct Answer
verified

If Canada wants to increase its net exports, other things equal, it might take steps to:

Correct Answer
verified

Exam 11: B: The Aggregate Expenditures Model

In a mixed open economy, where aggregate expenditures exceed GDP:

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.The equilibrium level of income (Y ) is:

Correct AnswerverifiedShow Answer

Refer to the below diagram, which aggregate expenditure (AE) schedule for a private closed economy implies the largest MPC?

Correct AnswerverifiedShow Answer

Imports have the same macroeconomic effect on GDP as:

Correct AnswerverifiedShow Answer

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

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. If the above economy was closed to international trade, the equilibrium GDP and the multiplier would be:

Correct AnswerverifiedShow Answer

In a mixed open economy, which of the following affect the equilibrium GDP in the same direction?

Correct AnswerverifiedShow Answer

Which of the following would reduce GDP by the greatest amount?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All else equal, a large decline in the real interest rate will shift the:

Correct AnswerverifiedShow Answer

In a mixed open economy the equilibrium level of GDP exists where:

Correct AnswerverifiedShow Answer

Planned plus unplanned investment equals:

Correct AnswerverifiedShow Answer

Refer to the above diagram which applies to a private closed economy.If gross investment is Ig1, the equilibrium GDP and the level of consumption will be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

Correct AnswerverifiedShow Answer

At the equilibrium GDP for an open economy:

Correct AnswerverifiedShow Answer

If net exports are positive:

Correct AnswerverifiedShow Answer

In the above private open economy exports are __________ and imports are __________ domestic GDP:

Correct AnswerverifiedShow Answer

An increase in government expenditures will shift the aggregate expenditures schedule ____ and ____ the equilibrium GDP.

Correct AnswerverifiedShow Answer

If Canada wants to increase its net exports, other things equal, it might take steps to:

Correct AnswerverifiedShow Answer

Correct Answer
verified

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.The equilibrium level of income (Y ) is:

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Refer to the above diagram which applies to a private closed economy.If gross investment is Ig₁, the equilibrium GDP and the level of consumption will be:

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

In the above private open economy exports are and imports are domestic GDP:

Correct Answer
verified

An increase in government expenditures will shift the aggregate expenditures schedule and the equilibrium GDP.

Correct Answer
verified

Correct Answer
verified