Question 1

Actual investment may be defined as:

Accepted Answer

A)  gross investment less replacement investment.
B)  the ratio of planned to unplanned investment.
C)  unintended less planned investment.
D)  planned plus unplanned investment.E) C) and D)
F) A) and D)

Question 2

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 gross investment remains at $10 at all levels of GDP, the after-tax equilibrium level of GDP will be:

Accepted Answer

A)  $220
B)  $190
C)  $180
D)  $160E) All of the above
F) A) and D)

Question 3

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) B) and C)

Question 4

The following information is for a closed economy:  Refer to the above information.If in addition to spending $80 billion at each level of GDP, government imposes a lump-sum tax of $100:

Accepted Answer

A)  equilibrium GDP will now be $350.
B)  equilibrium GDP will now be $400.
C)  equilibrium GDP will now be $300.
D)  the equilibrium GDP cannot be determined.E) C) and D)
F) A) and B)

Question 5

If the MPC is 2/3, the initial impact of an increase of $12 billion in lump-sum taxes will be to cause:

Accepted Answer

A)  a rightward shift in the investment-demand schedule.
B)  an $8 billion downshift in the consumption schedule.
C)  a $4 billion upshift in the consumption schedule.
D)  a $12 billion downshift in the consumption schedule.E) None of the above
F) All of the above

Question 6

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 B)
F) A) and C)

Question 7

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

Accepted Answer

A)  the expenditures multiplier is 4.
B)  the MPC for this economy is .8.
C)  the MPC for this economy is .6.
D)  the expenditures multiplier is 3.E) A) and B)
F) A) and C)

Question 8

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

Question 9

Assume in a private economy that the equilibrium level of income is $380 and the MPS is 0.25.Now suppose government collects taxes of $50 and spends the entire amount.As a result:

Accepted Answer

A)  the equilibrium level of real income and the price level will both remain unchanged.
B)  nominal wage rates will fall.
C)  the equilibrium level of income will rise to $420.
D)  the equilibrium level of income will rise to $430.E) B) and C)
F) A) and C)

Question 10

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 11

Suppose the economy's multiplier is 2.Other things equal, a $25 billion decrease in government expenditures on national defence will cause equilibrium GDP to:

Accepted Answer

A)  decrease by $50 billion.
B)  decrease by $150 billion.
C)  remain unchanged since spending on military goods is unproductive and usually wasteful.
D)  decrease by $25 billion.E) A) and C)
F) B) and C)

Question 12

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
The equilibrium level of GDP for the above open economy is:

Accepted Answer

A)  $390
B)  $375
C)  $320
D)  $400E) B) and C)
F) B) and D)

Question 13

A $10 billion decrease in taxes will increase the equilibrium GDP by more than would a $10 billion increase in government expenditures.

Accepted Answer

A) True 
 B)False

Question 14

Other things equal, serious recession in the economies of Canada's trading partners will:

Accepted Answer

A)  have no perceptible impact on the Canadian economy.
B)  cause inflation in the Canadian economy.
C)  depress real output and employment in the Canadian economy.
D)  stimulate real output and employment in the Canadian economy.E) A) and B)
F) C) and D)

Question 15

Saving is always equal to:

Accepted Answer

A)  planned less unintended investment.
B)  actual investment.
C)  planned investment.
D)  unintended investment.E) A) and D)
F) B) and C)

Question 16

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)  $180E) A) and B)
F) A) and C)

Question 17

The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively.  The equation representing the consumption schedule for the above economy is:

Accepted Answer

A)  C = Y -.6S.
B)  Y = C + S.
C)  C = 60 + .4Y.
D)  C = 60 + .6Y.E) All of the above
F) A) and D)

Question 18

In which of the following situations for a private closed economy will the level of GDP expand?

Accepted Answer

A)  when planned investment exceeds saving
B)  when planned investment exceeds consumption
C)  when saving exceeds consumption
D)  when consumption exceeds investmentE) None of the above
F) B) and D)

Question 19

The following information is for a closed economy:  Refer to the above information.If government now spends $80 billion at each level of GDP and taxes remain at zero, the equilibrium GDP:

Accepted Answer

A)  will rise to $700.
B)  will rise to $600.
C)  will rise to $500.
D)  may either rise or fall.E) A) and D)
F) None of the above

Question 20

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

Exam 11: Part B: The Aggregate Expenditures Model

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

Correct AnswerverifiedShow Answer

An exchange rate:

Correct AnswerverifiedShow Answer

In which of the following situations for a private closed economy will the level of GDP expand?

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

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

Correct AnswerverifiedShow Answer

Saving is always equal to:

Correct AnswerverifiedShow Answer

Other things equal, serious recession in the economies of Canada's trading partners will:

Correct AnswerverifiedShow Answer

Suppose the economy's multiplier is 2.Other things equal, a $25 billion decrease in government expenditures on national defence will cause equilibrium GDP to:

Correct AnswerverifiedShow Answer

A $10 billion decrease in taxes will increase the equilibrium GDP by more than would a $10 billion increase in government expenditures.

Correct AnswerverifiedShow Answer

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 The equilibrium level of GDP for the above open economy is:

Correct AnswerverifiedShow Answer

The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively. The equation representing the consumption schedule for the above economy is:

Correct AnswerverifiedShow Answer

If the MPC is 2/3, the initial impact of an increase of $12 billion in lump-sum taxes will be to cause:

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 gross investment remains at $10 at all levels of GDP, the after-tax equilibrium level of GDP will be:

Correct AnswerverifiedShow Answer

The following information is for a closed economy: Refer to the above information.If in addition to spending $80 billion at each level of GDP, government imposes a lump-sum tax of $100:

Correct AnswerverifiedShow Answer

At the equilibrium GDP for an open economy:

Correct AnswerverifiedShow Answer

Actual investment may be defined as:

Correct AnswerverifiedShow Answer

The following information is for a closed economy: Refer to the above information.If government now spends $80 billion at each level of GDP and taxes remain at zero, the equilibrium GDP:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Assume in a private economy that the equilibrium level of income is $380 and the MPS is 0.25.Now suppose government collects taxes of $50 and spends the entire amount.As a result:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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 The equilibrium level of GDP for the above open economy is:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified