Question 1

Refer to the above diagrams.Other things equal, Curve B will shift upward when:

Accepted Answer

A)  the level of GDP increases.
B)  the interest rate increases.
C)  curve A shifts to the left.
D)  curve A shifts to the right.E) B) and C)
F) A) and D)

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.E) B) and D)
F) B) and C)

Question 3

If a lump-sum tax of $40 billion is imposed and the MPC is 0.6, the saving schedule will:

Accepted Answer

A)  shift downward by $24 billion.
B)  shift upward by $24 billion.
C)  shift downward by $16 billion.
D)  shift upward by $16 billion.E) A) and B)
F) All of the above

Question 4

g is gross investment, X is exports, G is government purchases, S and Sa are saving before and after taxes respectively, M is imports, and T is net taxes, that is, taxes less transfers.The equilibrium level of GDP for this economy is: A) Y4. B) Y3. C) Y2. D) Y1." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram where Ig is gross investment, X is exports, G is government purchases, S and Sa are saving before and after taxes respectively, M is imports, and T is net taxes, that is, taxes less transfers.The equilibrium level of GDP for this economy is:

Accepted Answer

A)  Y4.
B)  Y3.
C)  Y2.
D)  Y1.E) A) and D)
F) All of the above

Question 5

If at some level of GDP the economy is experiencing an unplanned decrease in inventories:

Accepted Answer

A)  the aggregate level of saving will decline.
B)  the price level will fall.
C)  the business sector will lay off workers.
D)  domestic output will increase.E) C) and D)
F) A) and C)

Question 6

Refer to the below diagram, which aggregate expenditure (AE)  schedule for a private closed economy implies the largest MPC? 4 B) AE3 C) AE2 D) AE1" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  AE4
B)  AE3
C)  AE2
D)  AE1E) A) and D)
F) C) and D)

Question 7

The table shows a private, open economy.All figures are in billions of dollars.  Refer to the above table.The equilibrium real GDP is:

Accepted Answer

A)  $550
B)  $600
C)  $650
D)  $700E) B) and C)
F) B) and D)

Question 8

Achieving aggregate equilibrium in the economy is indicated by:

Accepted Answer

A)  an equality of saving and planned investment.
B)  an equality of aggregate expenditures and domestic output.
C)  the absence of unplanned investment or disinvestment.
D)  all of the above.E) A) and B)
F) B) and D)

Question 9

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

Accepted Answer

A)  shift the aggregate expenditures line downward.
B)  shift the aggregate expenditures line upward.
C)  not affect the aggregate expenditures line.
D)  reduce the equilibrium GDP.E) A) and B)
F) None of the above

Question 10

The following information is for a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP) .Ig = 80 S = -80 + 0.4Y
Refer to the above information.In equilibrium, consumption will be:

Accepted Answer

A)  $400.
B)  $280.
C)  $320.
D)  $360.E) B) and C)
F) None of the above

Question 11

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.E) None of the above
F) A) and B)

Question 12

g1 to Ig2, the equilibrium GDP will: A) decrease by KD. B) increase by HJ. C) increase by KD. D) increase by GH." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram which applies to a private closed economy.If gross investment increases from Ig1 to Ig2, the equilibrium GDP will:

Accepted Answer

A)  decrease by KD.
B)  increase by HJ.
C)  increase by KD.
D)  increase by GH.E) All of the above
F) B) and C)

Question 13

Cyclical unemployment in Canada is essentially the consequence of:

Accepted Answer

A)  procyclical fiscal policies.
B)  a deficient level of aggregate expenditures.
C)  rapid technological progress.
D)  the geographic immobility of the labor force.E) B) and C)
F) A) and C)

Question 14

1, the equilibrium GDP and the level of consumption will be: A) H and HB respectively. B) J and JI respectively. C) J and JK respectively D) H and HF respectively." class="answers-bank-image d-inline" rel="preload" > 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.E) All of the above
F) B) and C)

Question 15

Refer to the above table.If an additional lump-sum tax of $20 were imposed, we would expect:

Accepted Answer

A)  equilibrium GDP to fall by $30.
B)  equilibrium GDP to fall by $20.
C)  equilibrium GDP to fall by $50.
D)  equilibrium GDP to rise by $24.E) A) and B)
F) B) and C)

Question 16

In the aggregate expenditures model, it is assumed that the planned investment:

Accepted Answer

A)  automatically changes in response to changes in the current level of real domestic output.
B)  changes by less in percentage terms than changes in the level of real domestic output.
C)  does not respond to changes in interest rates.
D)  does not change when the level of real domestic output changes.E) A) and C)
F) B) and C)

Question 17

For a private closed economy aggregate expenditures consist of:

Accepted Answer

A)  C + Ig.
B)  C - Ig.
C)  C + S.
D)  C - S.E) B) and D)
F) A) and C)

Question 18

Refer to the above information.If the real interest rate is 9 percent, the equilibrium level of GDP will be:

Accepted Answer

A)  $600
B)  $500
C)  $400
D)  $300E) B) and D)
F) C) and D)

Question 19

The equilibrium level of GDP in a private closed economy is where:

Accepted Answer

A)  MPC = APC.
B)  unemployment is about 3 percent of the labor force.
C)  planned consumption equals saving.
D)  saving equals planned investment.E) A) and D)
F) None of the above

Question 20

What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

Accepted Answer

A)  net exports fall and contribute to demand-pull inflation
B)  net exports rise and contribute to demand-pull inflation
C)  net exports fall, but equilibrium GDP rises
D)  net exports rise, but equilibrium GDP fallsE) None of the above
F) A) and C)

Exam 11: Part B: The Aggregate Expenditures Model

Refer to the above diagrams.Other things equal, Curve B will shift upward when:

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In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

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In the aggregate expenditures model, it is assumed that the planned investment:

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If at some level of GDP the economy is experiencing an unplanned decrease in inventories:

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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:

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Cyclical unemployment in Canada is essentially the consequence of:

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The table shows a private, open economy.All figures are in billions of dollars. Refer to the above table.The equilibrium real GDP is:

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What is the likely result from a depreciation of a nation's currency when its economy is operating at its full-employment level of output?

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

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Refer to the above diagram which applies to a private closed economy.If gross investment increases from Ig1 to Ig2, the equilibrium GDP will:

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The following information is for a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP) .Ig = 80 S = -80 + 0.4Y Refer to the above information.In equilibrium, consumption will be:

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For a private closed economy aggregate expenditures consist of:

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

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

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Achieving aggregate equilibrium in the economy is indicated by:

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If a lump-sum tax of $40 billion is imposed and the MPC is 0.6, the saving schedule will:

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Refer to the above diagram where Ig is gross investment, X is exports, G is government purchases, S and Sa are saving before and after taxes respectively, M is imports, and T is net taxes, that is, taxes less transfers.The equilibrium level of GDP for this economy is:

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The equilibrium level of GDP in a private closed economy is where:

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Refer to the above information.If the real interest rate is 9 percent, the equilibrium level of GDP will be:

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Refer to the above table.If an additional lump-sum tax of $20 were imposed, we would expect:

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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:

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Refer to the above diagram which applies to a private closed economy.If gross investment increases from I_g1 to I_g2, the equilibrium GDP will:

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The following information is for a private closed economy, where I_g is gross investment, S is saving, and Y is gross domestic product (GDP) .I_g = 80 S = -80 + 0.4Y Refer to the above information.In equilibrium, consumption will be:

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Refer to the above diagram where I_g is gross investment, X is exports, G is government purchases, S and S_a are saving before and after taxes respectively, M is imports, and T is net taxes, that is, taxes less transfers.The equilibrium level of GDP for this economy is:

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