Question 1

C=40+0.8YIg=40X=20M=30\begin{array} { l } C = 40 + 0.8 Y \I _ { g } = 40 \X = 20 \M = 30\end{array}C=40+0.8YIg​=40X=20M=30​ 
(Advanced analysis)  The equations give information for a private open economy. The letters  Y,C,Ig,XY , C , I _ { g } , XY,C,Ig​,X , and  MMM  stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in billions of dollars. This nation is experiencing

Accepted Answer

A)   a trade surplus.
B)   balance in its international trade.
C)   a trade de?cit.
D)   unemployment. E) None of the above
F) A) and C)

Question 2

C = 26 + 0.75Y 
Ig = 60
X = 24
M = A
(Advanced analysis)  The equations give information for a private open economy. The letters Y, C, Ig, X,
And M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in
Billions of dollars. The multiplier for the economy is

Accepted Answer

A)   4.6.
B)   3.33.
C)   5.0.
D)   4.0.E) B) and C)
F) A) and D)

Question 3

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 $4 billion.
C)   decrease GDP by $100 billion.
D)   increase GDP by $20 billion.E) B) and C)
F) All of the above

Question 4

A private closed economy includes

Accepted Answer

A)   households, businesses, and government, but not international trade.
B)   households, businesses, and international trade, but not government.
C)   households and businesses, but not government or international trade.
D)   households only.E) B) and C)
F) A) and C)

Question 5

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 unintended accumulation of inventories by businesses
C)   a rise in the real GDP
D)   The federal budget will automatically move toward a deﬁcit.E) A) and D)
F) B) and C)

Question 6

If net exports are positive,

Accepted Answer

A)   the equilibrium GDP must be greater than the full-employment GDP.
B)   imports must exceed exports.
C)   aggregate expenditures are greater at each level of GDP than when net exports are zero or negative.
D)   some other component of aggregate expenditures must be negative.E) A) and B)
F) A) and D)

Question 7

All else equal, a large decline in the real interest rate will shift the

Accepted Answer

A)   investment demand curve leftward.
B)   investment demand curve rightward.
C)   investment schedule upward.
D)   investment schedule downward.E) A) and D)
F) A) and B)

Question 8

Planned investment plus unintended increases in inventories equals

Accepted Answer

A)   actual investment.
B)   consumption.
C)   consumption minus saving.
D)   unintended saving.E) C) and D)
F) A) and D)

Question 9

C = 40 + 0.8Y Ig = 60 − 2i
I = 10
(Advanced analysis)  The equations are for a private closed economy, where C is consumption, Y is the
Gross domestic product, Ig is gross investment, and i is the interest rate. The equilibrium level of GDP
In this economy is

Accepted Answer

A)   $240.
B)   $300.
C)   $360.
D)   $400.E) B) and D)
F) B) and C)

Question 10

GDP (Y)  Consumption (C)  Investment (I)  $0$60$301001204020018050300240604003007050036080\begin{array} { | c | c | c | } \hline 	ext { GDP } ( Y )  & 	ext { Consumption } ( C )  & 	ext { Investment (I)  } \\hline \$ 0 & \$ 60 & \$ 30 \\hline 100 & 120 & 40 \\hline 200 & 180 & 50 \\hline 300 & 240 & 60 \\hline 400 & 300 & 70 \\hline 500 & 360 & 80 \\hline\end{array} GDP (Y) $0100200300400500​ Consumption (C) $60120180240300360​ Investment (I)  $304050607080​​  (Advanced analysis)  The table gives data for a private closed economy. The letters Y, C, S, and I are used to represent real GDP, consumption, saving, and investment, respectively. The equation
Representing the consumption schedule for the economy is

Accepted Answer

A)   C = Y ? 0.6S.
B)   Y = C + S.
C)   C = 60 + 0.4Y.
D)   C = 60 + 0.6Y. E) A) and C)
F) All of the above

Question 11

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the

Accepted Answer

A)   saving schedule will shift upward by $5 billion.
B)   consumption schedule will shift downward by $25 billion.
C)   consumption schedule will shift downward by $20 billion.
D)   consumption schedule will shift upward by $25 billion.E) B) and C)
F) All of the above

Question 12

Refer to the diagram for a private closed economy. Unplanned changes in inventories will be zero

Accepted Answer

A)   only at the $300 level of GDP.
B)   only at the $200 level of GDP.
C)   at all levels of GDP.
D)   only at the $400 level of GDP.E) A) and B)
F) B) and C)

Question 13

Ig = 80 
SA=−80 + 0.4Y
(Advanced analysis)  The equations refer to a private closed economy, where Ig is gross investment, S
Is saving, and Y is gross domestic product (GDP) . In equilibrium, consumption will be

Accepted Answer

A)   $400.
B)   $280.
C)   $320.
D)   $360.E) All of the above
F) A) and D)

Question 14

If the United States wants to increase its net exports, it might take steps to

Accepted Answer

A)   increase its GDP.
B)   reduce existing tariffs and import quotas.
C)   appreciate the dollar compared to foreign currencies.
D)   depreciate the dollar compared to foreign currencies.E) A) and B)
F) A) and C)

Question 15

A private closed economy will expand when

Accepted Answer

A)   actual GDP is less than potential GDP.
B)   unplanned decreases in inventories occur.
C)   aggregate expenditures are less than GDP.
D)   unplanned increases in inventories occur.E) B) and C)
F) A) and D)

Question 16

If the equilibrium level of GDP in a private open economy is $1,000 billion and consumption is $700 billion at that level of GDP, then

Accepted Answer

A)   saving must be $300 billion.
B)   net exports must be $300 billion.
C)   S + C must equal $300 billion.
D)   Ig + Xn must equal $300 billion.E) B) and C)
F) A) and B)

Question 17

The equilibrium level of GDP is associated with

Accepted Answer

A)   an excess of planned investment over saving.
B)   no unintended changes in inventories.
C)   an unintended decrease in business inventories.
D)   an unintended increase in business inventories.E) A) and D)
F) A) and C)

Question 18

Refer to the diagrams. Other things equal, curve B will shift upward when

Accepted Answer

A)   the level of GDP increases.
B)   the interest rate increases.
C)   curve A shifts to the left.
D)   curve A shifts to the right.E) A) and D)
F) C) and D)

Question 19

Investment and saving are, respectively,

Accepted Answer

A)   income and wealth.
B)   stocks and ﬂows.
C)   injections and leakages.
D)   leakages and injections.E) A) and D)
F) A) and C)

Question 20

Actual investment equals saving

Accepted Answer

A)   at all levels of GDP.
B)   at all below-equilibrium levels of GDP.
C)   at all above-equilibrium levels of GDP.
D)   only at the equilibrium GDP.E) None of the above
F) A) and D)

Exam 11: The Aggregate Expenditures Model

Planned investment plus unintended increases in inventories equals

Correct Answer
verified

A private closed economy includes

Correct Answer
verified

A private closed economy will expand when

Correct Answer
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Ig = 80 SA=−80 + 0.4Y (Advanced analysis) The equations refer to a private closed economy, where Ig is gross investment, S Is saving, and Y is gross domestic product (GDP) . In equilibrium, consumption will be

Correct Answer
verified

Refer to the diagram for a private closed economy. Unplanned changes in inventories will be zero

Correct Answer
verified

Investment and saving are, respectively,

Correct Answer
verified

C = 40 + 0.8Y Ig = 60 − 2i I = 10 (Advanced analysis) The equations are for a private closed economy, where C is consumption, Y is the Gross domestic product, Ig is gross investment, and i is the interest rate. The equilibrium level of GDP In this economy is

Correct Answer
verified

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

Correct Answer
verified

If the United States wants to increase its net exports, it might take steps to

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

All else equal, a large decline in the real interest rate will shift the

Correct Answer
verified

If the equilibrium level of GDP in a private open economy is $1,000 billion and consumption is $700 billion at that level of GDP, then

Correct Answer
verified

Correct Answer
verified

Actual investment equals saving

Correct Answer
verified

C = 26 + 0.75Y Ig = 60 X = 24 M = A (Advanced analysis) The equations give information for a private open economy. The letters Y, C, Ig, X, And M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in Billions of dollars. The multiplier for the economy is

Correct Answer
verified

Correct Answer
verified

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the

Correct Answer
verified

If net exports are positive,

Correct Answer
verified

The equilibrium level of GDP is associated with

Correct Answer
verified

Refer to the diagrams. Other things equal, curve B will shift upward when

Correct Answer
verified

Exam 11: The Aggregate Expenditures Model

Planned investment plus unintended increases in inventories equals

Correct AnswerverifiedShow Answer

A private closed economy includes

Correct AnswerverifiedShow Answer

A private closed economy will expand when

Correct AnswerverifiedShow Answer

Ig = 80 SA=−80 + 0.4Y (Advanced analysis) The equations refer to a private closed economy, where Ig is gross investment, S Is saving, and Y is gross domestic product (GDP) . In equilibrium, consumption will be

Correct AnswerverifiedShow Answer

Refer to the diagram for a private closed economy. Unplanned changes in inventories will be zero

Correct AnswerverifiedShow Answer

Investment and saving are, respectively,

Correct AnswerverifiedShow Answer

C = 40 + 0.8Y Ig = 60 − 2i I = 10 (Advanced analysis) The equations are for a private closed economy, where C is consumption, Y is the Gross domestic product, Ig is gross investment, and i is the interest rate. The equilibrium level of GDP In this economy is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the United States wants to increase its net exports, it might take steps to

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

All else equal, a large decline in the real interest rate will shift the

Correct AnswerverifiedShow Answer

If the equilibrium level of GDP in a private open economy is $1,000 billion and consumption is $700 billion at that level of GDP, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Actual investment equals saving

Correct AnswerverifiedShow Answer

C = 26 + 0.75Y Ig = 60 X = 24 M = A (Advanced analysis) The equations give information for a private open economy. The letters Y, C, Ig, X, And M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in Billions of dollars. The multiplier for the economy is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the

Correct AnswerverifiedShow Answer

If net exports are positive,

Correct AnswerverifiedShow Answer

The equilibrium level of GDP is associated with

Correct AnswerverifiedShow Answer

Refer to the diagrams. Other things equal, curve B will shift upward when

Correct AnswerverifiedShow Answer

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