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Chapter 11 - The Aggregate Expenditures Model
Complete the following table and answer the question on the basis of the resulting data. All
figures are in billions of dollars.
96. If the above economy was closed to international trade, the equilibrium GDP and the
multiplier would be:
Chapter 11 - The Aggregate Expenditures Model
97. Refer to the above table. For the open economy the equilibrium GDP and the multiplier
are:
98. If net exports decline from zero to some negative amount, the aggregate expenditures
schedule would:
99. If net exports are positive:
Chapter 11 - The Aggregate Expenditures Model
100. An upward shift of the aggregate expenditures schedule might be caused by:
101. Other things equal, an increase in an economy's exports will:
102. If the dollar appreciates relative to foreign currencies, we would expect:
Chapter 11 - The Aggregate Expenditures Model
11-44
103. If a nation imposes tariffs and quotas on foreign products, the immediate effect will be
to:
104. If the multiplier in an economy is 5, a $20 billion increase in net exports will:
(Advanced analysis) Answer the question on the basis of the following information for a
private open economy:
Chapter 11 - The Aggregate Expenditures Model
105. The equilibrium GDP (=Y) in the above economy is:
106. Refer to the above information. In equilibrium, saving is:
107. Refer to the above information. This nation is incurring:
Chapter 11 - The Aggregate Expenditures Model
108. Refer to the above information. International trade in this case:
109. If the equilibrium level of GDP in a private open economy is $1000 billion and
consumption is $700 billion at that level of GDP, then:
110. An exchange rate:
Chapter 11 - The Aggregate Expenditures Model
111. If the United States wants to increase its net exports in the short term, it might take steps
to:
112. Other things equal, serious recession in the economies of U.S. trading partners will:
Chapter 11 - The Aggregate Expenditures Model
113. Refer to the above diagram. If (C + Ig) are the private expenditures in the closed
economy and Xn2are the net exports in the open economy, we can conclude that:
114. Refer to the above diagram. If net exports are Xn2, the GDP in the open economy will
exceed GDP in the closed economy by:
115. Refer to the above diagram. The multiplier in this economy is:
Chapter 11 - The Aggregate Expenditures Model
11-49
116. Refer to the above diagram. If aggregate expenditures in this economy are (C + Ig + Xn2),
then the equilibrium levels of GDP and aggregate expenditures respectively will be:
117. Refer to the above diagram. The change in aggregate expenditures as shown from (C + Ig
+ Xn2) to (C + Ig + Xn1) might be caused by:
118. Refer to the above diagram. The change in aggregate expenditures as shown from (C + Ig
+ Xn1) to (C + Ig + Xn2) will produce:
Chapter 11 - The Aggregate Expenditures Model
(Advanced analysis) Answer the question on the basis of the following information for a
private open economy. The letters Y, C, Ig, X, and M stand for GDP, consumption, gross
investment, exports, and imports respectively. Figures are in billions of dollars.
119. The equilibrium GDP for the above open economy is:
Chapter 11 - The Aggregate Expenditures Model
121. In a mixed open economy the equilibrium GDP exists where:
122. In a mixed open economy the equilibrium GDP is determined at that point where:
123. Suppose that a mixed open economy is producing at its equilibrium income and that net
exports are zero. If at the equilibrium income the public sector's budget shows a surplus:
Chapter 11 - The Aggregate Expenditures Model
124. Other things equal, if $100 billion of government purchases (G) is added to private
spending (C + Ig + Xn), GDP will:
125. Suppose the economy's multiplier is 2. Other things equal, a $25 billion decrease in
government expenditures on national defense will cause equilibrium GDP to:
126. Assume the MPC is .8. If government were to impose $50 billion of new taxes on
household income, consumption spending would initially decrease by:
Chapter 11 - The Aggregate Expenditures Model
127. Refer to the above diagram. The level of government spending:
Chapter 11 - The Aggregate Expenditures Model
128. Refer to the above diagram. The sizes of the multipliers associated with changes in
investment and government spending in this economy are:
129. Refer to the above diagram. The impact of the public sector on the equilibrium GDP:
130. Other things equal, the multiplier effect associated with a change in government
spending is:
Chapter 11 - The Aggregate Expenditures Model
131. In which of the following situations for a mixed open economy will the level of GDP
expand?
132. If a lump-sum income tax of $25 billion is levied and the MPS is 0.20, the:
133. Which of the following statements is incorrect?
Chapter 11 - The Aggregate Expenditures Model
134. Suppose the economy is operating at its full-employment-noninflationary GDP and the
MPC is 0.75. The Federal government now finds that it must increase spending on military
goods by $21 billion in response to deterioration in the international political situation. To
135. A $1 increase in government spending on goods and services will have a greater impact
on the equilibrium GDP than will a $1 decline in taxes because:
136. In a mixed open economy, if aggregate expenditures exceed GDP:
Chapter 11 - The Aggregate Expenditures Model
137. An increase in taxes of a specific amount will have a smaller impact on the equilibrium
GDP than will a decline in government spending of the same amount because:
The following schedule contains data for a private closed economy. All figures are in
billions. Use these data in answering the question.
138. Refer to the above data. If gross investment is $10 at all levels of GDP, the equilibrium
GDP will be:
Chapter 11 - The Aggregate Expenditures Model
139. Refer to the above data. If a lump-sum tax of $20 is imposed, the consumption schedule
will become:
Chapter 11 - The Aggregate Expenditures Model
140. Which of the following is a correct statement of the impacts of a lump-sum tax?
141. The level of aggregate expenditures in a mixed open economy is comprised of:
142. If the MPC is 2/3, the initial impact of an increase of $12 billion in lump-sum taxes will
be to cause:
Chapter 11 - The Aggregate Expenditures Model
143. In a mixed closed economy:
144. An increase in taxes will have a greater effect on the equilibrium GDP:
145. A lump-sum tax causes the after-tax consumption schedule:
