Question 1

The consumption share of GDP must grow for the living standards of the average person to improve.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the real interest rate

Accepted Answer

A) causes the nongovernment share of GDP line to shift to the right. 
B) causes the nongovernment share of GDP line to shift to the left. 
C) causes a downward movement along the nongovernment share line. 
D) causes an upward movement along the nongovernment share line. 
E) has an indeterminate effect on nongovernment expenditures since some nongovernment expenditures are positively related to the interest rate while others exhibit a negative relationship. 
A) causes the nongovernment share of GDP line to shift to the right. 
B) causes the nongovernment share of GDP line to shift to the left. 
C) causes a downward movement along the nongovernment share line. 
D) causes an upward movement along the nongovernment share line. 
E) has an indeterminate effect on nongovernment expenditures since some nongovernment expenditures are positively related to the interest rate while others exhibit a negative relationship.

Question 3

The spending allocation model determines how consumers allocate their income between consumption and saving.

Accepted Answer

A) True 
 B)False

Question 4

Suppose businesses seriously believe that, within a year, a new generation of computers will be developed that will be more powerful than the current ones but cheaper to run. Assuming everything else held constant, how will the investment share of GDP be affected?

Accepted Answer

Expenditures on computers will decline i

Question 5

As the import share of GDP increases relative to the export share of GDP, the sum of the consumption, investment, and government shares of GDP will decline.

Accepted Answer

A) True 
 B)False

Question 6

The decline in investment due to an increase in government purchases is called crowding out.

Accepted Answer

A) True 
 B)False

The consumption share of GDP must grow for the living standards of the average person to improve.

An increase in the real interest rate

The spending allocation model determines how consumers allocate their income between consumption and saving.

Suppose businesses seriously believe that, within a year, a new generation of computers will be developed that will be more powerful than the current ones but cheaper to run. Assuming everything else held constant, how will the investment share of GDP be affected?

As the import share of GDP increases relative to the export share of GDP, the sum of the consumption, investment, and government shares of GDP will decline.

The decline in investment due to an increase in government purchases is called crowding out.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters

Exam 19: The Spending Allocation Model

The consumption share of GDP must grow for the living standards of the average person to improve.

An increase in the real interest rate

The spending allocation model determines how consumers allocate their income between consumption and saving.

Suppose businesses seriously believe that, within a year, a new generation of computers will be developed that will be more powerful than the current ones but cheaper to run. Assuming everything else held constant, how will the investment share of GDP be affected?

As the import share of GDP increases relative to the export share of GDP, the sum of the consumption, investment, and government shares of GDP will decline.

The decline in investment due to an increase in government purchases is called crowding out.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters