Question 1

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

Accepted Answer

A)   is $100.
B)   is $250.
C)   is $350.
D)   is $500.E) A) and C)
F) A) and D)

Question 2

Other things equal, if $100 billion of government purchases (G)  is added to private spending (C + Ig + Xn) , GDP will:

Accepted Answer

A)   increase by $100 billion.
B)   increase by more than $100 billion.
C)   increase by less than $100 billion.
D)   fall by $100 billionE) C) and D)
F) A) and B)

Question 3

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 consumption spending will be:

Accepted Answer

A)   170.
B)   270.
C)   160.
D)   195.E) A) and B)
F) All of the above

Question 4

An exchange rate:

Accepted Answer

A)   is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports.
B)   measures the interest rate ratios of any two nations.
C)   is the amount which one nation must export to obtain $1 worth of imports.
D)   is the price at which the currencies of any two nations exchange for one another.E) A) and C)
F) B) and D)

Question 5

In a mixed open economy the equilibrium level of GDP is determined at that point where:

Accepted Answer

A)   Sa + M + T = Ig + X +G
B)   the 45-degree line and the saving schedule intersect.
C)   Sa + X + G = Ig + T.
D)   Sa + Ig + X = G + T.E) None of the above
F) All of the above

Question 6

C = 40 + .8Y
_
Ig = Ig = 40
_
X = X = 20
_
M = M = 30
-The equilibrium level of GDP = (Y)  in the above economy is:

Accepted Answer

A)   $200.
B)   $245.
C)   $320.
D)   $350.E) A) and B)
F) A) and C)

Question 7

Actual investment is $62 billion at an equilibrium output level of $620 billion in a private closed economy. The average propensity to save at this level of output:

Accepted Answer

A)   is 0.10.
B)   is 10.
C)   is 0.62.
D)   cannot be determined on the basis of the information given.E) A) and B)
F) B) and C)

Question 8

-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) A) and D)
F) A) and B)

Question 9

In the aggregate expenditures model, equilibrium GDP in a private closed economy is indicated by:

Accepted Answer

A)   the equality of saving and planned investment.
B)   the intersection of aggregate expenditures and the 45-degree line.
C)   the absence of unplanned changes in inventories.
D)   all of the above.E) A) and B)
F) None of the above

Question 10

Exports are added to, and imports are subtracted from, aggregate expenditures in moving from a closed to an open economy.

Accepted Answer

A) True 
 B)False

Question 11

Cyclical unemployment in Canada is essentially the consequence of:

Accepted Answer

A)   procyclical fiscal policies.
B)   a deficient level of aggregate expenditures.
C)   rapid technological progress.
D)   the geographic immobility of the labor force.E) A) and B)
F) A) and C)

Question 12

At the $180 billion equilibrium level of income, saving is $38 billion in a private closed economy. Planned investment must be:

Accepted Answer

A)   $138 billion.
B)   $126 billion.
C)   $38 billion.
D)   $180 billion.E) A) and B)
F) B) and C)

Question 13

The Sa + M + T schedule has a negative slope.

Accepted Answer

A) True 
 B)False

Question 14

If a nation imposes tariffs and quotas on foreign products, the immediate effect, if no retaliation is immediately imposed by other countries will be to:

Accepted Answer

A)   reduce the rate of domestic inflation.
B)   increase efficiency in the world economy.
C)   increase domestic output and employment.
D)   reduce domestic output and employment.E) B) and D)
F) All of the above

Question 15

-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) All of the above
F) None of the above

Question 16

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

Accepted Answer

A)   a decline in the rate of interest
B)   an unplanned accumulation of inventories by businesses
C)   a rise in the real GDP
D)   the federal budget will automatically move toward a deficitE) A) and D)
F) B) and D)

Question 17

-Refer to the above diagram. International trade has an expansionary effect on this economy.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

-Refer to the above table. If an additional lump-sum tax of $20 were imposed, we would expect:

Accepted Answer

A)   equilibrium GDP to fall by $30.
B)   equilibrium GDP to fall by $20.
C)   equilibrium GDP to fall by $50.
D)   equilibrium GDP to rise by $24.E) All of the above
F) C) and D)

Question 20

Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy. We can predict that:

Accepted Answer

A)   GDP will increase by $64.
B)   GDP will decrease by $64.
C)   the aggregate expenditures schedule will shift downward by $12.
D)   inflation will occur.E) B) and D)
F) A) and B)

Exam 9: The Aggregate Expenditures Model

Cyclical unemployment in Canada is essentially the consequence of:

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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:

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Exports are added to, and imports are subtracted from, aggregate expenditures in moving from a closed to an open economy.

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-The tax in the above economy is a:

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In the aggregate expenditures model, equilibrium GDP in a private closed economy is indicated by:

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If a nation imposes tariffs and quotas on foreign products, the immediate effect, if no retaliation is immediately imposed by other countries will be to:

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

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Other things equal, if $100 billion of government purchases (G) is added to private spending (C + Ig + Xn) , GDP will:

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At the $180 billion equilibrium level of income, saving is $38 billion in a private closed economy. Planned investment must be:

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Suppose the multiplier is 4 and lump-sum taxes are increased by $16 in a closed economy. We can predict that:

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

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C = 40 + .8Y _ Ig = Ig = 40 _ X = X = 20 _ M = M = 30 -The equilibrium level of GDP = (Y) in the above economy is:

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What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

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An exchange rate:

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The Sa + M + T schedule has a negative slope.

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In a mixed open economy the equilibrium level of GDP is determined at that point where:

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-Refer to the above diagram. International trade has an expansionary effect on this economy.

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-Refer to the above table. If an additional lump-sum tax of $20 were imposed, we would expect:

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Actual investment is $62 billion at an equilibrium output level of $620 billion in a private closed economy. The average propensity to save at this level of output:

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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 consumption spending will be:

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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:

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Other things equal, if $100 billion of government purchases (G) is added to private spending (C + I_g + X_n) , GDP will:

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C = 40 + .8Y _ I_g = I_g = 40 _ X = X = 20 _ M = M = 30 -The equilibrium level of GDP = (Y) in the above economy is:

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The S_a + M + T schedule has a negative slope.

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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 consumption spending will be:

Correct Answer
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