Question 1

Refer to the above diagram for a private closed economy.Unplanned investment in inventories will:

Accepted Answer

A)  occur at all levels of GDP in excess of $200.
B)  occur at all levels of GDP in excess of $600.
C)  occur at all levels of GDP below $600.
D)  not occur because the economy is necessarily in equilibrium.E) A) and D)
F) All of the above

Question 2

Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Accepted Answer

A)  aggregate expenditures exceed GDP with the result that GDP will rise.
B)  consumption is $350 and planned investment is zero so that aggregate expenditures are $350.
C)  consumption is $300 and planned investment is $50 so that aggregate expenditures are $350.
D)  consumption is $300 and actual investment is $100 so that aggregate expenditures are $400.E) C) and D)
F) B) and C)

Question 3

In the aggregate expenditures model, an increase in government spending will:

Accepted Answer

A)  decrease real GDP.
B)  increase output and employment.
C)  shift the aggregate expenditures schedule downward.
D)  do all of the above.E) B) and D)
F) None of the above

Question 4

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1, the: 1, the:   A) inflationary expenditure gap is hg. B) recessionary expenditure gap is BC. C) inflationary expenditure gap is zero. D) inflationary expenditure gap is ed." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  inflationary expenditure gap is hg.
B)  recessionary expenditure gap is BC.
C)  inflationary expenditure gap is zero.
D)  inflationary expenditure gap is ed.E) None of the above
F) B) and C)

Question 5

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 6

3, the: A) inflationary GDP gap is BC. B) recessionary GDP gap is BC. C) recessionary GDP gap is AB. D) inflationary expenditure gap is ed." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3, the:

Accepted Answer

A)  inflationary GDP gap is BC.
B)  recessionary GDP gap is BC.
C)  recessionary GDP gap is AB.
D)  inflationary expenditure gap is ed.E) A) and B)
F) B) and D)

Question 7

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

Question 8

In reality, if a nation devalues its currency, then the final result will be that:

Accepted Answer

A)  net exports and GDP will increase.
B)  net exports and GDP will decrease.
C)  there will be is no long term effect on net exports and GDP.
D)  there will be a decrease in imports and an increase in GDP.E) B) and C)
F) C) and D)

Question 9

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) All of the above
F) None of the above

Question 10

Other things 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) A) and B)
F) A) and C)

Question 11

The multiplier for the economy in the above diagram:

Accepted Answer

A)  is 3.
B)  is 4.
C)  is 4.8.
D)  is 5.4.E) None of the above
F) A) and B)

Question 12

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) None of the above
F) All of the above

Question 13

Refer to the above diagram.The value of the multiplier for this economy is:

Accepted Answer

A)  BC/hg.
B)  BC/AB.
C)  ed/di.
D)  df/BC.E) C) and D)
F) A) and C)

Question 14

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Accepted Answer

A)  the MPC is smaller in the private sector than it is in the public sector.
B)  declines in government spending always tend to stimulate private investment.
C)  disposable income will fall by some amount smaller than the tax increase.
D)  only part of the tax increase will affect the consumption negatively.E) A) and B)
F) A) and C)

Question 15

Refer to the above data.If gross investment is $120, the equilibrium level of GDP will be:

Accepted Answer

A)  $380
B)  $370
C)  $360
D)  $400E) None of the above
F) A) and B)

Question 16

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

Question 17

Equal increases in government expenditures and tax collections will leave the equilibrium GDP unchanged.

Accepted Answer

A) True 
 B)False

Question 18

At equilibrium real GDP in a private closed economy:

Accepted Answer

A)  the MPC must equal the APC.
B)  the slope of the aggregate expenditures schedule equals the MPS.
C)  planned and actual investment are equal.
D)  planned saving and consumption are equal.E) A) and C)
F) None of the above

Exam 11: B: The Aggregate Expenditures Model

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

Correct Answer
verified

Equal increases in government expenditures and tax collections will leave the equilibrium GDP unchanged.

Correct Answer
verified

Refer to the above diagram.The value of the multiplier for this economy is:

Correct Answer
verified

Refer to the above data.If gross investment is $120, the equilibrium level of GDP will be:

Correct Answer
verified

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

Correct Answer
verified

In reality, if a nation devalues its currency, then the final result will be that:

Correct Answer
verified

Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₃, the:

Correct Answer
verified

In the aggregate expenditures model, an increase in government spending will:

Correct Answer
verified

The multiplier for the economy in the above diagram:

Correct Answer
verified

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Correct Answer
verified

Refer to the above diagram for a private closed economy.Unplanned investment in inventories will:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The economy in the above diagram is incurring:

Correct Answer
verified

Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Correct Answer
verified

At equilibrium real GDP in a private closed economy:

Correct Answer
verified

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₁, the:

Correct Answer
verified

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

Correct Answer
verified

Exam 11: B: The Aggregate Expenditures Model

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

Correct AnswerverifiedShow Answer

Equal increases in government expenditures and tax collections will leave the equilibrium GDP unchanged.

Correct AnswerverifiedShow Answer

Refer to the above diagram.The value of the multiplier for this economy is:

Correct AnswerverifiedShow Answer

Refer to the above data.If gross investment is $120, the equilibrium level of GDP will be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In reality, if a nation devalues its currency, then the final result will be that:

Correct AnswerverifiedShow Answer

Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE3, the:

Correct AnswerverifiedShow Answer

In the aggregate expenditures model, an increase in government spending will:

Correct AnswerverifiedShow Answer

The multiplier for the economy in the above diagram:

Correct AnswerverifiedShow Answer

An increase in taxes of a specific amount will have a smaller impact on the equilibrium GDP than will a decline in government spending of the same amount because:

Correct AnswerverifiedShow Answer

Refer to the above diagram for a private closed economy.Unplanned investment in inventories will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The economy in the above diagram is incurring:

Correct AnswerverifiedShow Answer

Refer to the above diagram for a private closed economy.At the $400 level of GDP:

Correct AnswerverifiedShow Answer

At equilibrium real GDP in a private closed economy:

Correct AnswerverifiedShow Answer

Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE1, the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Refer to the above diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₃, the:

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Refer to the diagram.If the full-employment level of GDP is B and aggregate expenditures are at AE₁, the:

Correct Answer
verified

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

Correct Answer
verified