Exam 10: Income and Expenditures Equilibrium

The figure given below depicts macroeconomic equilibrium in a closed economy. Assume that the spending multiplier in this economy is 1.5.?Figure 10.5 -Refer to Figure 10.5. If the target or potential level of real GDP is $1,200, then at an equilibrium real GDP level of $900:

The figure given below represents the leakages and injections in an economy.?Figure 10.3??In the figure:?S₁ and S₂: Saving functions?I: Investment?G: Government spending?EX: Net exports -Refer to Figure 10.3. The paradox of thrift might not be a problem if:

The table given below reports the value of real GDP and its components consumption (C), investment (I), exports, and imports for two consecutive years in an economy.? -According to the information provided in Table 10.3, the MPI equals _____.

The table given below shows the real GDP, aggregate expenditures, saving, and imports of an economy.? -Refer to Table 10.4. Suppose the economy is currently in equilibrium and has a potential GDP of $6,000. The current GDP gap equals _____.

If equilibrium in the economy is merely a function of aggregate demand, the aggregate supply curve must be:

A rise in the price level that reduces the real wealth of people who hold financial assets is an illustration of the:

If Saving+Tax+Import > Investment+Government spending+Export, then _____ must fall to establish macroeconomic equilibrium.

The table given below states the value of the GDP and the different components of aggregate expenditure for two years.? -Refer to Table 10.1. If real GDP equals $1,000 in year 1, then:

The table given below reports the value of real GDP and its components consumption (C), investment (I), exports, and imports for two consecutive years in an economy.? -Refer to Table 10.3. The equilibrium value of imports in year 1 is:

Scenario 10.1 Imagine an economy that does not have international trade and is initially in equilibrium. Later the government increases the level of spending by $350 million because it received a gift from abroad. In this economy, only 65 cents of every dollar is spent, and the rest is saved. -Refer to Scenario 10.1. What is the marginal propensity to save for this economy?

Foreign repercussions of changes in domestic imports cause the true domestic spending multiplier to be less than 1/(MPS+MPI)

A major drawback of the Keynesian approach to macroeconomic equilibrium is the assumption that the supply of goods and services in the economy always adjusts to aggregate expenditures

Everything else constant, the international trade effect indicates that aggregate expenditures in the domestic economy fall when:

An increase in U.S. imports from Mexico will cause a decrease in income for Mexican individuals and businesses.

If total planned expenditures exceed real GDP, the economy will contract, causing production of goods and services to decrease and unplanned inventories to rise.

A depreciation of the U.S. dollar will result in an increase in aggregate expenditures in the country.

The interest rate effect states that an increase in the price level will cause:

The Keynesian region of the aggregate supply curve represents an economy with:

A decrease in the general price level is associated with an upward shift in the aggregate expenditures function.

The figure given below represents the macroeconomic equilibrium in the aggregate income and aggregate expenditure framework. Assume that MPI is equal to zero. -Assume that potential GDP is $200 billion and the multiplier equals 5. The recessionary gap is $10 billion. What is the actual level of equilibrium income?