Question 1

In a mixed open economy, where aggregate expenditures exceed GDP:

Accepted Answer

A) Ig + X + G = Ca. 
B) Ca + Ig + Xn + G g > S. 
D) Ig + X + G > Sa + M + T. 
A) Ig + X + G = Ca. 
B) Ca + Ig + Xn + G g > S. 
D) Ig + X + G > Sa + M + T.

Question 2

If Canada wants to increase its net exports, other things equal, it might take steps to:

Accepted Answer

A) increase its GDP. 
B) reduce existing tariffs and import quotas. 
C) decrease the dollar price of foreign currencies. 
D) increase the dollar price of foreign currencies. 
A) increase its GDP. 
B) reduce existing tariffs and import quotas. 
C) decrease the dollar price of foreign currencies. 
D) increase the dollar price of foreign currencies.

Question 3

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. 
A) $300 and 5. 
B) $350 and 4. 
C) $400 and 4. 
D) $350 and 5.

Question 4

If an unplanned increase in business inventories occurs at some level of GDP, then GDP:

Accepted Answer

A) entails a rate of aggregate expenditures in excess of the rate of aggregate production. 
B) may be either above or below the equilibrium output. 
C) is too low for equilibrium. 
D) will decrease. 
A) entails a rate of aggregate expenditures in excess of the rate of aggregate production. 
B) may be either above or below the equilibrium output. 
C) is too low for equilibrium. 
D) will decrease.

Question 5

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. 
A) investment-demand curve leftward. 
B) investment-demand curve rightward. 
C) investment schedule upward. 
D) investment schedule downward.

Question 6

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

Accepted Answer

A) True 
 B)False

Question 7

In a mixed open economy, which of the following affect the equilibrium GDP in the same direction?

Accepted Answer

A) Ca, Ig, Sa, and M 
B) Sa, T, and M 
C) Ig, T, and Ca 
D) Sa, Ig, and X 
A) Ca, Ig, Sa, and M 
B) Sa, T, and M 
C) Ig, T, and Ca 
D) Sa, Ig, and X

Question 8

An increase in government expenditures will shift the aggregate expenditures schedule ____ and ____ the equilibrium GDP.

Accepted Answer

A) upward; raise 
B) downward; raise 
C) downward; lower 
D) upward; lower 
A) upward; raise 
B) downward; raise 
C) downward; lower 
D) upward; lower

Question 9

In the above private open economy exports are __________ and imports are __________ domestic GDP:

Accepted Answer

A) inversely related to; directly related to 
B) independent of; inversely related to 
C) independent of; dependent of 
D) directly related to; independent of 
A) inversely related to; directly related to 
B) independent of; inversely related to 
C) independent of; dependent of 
D) directly related to; independent of

Question 10

In a mixed open economy the equilibrium level of GDP exists where:

Accepted Answer

A) Ca + Ig + Xn intersects the 45-degree line. 
B) Ca + Ig = Sa + T + X. 
C) Ca + Ig + Xn + G = GDP. 
D) Ca + Ig + Xn = Sa + T. 
A) Ca + Ig + Xn intersects the 45-degree line. 
B) Ca + Ig = Sa + T + X. 
C) Ca + Ig + Xn + G = GDP. 
D) Ca + Ig + Xn = Sa + T.

Question 11

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

Accepted Answer

A) a $20 billion increase 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 decrease in government spending 
A) a $20 billion increase 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 decrease in government spending

Question 12

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. 
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.

Question 13

Imports have the same macroeconomic effect on GDP as:

Accepted Answer

A) exports. 
B) investment. 
C) consumption. 
D) saving. 
A) exports. 
B) investment. 
C) consumption. 
D) saving.

Question 14

The letters Y, Ca, Ig, Xn, G, and T stand for GDP, consumption, gross investment, net exports, government purchases, and net taxes respectively.Figures are in billions of dollars.Ca = 25 + .75(Y - T ) Ig = Ig0 = 50
Xn = Xn0 = 10
G = G0 = 70
T = T0 = 30
Refer to the above information.The equilibrium level of GDP for this economy is:

Accepted Answer

A) $600 
B) $530 
C) $415 
D) $400 
A) $600 
B) $530 
C) $415 
D) $400

Question 15

Refer to the above diagram which applies to a private closed economy.If gross investment is Ig1, the equilibrium GDP and the level of consumption will be:

Accepted Answer

A) H and HB respectively. 
B) J and JI respectively. 
C) J and JK respectively 
D) H and HF respectively. 
A) H and HB respectively. 
B) J and JI respectively. 
C) J and JK respectively 
D) H and HF respectively.

Question 16

Planned plus unplanned investment equals:

Accepted Answer

A) actual investment. 
B) consumption of fixed capital. 
C) consumption minus saving. 
D) unintended saving. 
A) actual investment. 
B) consumption of fixed capital. 
C) consumption minus saving. 
D) unintended saving.

Question 17

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I0 = 30
Refer to the above data.The equilibrium level of income (Y ) is:

Accepted Answer

A) 360 
B) 225 
C) 200 
D) 135 
A) 360 
B) 225 
C) 200 
D) 135

Question 18

Refer to the above diagram for a private closed economy.At the $300 level of GDP:

Accepted Answer

A) planned investment will exceed saving, but actual investment will be equal to saving. 
B) aggregate expenditures will exceed GDP, causing GDP to rise. 
C) actual investment will exceed planned investment. 
D) households will consume in excess of their incomes. 
A) planned investment will exceed saving, but actual investment will be equal to saving. 
B) aggregate expenditures will exceed GDP, causing GDP to rise. 
C) actual investment will exceed planned investment. 
D) households will consume in excess of their incomes.

Question 19

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. 
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.

Question 20

Refer to the below diagram, which aggregate expenditure (AE) schedule for a private closed economy implies the largest MPC?

Accepted Answer

A) AE4 
B) AE3 
C) AE2 
D) AE1 
A) AE4 
B) AE3 
C) AE2 
D) AE1

Exam 11: B: The Aggregate Expenditures Model

In a mixed open economy, where aggregate expenditures exceed GDP:

If Canada wants to increase its net exports, other things equal, it might take steps to:

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:

If an unplanned increase in business inventories occurs at some level of GDP, then GDP:

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

For given data the aggregate expenditures-domestic output and the saving-investment approaches will yield the same equilibrium level of GDP.

In a mixed open economy, which of the following affect the equilibrium GDP in the same direction?

An increase in government expenditures will shift the aggregate expenditures schedule ____ and ____ the equilibrium GDP.

In the above private open economy exports are __________ and imports are __________ domestic GDP:

In a mixed open economy the equilibrium level of GDP exists where:

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

If net exports are positive:

Imports have the same macroeconomic effect on GDP as:

Refer to the above diagram which applies to a private closed economy.If gross investment is Ig1, the equilibrium GDP and the level of consumption will be:

Planned plus unplanned investment equals:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I0 = 30 Refer to the above data.The equilibrium level of income (Y ) is:

Refer to the above diagram for a private closed economy.At the $300 level of GDP:

At the equilibrium GDP for an open economy:

Refer to the below diagram, which aggregate expenditure (AE) schedule for a private closed economy implies the largest MPC?

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters

An increase in government expenditures will shift the aggregate expenditures schedule and the equilibrium GDP.

In the above private open economy exports are and imports are domestic GDP:

Refer to the above diagram which applies to a private closed economy.If gross investment is Ig₁, the equilibrium GDP and the level of consumption will be:

The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I₀ = 30 Refer to the above data.The equilibrium level of income (Y ) is: