Question 1

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 2

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.

Question 3

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 4

Saving is always equal to:

Accepted Answer

A)   planned less unintended investment.
B)   actual investment.
C)   planned investment.
D)   unintended investment.

Question 5

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.

Question 6

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.

Question 7

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 8

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.

Question 9

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.

Question 10

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.

Question 11

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)   $480

Question 12

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 spending

Question 13

-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.

Question 14

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)   $200

Question 15

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 D

Question 16

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.

Question 17

-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.

Question 18

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)   $80

Question 19

-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.

Question 20

-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)   $300

Exam 11: The Aggregate Expenditures Model

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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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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-The economy in the above diagram is incurring:

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

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

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

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

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

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

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

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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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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 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 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 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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-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:

Correct Answer
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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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