Chapter 11 – The Aggregate Expenditures Model
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53. Other things being equal, a decrease in an economy’s exports will:
54. Other things constant, if domestic consumers purchase fewer foreign goods at each level
of GDP in the short run:
The table shows a private open economy. All figures are in billions of dollars.
Chapter 11 – The Aggregate Expenditures Model
55. Refer to the above table. The equilibrium real GDP is:
56. Refer to the above table. If net exports increased by $10 billion at each level of GDP, the
equilibrium real GDP would be:
57. Refer to the above table. If the marginal propensity to consume in this economy is 0.8, a
$10 increase in its net exports would increase its equilibrium real GDP by:
Chapter 11 – The Aggregate Expenditures Model
58. Other things being equal, the effect of a downward shift of the economy’s net export
schedule on equilibrium GDP will be similar to a(n):
59. A newspaper story states: “For the fourth straight quarter, the nation purchased more
goods from abroad than ever before.” The event described would:
Chapter 11 – The Aggregate Expenditures Model
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60. Which of the following statements is correct?
All figures in the table below are in billions.
Chapter 11 – The Aggregate Expenditures Model
61. Refer to the above data. The equilibrium level of GDP in a private, open economy is:
62. Refer to the above data. The multiplier for this open economy is:
63. Refer to the above data. If exports increased by $15 billion at each level of GDP, then the
equilibrium level of GDP would be:
Chapter 11 – The Aggregate Expenditures Model
All figures in the table below are in billions of dollars.
64. Refer to the above data. If this economy is closed to international trade, then the
equilibrium GDP and the multiplier would be:
65. Refer to the above data. For the open economy, the equilibrium GDP will be:
Chapter 11 – The Aggregate Expenditures Model
66. Refer to the above data. If exports should decrease by $20 billion at each level of GDP,
then the equilibrium GDP for the economy will be:
67. Over time, an increase in the real output and incomes of the trading partners of the United
States will most likely:
68. Which event would most likely decrease an economy’s exports?
Chapter 11 – The Aggregate Expenditures Model
69. What is the likely result from a depreciation of a nation’s currency when its economy is
already operating at its full-employment level of output?
70. In the aggregate expenditures model of the economy, a downward shift in aggregate
expenditures can be caused by a:
71. A tax-cut will have a greater effect on equilibrium GDP if the:
Chapter 11 – The Aggregate Expenditures Model
72. If a lump-sum tax of $40 billion is levied at each level of income and the MPC is 0.75,
then the saving schedule will shift:
The data below is the consumption schedule in an economy. All figures are in billions of
dollars.
73. Refer to the above table. If a government sector is introduced and a lump-sum tax of $30
billion is imposed at all levels of GDP, then the consumption column in the table becomes:
Chapter 11 – The Aggregate Expenditures Model
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74. Refer to the above table. If gross investment is $34 billion, net exports are zero, and there
is a lump-sum tax of $30 billion at all levels of GDP, then the after-tax equilibrium level of
GDP will be:
75. Refer to the above table. Given the levels of investment at $34 billion, zero net exports,
and a lump-sum tax of $30 billion, the addition of government expenditures of $20 billion at
each level of GDP will result in an equilibrium GDP of:
All figures in the table below are in billions of dollars.
Chapter 11 – The Aggregate Expenditures Model
76. Refer to the above data. If gross investment is $8 billion, net exports are zero, and there is
no government, the equilibrium level of GDP will be:
77. Refer to the above data. Gross investment is $8 billion, net exports are $4 billion, and
government collects a lump-sum tax of $30 billion and spends $30 billion. Assume all taxes
are personal taxes and that government spending does not entail shifts in the consumption and
investment schedules. The equilibrium GDP will be:
Chapter 11 – The Aggregate Expenditures Model
78. In the above graph it is assumed that investment, net exports, and government
expenditures:
Chapter 11 – The Aggregate Expenditures Model
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79. Refer to the above graph. If this economy was an open economy without a government
sector, the level of GDP would be:
80. Refer to the above graph. The size of the multiplier associated with changes in
government spending in this economy is:
The table shows a consumption schedule. All figures are in billions of dollars.
Chapter 11 – The Aggregate Expenditures Model
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81. Refer to the above information. If planned investment was $20 billion, government
purchases of goods and services were $20 billion, and taxes and net exports were zero, then
the equilibrium level of GDP would be:
82. Refer to the above information. If lump-sum taxes were $20 billion, planned investment
$45 billion, net exports zero, and government purchases $20 billion, then equilibrium GDP
would be:
The table shows the consumption schedule for a hypothetical economy. All figures are in
billions of dollars.
Chapter 11 – The Aggregate Expenditures Model
83. Refer to the above table. If taxes were zero, government purchases of goods and services
$10, planned investment $6, and net exports zero, equilibrium real GDP would be:
84. Refer to the above table. If taxes were $5, government purchases of goods and services
$10, planned investment $6, and net exports zero, equilibrium real GDP would be:
85. Injections into the income-expenditure stream include:
Chapter 11 – The Aggregate Expenditures Model
86. Leakages from the income-expenditure stream are:
87. In which of the following situations for an open mixed economy will the level of GDP
contract?
Chapter 11 – The Aggregate Expenditures Model
88. The following data show levels of planned variables for an economy. Ig = Investment; Sa=
Saving after taxes; G = Government spending; T = Taxation; X = Exports; M = Imports. What
is the equilibrium level of domestic output?
89. A constitutional amendment is passed that requires the government to have an annually
balanced budget. Should the government desire to increase GDP by $25 billion and meet the
provisions of the law it:
Chapter 11 – The Aggregate Expenditures Model
90. If a government raises its expenditures by $50 billion and at the same time levies a lump-
sum tax of $50 billion, the net effect on the economy will be to:
91. A personal tax cut of $50 billion will affect income differently than an increase in
government spending by $50 billion because:
92. If the marginal propensity to consume is .80 and both taxes and government purchases
increase by $50 billion, GDP will: