Question 1

All of the following,except one,are true statements about expenditure equilibrium.Which is the exception?

Accepted Answer

A) It is the national income at which the value of production and aggregate expenditures are equal. 
B) It is the national income level at which there is neither a surplus nor a shortage of production. 
C) It is the national income level at which planned investment is equal to zero. 
D) It is the national income level at which total injections equal total leakages. 
A) It is the national income at which the value of production and aggregate expenditures are equal. 
B) It is the national income level at which there is neither a surplus nor a shortage of production. 
C) It is the national income level at which planned investment is equal to zero. 
D) It is the national income level at which total injections equal total leakages.

Question 2

What is not a determinant of the level of consumption?

Accepted Answer

A) The level of prices. 
B) Consumer expectations. 
C) The stock of wealth. 
D) The age of capital goods. 
A) The level of prices. 
B) Consumer expectations. 
C) The stock of wealth. 
D) The age of capital goods.

Question 3

Which of the following variables in the expenditure model are wholly autonomous and which are partly induced?

Accepted Answer

A) I,G,and XN are autonomous;S,IM,and C are partly induced. 
B) I,G,and C are autonomous;S,IM,and X are partly induced. 
C) I,G,and X are autonomous;S,IM,and C are partly induced. 
D) G,X,and IM are autonomous;S,C,and I are partly induced. 
A) I,G,and XN are autonomous;S,IM,and C are partly induced. 
B) I,G,and C are autonomous;S,IM,and X are partly induced. 
C) I,G,and X are autonomous;S,IM,and C are partly induced. 
D) G,X,and IM are autonomous;S,C,and I are partly induced.

Question 4

The budget function for the economy of Sunsville is T - G = -400 + 0.25Y.
a)Suppose income is $4,000.What is the value of the budget surplus or deficit?
b)What range of income will give Sunsville a budget surplus?
c)What range of income will give Sunsville a budget deficit?
d)At what level of income will there be a balanced budget?

Accepted Answer

a)Budget surplus,$60

Question 5

Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14.
-Refer to the information above to answer this question.What is the value of the marginal propensity to expend?

Accepted Answer

A) 0.46 
B) 0.50 
C) 0.78 
D) 0.86 
A) 0.46 
B) 0.50 
C) 0.78 
D) 0.86

Question 6

-Refer to the above graph to answer this question.What is the value of autonomous aggregate expenditures?

Accepted Answer

A) 0. 
B) 100. 
C) 200. 
D) 800. 
E) 1,000. 
A) 0. 
B) 100. 
C) 200. 
D) 800. 
E) 1,000.

Question 7

The following data refers to a national economy with all figures in $billions.
  
-Refer to the table above to answer this question.What is the value of the MPM?

Accepted Answer

A) 0.1 
B) 0.25 
C) 0.4 
D) 0.5 
E) 0.8 
A) 0.1 
B) 0.25 
C) 0.4 
D) 0.5 
E) 0.8

Question 8

-Refer to the graph above to answer this question.Suppose that G equals $650,I equals $380 and X equals $170.If income equals $1,200,which of the following statements is correct?

Accepted Answer

A) There is a shortage of goods and services of $100. 
B) There is a surplus of goods and services of $100. 
C) There is a shortage of goods and services of $300. 
D) There is a surplus of goods and services of $300. 
E) The economy is in expenditures equilibrium. 
A) There is a shortage of goods and services of $100. 
B) There is a surplus of goods and services of $100. 
C) There is a shortage of goods and services of $300. 
D) There is a surplus of goods and services of $300. 
E) The economy is in expenditures equilibrium.

Question 9

Assume that the parameters of a particular economy are as follows: MPC = 0.9,MPM = 0.3.What is the value of the multiplier?

Accepted Answer

A) 0.4. 
B) 0.6. 
C) 1.67. 
D) 2.5 
E) 10. 
A) 0.4. 
B) 0.6. 
C) 1.67. 
D) 2.5 
E) 10.

Question 10

If the marginal tax rate increases,then the marginal propensity to expend will be smaller and the marginal leakage rate will be larger.

Accepted Answer

A) True 
 B)False

Question 11

What is meant by dis-savings?

Accepted Answer

A) The level of savings when income is zero. 
B) Negative savings. 
C) The level of savings where it is equal to consumption. 
D) The level of savings where it is equal to income. 
A) The level of savings when income is zero. 
B) Negative savings. 
C) The level of savings where it is equal to consumption. 
D) The level of savings where it is equal to income.

Question 12

The following partial data relates to a national economy (all figures in $billions):
  
-Refer to the above table to answer this question.What is the value of the marginal propensity to expend?

Accepted Answer

A) 0 
B) 0.4 
C) 0.6 
D) 1.67 
E) 2.5 
A) 0 
B) 0.4 
C) 0.6 
D) 1.67 
E) 2.5

Question 13

If in an economy,the marginal tax rate = 0.1,the marginal propensity to save = 0.25,and the marginal propensity to import = 0.05,what is the value of the marginal propensity to expend?

Accepted Answer

A) 0.4 
B) 0.5 
C) 0.6 
D) 0.65 
E) 0.7 
A) 0.4 
B) 0.5 
C) 0.6 
D) 0.65 
E) 0.7

Question 14

The basis of the parameters for an economy shown in Table 6.5.(All figures are in $billion. )
  
-Refer to Table 6.5 to answer this question.At equilibrium,what is the balance of trade?

Accepted Answer

A) A surplus of $100. 
B) A deficit of $100. 
C) A surplus of $300. 
D) A deficit of $300. 
E) A zero balance of trade. 
A) A surplus of $100. 
B) A deficit of $100. 
C) A surplus of $300. 
D) A deficit of $300. 
E) A zero balance of trade.

Question 15

What happens if aggregate expenditures exceeds the level of production?

Accepted Answer

A) National income exceeds the level of production and inventories will accumulate. 
B) The level of production exceeds national income and inventories will accumulate 
C) National income exceeds the level of production and inventories will be reduced. 
D) The level of production exceeds national income and inventories will be reduced 
E) National income is less than total spending and inventories will be reduced. 
A) National income exceeds the level of production and inventories will accumulate. 
B) The level of production exceeds national income and inventories will accumulate 
C) National income exceeds the level of production and inventories will be reduced. 
D) The level of production exceeds national income and inventories will be reduced 
E) National income is less than total spending and inventories will be reduced.

Question 16

-Refer to the above graph to answer this question.What is the value of the multiplier?

Accepted Answer

A) 2. 
B) 2.5. 
C) 5. 
D) 10. 
A) 2. 
B) 2.5. 
C) 5. 
D) 10.

Question 17

If in an economy,the MTR = 0.2,the MPS = 0.25,and the MPM = 0.15,what is the value of the MLR?

Accepted Answer

A) 0.3 
B) 0.4 
C) 0.5 
D) 0.55 
E) 0.6 
A) 0.3 
B) 0.4 
C) 0.5 
D) 0.55 
E) 0.6

Question 18

How is the AE function placed onto the 45S1U1P1$\circ$S1S1P0 graph?

Accepted Answer

A) It starts at zero income and rises with a slope equal to the MPE. 
B) It starts on the vertical axis at the level of autonomous expenditures and rises with a slope equal to the MPE. 
C) It starts at zero income and falls with a slope equal to the MPE. 
D) It starts on the vertical axis at the level of autonomous expenditures and falls with a slope equal to the MPE. 
A) It starts at zero income and rises with a slope equal to the MPE. 
B) It starts on the vertical axis at the level of autonomous expenditures and rises with a slope equal to the MPE. 
C) It starts at zero income and falls with a slope equal to the MPE. 
D) It starts on the vertical axis at the level of autonomous expenditures and falls with a slope equal to the MPE.

Question 19

Induced taxes do not change with income,but autonomous taxes do.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true?

Accepted Answer

A) Higher autonomous expenditures will increase the value of the multiplier. 
B) Lower autonomous expenditures will increase the value of the multiplier. 
C) Higher national income will increase the value of the multiplier. 
D) Lower national income will increase the value of the multiplier. 
E) The value of the multiplier is not affected by the level of autonomous expenditures or national income. 
A) Higher autonomous expenditures will increase the value of the multiplier. 
B) Lower autonomous expenditures will increase the value of the multiplier. 
C) Higher national income will increase the value of the multiplier. 
D) Lower national income will increase the value of the multiplier. 
E) The value of the multiplier is not affected by the level of autonomous expenditures or national income.

All of the following,except one,are true statements about expenditure equilibrium.Which is the exception?

What is not a determinant of the level of consumption?

Which of the following variables in the expenditure model are wholly autonomous and which are partly induced?

Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14. -Refer to the information above to answer this question.What is the value of the marginal propensity to expend?

-Refer to the above graph to answer this question.What is the value of autonomous aggregate expenditures?

The following data refers to a national economy with all figures in $billions. -Refer to the table above to answer this question.What is the value of the MPM?

-Refer to the graph above to answer this question.Suppose that G equals $650,I equals $380 and X equals $170.If income equals $1,200,which of the following statements is correct?

Assume that the parameters of a particular economy are as follows: MPC = 0.9,MPM = 0.3.What is the value of the multiplier?

If the marginal tax rate increases,then the marginal propensity to expend will be smaller and the marginal leakage rate will be larger.

What is meant by dis-savings?

The following partial data relates to a national economy (all figures in $billions): -Refer to the above table to answer this question.What is the value of the marginal propensity to expend?

If in an economy,the marginal tax rate = 0.1,the marginal propensity to save = 0.25,and the marginal propensity to import = 0.05,what is the value of the marginal propensity to expend?

The basis of the parameters for an economy shown in Table 6.5.(All figures are in $billion. ) -Refer to Table 6.5 to answer this question.At equilibrium,what is the balance of trade?

What happens if aggregate expenditures exceeds the level of production?

-Refer to the above graph to answer this question.What is the value of the multiplier?

If in an economy,the MTR = 0.2,the MPS = 0.25,and the MPM = 0.15,what is the value of the MLR?

How is the AE function placed onto the 45^$\circ$ graph?

Induced taxes do not change with income,but autonomous taxes do.

Which of the following is true?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 6: Aggregate Expenditures

All of the following,except one,are true statements about expenditure equilibrium.Which is the exception?

What is not a determinant of the level of consumption?

Which of the following variables in the expenditure model are wholly autonomous and which are partly induced?

Assume that in a particular economy the MPC = 0.64 and the MPM = 0.14. -Refer to the information above to answer this question.What is the value of the marginal propensity to expend?

-Refer to the above graph to answer this question.What is the value of autonomous aggregate expenditures?

The following data refers to a national economy with all figures in $billions. -Refer to the table above to answer this question.What is the value of the MPM?

-Refer to the graph above to answer this question.Suppose that G equals $650,I equals $380 and X equals $170.If income equals $1,200,which of the following statements is correct?

Assume that the parameters of a particular economy are as follows: MPC = 0.9,MPM = 0.3.What is the value of the multiplier?

If the marginal tax rate increases,then the marginal propensity to expend will be smaller and the marginal leakage rate will be larger.

What is meant by dis-savings?

The following partial data relates to a national economy (all figures in $billions): -Refer to the above table to answer this question.What is the value of the marginal propensity to expend?

If in an economy,the marginal tax rate = 0.1,the marginal propensity to save = 0.25,and the marginal propensity to import = 0.05,what is the value of the marginal propensity to expend?

The basis of the parameters for an economy shown in Table 6.5.(All figures are in $billion. ) -Refer to Table 6.5 to answer this question.At equilibrium,what is the balance of trade?

What happens if aggregate expenditures exceeds the level of production?

-Refer to the above graph to answer this question.What is the value of the multiplier?

If in an economy,the MTR = 0.2,the MPS = 0.25,and the MPM = 0.15,what is the value of the MLR?

How is the AE function placed onto the 45 ∘\circ∘ graph?

Induced taxes do not change with income,but autonomous taxes do.

Which of the following is true?

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

How is the AE function placed onto the 45^$\circ$ graph?