Question 1

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

Accepted Answer

A)   a $20 billion reduction 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 increase in government spendingE) A) and C)
F) B) and C)

Question 2

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) None of the above
F) C) and D)

Question 3

g1 to Ig2,the equilibrium GDP will: A)  decrease by KD. B)  increase by HJ. C)  increase by KD. D)  increase by GH." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram which applies to a private closed economy.If gross investment increases from Ig1 to Ig2,the equilibrium GDP will:

Accepted Answer

A)   decrease by KD.
B)   increase by HJ.
C)   increase by KD.
D)   increase by GH.E) B) and D)
F) None of the above

Question 4

If the MPC is .9,a $20 billion increase in a lump-sum tax will reduce GDP by $200 billion.

Accepted Answer

A) True 
 B)False

Question 5

The following information is for a private closed economy,where Ig is gross investment,S is saving,and Y is gross domestic product (GDP) .
Ig = 80
S = -80 + .4Y
-Refer to the above information.In equilibrium,saving will be:

Accepted Answer

A)   $40
B)   $120
C)   $60
D)   $80E) A) and B)
F) A) and C)

Question 6

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) A) and C)

Question 7

Refer to the diagram below for a private closed economy.Saving and planned investment are equal:

Accepted Answer

A)   only at the $300 level of GDP.
B)   only at the $250 level of GDP.
C)   at all levels of GDP.
D)   only at the $375 level of GDP.E) C) and D)
F) None of the above

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

-Refer to the above information.If the real interest rate is 9 percent,the equilibrium level of GDP will be:

Accepted Answer

A)   $600
B)   $500
C)   $400
D)   $300E) A) and D)
F) B) and C)

Question 10

-The economy in the above diagram is incurring:

Accepted Answer

A)   balance in its international trade.
B)   a trade deficit.
C)   a trade surplus.
D)   inflation.E) None of the above
F) B) and C)

Question 11

-Refer to the above information.When the real interest rate is 10 percent,unplanned changes in inventories are equal to:

Accepted Answer

A)   $40
B)   -$30.
C)   $20
D)   -$60.E) B) and C)
F) None of the above

Question 12

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 X n2,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) A) and D)
F) A) and B)

Question 13

During the recession of 2008-2009 the federal government undertook various policies intended to stimulate private spending and investment.

Accepted Answer

A) True 
 B)False

Question 14

If S = -60 + .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)   $480E) A) and B)
F) B) and C)

Question 15

If an increase in aggregate expenditures results in no increase in real GDP we can conclude that the:

Accepted Answer

A)   economy is in a deep recession.
B)   MPC equals 1.
C)   economy is already operating at full employment.
D)   price level has fallen.E) None of the above
F) A) and B)

Question 16

The table shows a private,open economy.All figures are in billions of dollars.
 
-Refer to the above table.If the marginal propensity to consume in this economy is 0.8,a $10 increase in its net exports would increase its equilibrium real GDP by:

Accepted Answer

A)   $25
B)   $50
C)   $100
D)   $200E) A) and C)
F) B) and C)

Question 17

-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 C)
F) All of the above

Question 18

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) A) and B)

Question 19

If the multiplier in an economy is 5,a $20 billion increase in net exports will:

Accepted Answer

A)   increase GDP by $100 billion.
B)   reduce GDP by $20 billion.
C)   decrease GDP by $100 billion.
D)   increase GDP by $20 billion.E) B) and C)
F) A) and B)

Question 20

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) C) and D)
F) None of the above

Exam 11: The Aggregate Expenditures Model

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

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

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-Refer to the above information.When the real interest rate is 10 percent,unplanned changes in inventories are equal to:

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

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

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-Refer to the above information.If the real interest rate is 9 percent,the equilibrium level of GDP will be:

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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 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:

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If the multiplier in an economy is 5,a $20 billion increase in net exports will:

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-Refer to the above diagram which applies to a private closed economy.If gross investment increases from Ig1 to Ig2,the equilibrium GDP will:

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During the recession of 2008-2009 the federal government undertook various policies intended to stimulate private spending and investment.

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The table shows a private,open economy.All figures are in billions of dollars. -Refer to the above table.If the marginal propensity to consume in this economy is 0.8,a $10 increase in its net exports would increase its equilibrium real GDP by:

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If an increase in aggregate expenditures results in no increase in real GDP we can conclude that the:

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Refer to the diagram below for a private closed economy.Saving and planned investment are equal:

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If S = -60 + .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:

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-The economy in the above diagram is incurring:

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If the MPC is .9,a $20 billion increase in a lump-sum tax will reduce GDP by $200 billion.

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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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Saving is always equal to:

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The following information is for a private closed economy,where Ig is gross investment,S is saving,and Y is gross domestic product (GDP) . Ig = 80 S = -80 + .4Y -Refer to the above information.In equilibrium,saving will be:

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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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-Refer to the above diagram which applies to a private closed economy.If gross investment increases from I_g1 to I_g2,the equilibrium GDP will:

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If S = -60 + .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:

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The following information is for a private closed economy,where I_g is gross investment,S is saving,and Y is gross domestic product (GDP) . I_g = 80 S = -80 + .4Y -Refer to the above information.In equilibrium,saving will be:

Correct Answer
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