Question 1

g + Xn must equal $300 billion." class="answers-bank-image d-inline" rel="preload" >
-If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then:

Accepted Answer

A)   unplanned investment must be occurring.
B)   net exports must be $300 billion.
C)   S + C must equal $300 billion.
D)   Ig + Xn must equal $300 billion.E) A) and D)
F) All of the above

Question 2

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

Accepted Answer

A)   $10.
B)   $20.
C)   $30.
D)   $50E) B) and C)
F) A) and C)

Question 3

The equilibrium level of GDP always coincides with the full-employment GDP.

Accepted Answer

A) True 
 B)False

Question 4

Other things being equal, the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n) :

Accepted Answer

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

Question 5

If government increases its tax revenues by $15 billion and the MPC is 2/3, then we can expect the equilibrium GDP to:

Accepted Answer

A)   decrease by $30 billion.
B)   decrease by $45 billion.
C)   decrease by $35 billion.
D)   decrease by $55 billion.E) A) and C)
F) A) and B)

Question 6

Achieving aggregate equilibrium in the economy is indicated by:

Accepted Answer

A)   an equality of saving and planned investment.
B)   an equality of aggregate expenditures and domestic output.
C)   the absence of unplanned investment or disinvestment.
D)   all of the above.E) C) and D)
F) All of the above

Question 7

Refer to the data below. If gross investment is $10 at all levels of GDP, the equilibrium GDP will be: The following schedule contains data for a private closed economy. All figures are in billions.

Accepted Answer

A)   $300.
B)   $220.
C)   $260.
D)   $180.E) C) and D)
F) All of the above

Question 8

In which of the following situations for a mixed open economy will the level of GDP expand?

Accepted Answer

A)   when Ig + X + G exceeds Sa + M + T
B)   when Sa + T + M exceeds Ig + G + X
C)   when domestic output exceeds Ca + Ig + G + Xn
D)   when Ig + M + T exceeds Ca + X + SE) A) and D)
F) A) and C)

Question 9

-The above diagram represents a:

Accepted Answer

A)   mixed closed economy.
B)   mixed open economy.
C)   private closed economy.
D)   private open economy.E) A) and B)
F) None of the above

Question 10

Planned plus unplanned investment equals:

Accepted Answer

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

Question 11

-Refer to the above diagram. The equilibrium condition for a private open economy is S + M = Ig + X.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

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

Question 14

If the marginal propensity to consume is .80 and both taxes and government purchases increase by $50 billion, GDP will:

Accepted Answer

A)   increase by $50 billion.
B)   decrease by $50 billion.
C)   increase by $10 billion.
D)   decrease by $10 billion.E) B) and C)
F) All of the above

Question 15

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

Question 16

The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars.
C = 26 + .75Y
Ig = 60
X = 24
M = 10
-Refer to the above information. The multiplier for this economy:

Accepted Answer

A)   is 4.
B)   is 3.
C)   is 2.
D)   is 2.33.E) B) and C)
F) A) and B)

Question 17

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 D)
F) B) and D)

Question 18

g1, 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) C) and D)
F) A) and C)

Question 19

A lump-sum tax causes the after-tax consumption schedule:

Accepted Answer

A)   and the before-tax consumption schedule to coincide.
B)   to be steeper than the before-tax consumption schedule.
C)   to be flatter than the before-tax consumption schedule.
D)   to be parallel to the before-tax consumption schedule.E) A) and B)
F) All of the above

Question 20

-In the economy in the above diagram, international trade:

Accepted Answer

A)   does not occur.
B)   has a contractionary effect on GDP.
C)   has an expansionary effect on GDP.
D)   has no impact on GDP.E) A) and B)
F) All of the above

Exam 9: The Aggregate Expenditures Model

-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:

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

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-In the economy in the above diagram, international trade:

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Planned plus unplanned investment equals:

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-Refer to the above diagram. The equilibrium condition for a private open economy is S + M = Ig + X.

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-If the equilibrium level of GDP in a private open economy is $1000 billion and consumption is $700 billion at that level of GDP, then:

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

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-The above diagram represents a:

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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. The equilibrium level of income (Y ) is:

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

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If the marginal propensity to consume is .80 and both taxes and government purchases increase by $50 billion, GDP will:

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The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars. C = 26 + .75Y Ig = 60 X = 24 M = 10 -Refer to the above information. The multiplier for this economy:

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Other things being equal, the effect of a downward shift of the economy's net export schedule on equilibrium GDP will be similar to a(n) :

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If government increases its tax revenues by $15 billion and the MPC is 2/3, then we can expect the equilibrium GDP to:

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Refer to the data below. If gross investment is $10 at all levels of GDP, the equilibrium GDP will be: The following schedule contains data for a private closed economy. All figures are in billions.

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The equilibrium level of GDP always coincides with the full-employment GDP.

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Which of the following statements is incorrect?

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In which of the following situations for a mixed open economy will the level of GDP expand?

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A lump-sum tax causes the after-tax consumption schedule:

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Achieving aggregate equilibrium in the economy is indicated by:

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-Refer to the above diagram which applies to a private closed economy. If gross investment is I_g1, the equilibrium GDP and the level of consumption will be:

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-Refer to the above diagram. The equilibrium condition for a private open economy is S + M = I_g + X.

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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. The equilibrium level of income (Y ) is:

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The letters Y, C, I_g, X, and M stand for GDP, consumption, gross investment, exports, and imports respectively. Figures are in billions of dollars. C = 26 + .75Y I_g = 60 X = 24 M = 10 -Refer to the above information. The multiplier for this economy:

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