Question 1

If the MPC is 0.5, the tax multiplier is

Accepted Answer

A)  -2.5. 
B)  -2. 
C)  -1.67. 
D)  -1. 
A)  -2.5. 
B)  -2. 
C)  -1.67. 
D)  -1.

Question 2

Federal transfer payments and grants-in-aid as a percentage of GDP increased the most during the

Accepted Answer

A)  Bill Clinton administrations. 
B)  George W. Bush administrations. 
C)  Barack Obama administrations. 
D)  Federal transfer payments and grants-in-aid decreased during all of the above administrations. 
A)  Bill Clinton administrations. 
B)  George W. Bush administrations. 
C)  Barack Obama administrations. 
D)  Federal transfer payments and grants-in-aid decreased during all of the above administrations.

Question 3

Refer to the information provided in Table 9.7 below to answer the questions that follow.
Table 9.7
All Numbers are in $ Million  
-Refer to Table 9.7. Assuming constant MPC, at income of $1,100 million, consumption is $________ million, and at income of $1,400 million, consumption is $________ million.

Accepted Answer

A)  720; 960 
B)  740; 980 
C)  760; 1,000 
D)  780; 1,020 
A)  720; 960 
B)  740; 980 
C)  760; 1,000 
D)  780; 1,020

Question 4

Refer to the information provided in Table 9.3 below to answer the questions that follow.
Table 9.3  
-Refer to Table 9.3. The equilibrium level of output is ________ billion.

Accepted Answer

A)  $3,000 
B)  $2,400 
C)  $1,800 
D)  $1,200 
A)  $3,000 
B)  $2,400 
C)  $1,800 
D)  $1,200

Question 5

Assume that taxes depend on income and the MPC is 0.8 and t is 0.4. An increase in taxes of $10 billion will decrease equilibrium income by

Accepted Answer

A)  $15.4 billion. 
B)  $19.2 billion. 
C)  $25 billion. 
D)  $27 billion. 
A)  $15.4 billion. 
B)  $19.2 billion. 
C)  $25 billion. 
D)  $27 billion.

Question 6

Assume that taxes depend on income. The MPC is 0.9 and t is 0.3. The government spending multiplier is

Accepted Answer

A)  10. 
B)  2.7. 
C)  1.42. 
D)  1.17. 
A)  10. 
B)  2.7. 
C)  1.42. 
D)  1.17.

Question 7

The aggregate consumption function is C = 100 + 0.8Yd. If income is $600 and net taxes are zero, consumption equals

Accepted Answer

A)  zero. 
B)  360. 
C)  460. 
D)  580. 
A)  zero. 
B)  360. 
C)  460. 
D)  580.

Question 8

Refer to the information provided in Table 9.7 below to answer the questions that follow.
Table 9.7
All Numbers are in $ Million  
-Refer to Table 9.7. Assuming constant MPC, at income of $1,300 million, saving is $________ million, at income of $1,500 million, saving is $________ million.

Accepted Answer

A)  170; 210 
B)  180; 220 
C)  190; 230 
D)  195; 235 
A)  170; 210 
B)  180; 220 
C)  190; 230 
D)  195; 235

Question 9

Refer to the information provided in Figure 9.5 below to answer the questions that follow.   Figure 9.5
-Refer to Figure 9.5. At aggregate output of $________ billion, unplanned inventories equal $200 billion.

Accepted Answer

A)  2,400 
B)  3,000 
C)  3,200 
D)  3,600 
A)  2,400 
B)  3,000 
C)  3,200 
D)  3,600

Question 10

Refer to the information provided in Figure 9.4 below to answer the questions that follow.   Figure 9.4
-Refer to Figure 9.4. Along AE1, injections equal leakages when aggregate output equals $________ billion.

Accepted Answer

A)  1,500 
B)  2,000 
C)  2,500 
D)  3,000 
A)  1,500 
B)  2,000 
C)  2,500 
D)  3,000

Question 11

[1/MPS] is the formula for

Accepted Answer

A)  saving. 
B)  the government spending multiplier. 
C)  the MPC. 
D)  the consumption function. 
A)  saving. 
B)  the government spending multiplier. 
C)  the MPC. 
D)  the consumption function.

Question 12

The Canadian economy can be characterized by Equation 9.2.
EQUATION 9.2:
C = 500 + 0.5Yd
Taxes = 600
Equilibrium Output = $4,000
-Refer to Equation 9.2. At equilibrium, the sum of investment and government purchases in Canada is

Accepted Answer

A)  $1,800. 
B)  $1,750. 
C)  $1,500. 
D)  cannot be determined from the given information 
A)  $1,800. 
B)  $1,750. 
C)  $1,500. 
D)  cannot be determined from the given information

Question 13

Refer to the information provided in Table 9.4 below to answer the questions that follow.
Table 9.4  
-Refer to Table 9.4. At an output level of $1,500 billion, the level of aggregate expenditure is ________ billion.

Accepted Answer

A)  $1,300 
B)  $1,400 
C)  $1,500 
D)  $1,600 
A)  $1,300 
B)  $1,400 
C)  $1,500 
D)  $1,600

Question 14

Refer to the information provided in Figure 9.4 below to answer the questions that follow.   Figure 9.4
-Refer to Figure 9.4. What is the value of Point A?

Accepted Answer

A)  $3,500 billion 
B)  $6,000 billion 
C)  $7,000 billion 
D)  cannot be determined from the given information 
A)  $3,500 billion 
B)  $6,000 billion 
C)  $7,000 billion 
D)  cannot be determined from the given information

Question 15

Which of the following is a correct sequence of events during an expansion?

Accepted Answer

A)  unemployment falls, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit falls 
B)  unemployment rises, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit rises 
C)  unemployment rises, income falls, tax revenue rises, unemployment benefits fall, and the budget deficit falls 
D)  unemployment falls, income rises, tax revenue rises, unemployment benefits fall, and the budget deficit falls 
A)  unemployment falls, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit falls 
B)  unemployment rises, income falls, tax revenue falls, unemployment benefits rise, and the budget deficit rises 
C)  unemployment rises, income falls, tax revenue rises, unemployment benefits fall, and the budget deficit falls 
D)  unemployment falls, income rises, tax revenue rises, unemployment benefits fall, and the budget deficit falls

Question 16

Refer to the information provided in Figure 9.4 below to answer the questions that follow.   Figure 9.4
-Refer to Figure 9.4. What is the value of the expenditure multiplier?

Accepted Answer

A)  5 
B)  8 
C)  10 
D)  20 
A)  5 
B)  8 
C)  10 
D)  20

Question 17

Taxes are reduced by $10 billion and income increases by $200 billion. The value of the tax multiplier is

Accepted Answer

A)  -20. 
B)  -5. 
C)  -2. 
D)  -0.5. 
A)  -20. 
B)  -5. 
C)  -2. 
D)  -0.5.

Question 18

Refer to the information provided in Table 9.6 below to answer the questions that follow.
Table 9.6
All Figures in Billions of Dollars  
-Refer to Table 9.6. If taxes are reduced from $100 billion to $50 billion and government spending is reduced from $200 billion to $150 billion, the new equilibrium level of income

Accepted Answer

A)  is $3,550 billion. 
B)  is $3,350 billion. 
C)  is $1,600 billion. 
D)  cannot be determined from this information. 
A)  is $3,550 billion. 
B)  is $3,350 billion. 
C)  is $1,600 billion. 
D)  cannot be determined from this information.

Question 19

If the government spending multiplier is 2, then the tax multiplier

Accepted Answer

A)  is -2. 
B)  is -1. 
C)  is -0.5. 
D)  cannot be determined because the MPS is not given. 
A)  is -2. 
B)  is -1. 
C)  is -0.5. 
D)  cannot be determined because the MPS is not given.

Question 20

Refer to the information provided in Table 9.6 below to answer the questions that follow.
Table 9.6
All Figures in Billions of Dollars  
-Refer to Table 9.6. The economy is at the equilibrium level of output. If government spending increases to a level of $400 billion, the new equilibrium level of output is

Accepted Answer

A)  $2,100 billion. 
B)  $5,400 billion. 
C)  $6,040 billion. 
D)  $6,600 billion. 
A)  $2,100 billion. 
B)  $5,400 billion. 
C)  $6,040 billion. 
D)  $6,600 billion.

If the MPC is 0.5, the tax multiplier is

Federal transfer payments and grants-in-aid as a percentage of GDP increased the most during the

Refer to the information provided in Table 9.7 below to answer the questions that follow. Table 9.7 All Numbers are in $ Million -Refer to Table 9.7. Assuming constant MPC, at income of $1,100 million, consumption is $ million, and at income of $1,400 million, consumption is $ million.

Refer to the information provided in Table 9.3 below to answer the questions that follow. Table 9.3 -Refer to Table 9.3. The equilibrium level of output is ________ billion.

Assume that taxes depend on income and the MPC is 0.8 and t is 0.4. An increase in taxes of $10 billion will decrease equilibrium income by

Assume that taxes depend on income. The MPC is 0.9 and t is 0.3. The government spending multiplier is

The aggregate consumption function is C = 100 + 0.8Yd. If income is $600 and net taxes are zero, consumption equals

Refer to the information provided in Table 9.7 below to answer the questions that follow. Table 9.7 All Numbers are in $ Million -Refer to Table 9.7. Assuming constant MPC, at income of $1,300 million, saving is $ million, at income of $1,500 million, saving is $ million.

Refer to the information provided in Figure 9.5 below to answer the questions that follow. Figure 9.5 -Refer to Figure 9.5. At aggregate output of $________ billion, unplanned inventories equal $200 billion.

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. Along AE₁, injections equal leakages when aggregate output equals $________ billion.

[1/MPS] is the formula for

The Canadian economy can be characterized by Equation 9.2. EQUATION 9.2: C = 500 + 0.5Yd Taxes = 600 Equilibrium Output = $4,000 -Refer to Equation 9.2. At equilibrium, the sum of investment and government purchases in Canada is

Refer to the information provided in Table 9.4 below to answer the questions that follow. Table 9.4 -Refer to Table 9.4. At an output level of $1,500 billion, the level of aggregate expenditure is ________ billion.

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. What is the value of Point A?

Which of the following is a correct sequence of events during an expansion?

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. What is the value of the expenditure multiplier?

Taxes are reduced by $10 billion and income increases by $200 billion. The value of the tax multiplier is

If the government spending multiplier is 2, then the tax multiplier

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 9: The Government and Fiscal Policy

If the MPC is 0.5, the tax multiplier is

Federal transfer payments and grants-in-aid as a percentage of GDP increased the most during the

Refer to the information provided in Table 9.3 below to answer the questions that follow. Table 9.3 -Refer to Table 9.3. The equilibrium level of output is ________ billion.

Assume that taxes depend on income and the MPC is 0.8 and t is 0.4. An increase in taxes of $10 billion will decrease equilibrium income by

Assume that taxes depend on income. The MPC is 0.9 and t is 0.3. The government spending multiplier is

The aggregate consumption function is C = 100 + 0.8Yd. If income is $600 and net taxes are zero, consumption equals

Refer to the information provided in Table 9.7 below to answer the questions that follow. Table 9.7 All Numbers are in $ Million -Refer to Table 9.7. Assuming constant MPC, at income of $1,300 million, saving is $________ million, at income of $1,500 million, saving is $________ million.

Refer to the information provided in Figure 9.5 below to answer the questions that follow. Figure 9.5 -Refer to Figure 9.5. At aggregate output of $________ billion, unplanned inventories equal $200 billion.

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. Along AE1, injections equal leakages when aggregate output equals $________ billion.

[1/MPS] is the formula for

The Canadian economy can be characterized by Equation 9.2. EQUATION 9.2: C = 500 + 0.5Yd Taxes = 600 Equilibrium Output = $4,000 -Refer to Equation 9.2. At equilibrium, the sum of investment and government purchases in Canada is

Refer to the information provided in Table 9.4 below to answer the questions that follow. Table 9.4 -Refer to Table 9.4. At an output level of $1,500 billion, the level of aggregate expenditure is ________ billion.

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. What is the value of Point A?

Which of the following is a correct sequence of events during an expansion?

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. What is the value of the expenditure multiplier?

Taxes are reduced by $10 billion and income increases by $200 billion. The value of the tax multiplier is

If the government spending multiplier is 2, then the tax multiplier

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Refer to the information provided in Table 9.7 below to answer the questions that follow. Table 9.7 All Numbers are in $ Million -Refer to Table 9.7. Assuming constant MPC, at income of $1,300 million, saving is $ million, at income of $1,500 million, saving is $ million.

Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4 -Refer to Figure 9.4. Along AE₁, injections equal leakages when aggregate output equals $________ billion.