Which of the following would increase GDP by the greatest amount?
  • A $20 billion increase in government spending
  • A $20 billion decrease in government spending.
  • an $8 billion downshift in the consumption schedule.
  • reduced taxes and increased government spending.
It is true that:
  • bring actual investment and saving into equality at all levels of GDP.
  • equal increases in government spending and taxes increase the equilibrium GDP.
  • the same amount of tax revenue is collected at each level of GDP.
  • equal to that associated with a change in investment or consumption.
http://ezto.mheducation.com/13252703216803196681.tp4?REQUEST=SHOWmedia&media=image028.pngRefer to the diagram for a private closed economy. At the $300 level of GDP:
  • depreciate the dollar compared to foreign currencies.
  • aggregate expenditures and GDP are equal.
  • a portion of a tax cut will be saved.
  • upward and increase aggregate expenditures.
Which of the following statements is correct for a private closed economy?
  • bring actual investment and saving into equality at all levels of GDP.
  • A $20 billion decrease in government spending.
  • depress real output and employment in the U.S. economy.
  • Saving equals planned investment only at the equilibrium level of GDP.
In a private closed economy, when aggregate expenditures equal GDP:
  • business inventories will fall.
  • planned investment equals saving.
  • planned investment will exceed saving.
  • does not change when real GDP changes.
http://ezto.mheducation.com/13252703216803196681.tp4?REQUEST=SHOWmedia&media=image021.pngRefer to the diagram for a private closed economy. Aggregate saving in this economy will be zero when:
  • Sa + M + T = Ig + X + G.
  • $38 billion.
  • GDP is $60 billion.
  • Ig + Xn must equal $300 billion.
If a nation imposes tariffs and quotas on foreign products, the immediate effect will be to:
  • John Maynard Keynes.
  • depreciate the dollar compared to foreign currencies.
  • increase domestic output and employment.
  • increase output and employment.
In an effort to stop the U.S. recession of 2007-2009, the federal government:
  • planned investment will exceed saving.
  • declined by 27 percent; rose to 25 percent
  • reduced taxes and increased government spending.
  • expenditures of consumers and businesses.
An exchange rate:
  • equal increases in government spending and taxes increase the equilibrium GDP.
  • bring actual investment and saving into equality at all levels of GDP.
  • is the price that the currencies of any two nations exchange for one another.
  • increase its domestic aggregate expenditures and therefore increase its equilibrium GDP.
Actual investment equals saving:
  • at all levels of GDP.
  • actual investment.
  • aggregate expenditures and real GDP are equal.
  • Ca + Ig + Xn + G = GDP.
The recessionary expenditure gap associated with the recession of 2007-2009 resulted from:
  • expenditures of consumers and businesses.
  • depress real output and employment in the U.S. economy.
  • a rapid decline in investment spending.
  • upward and increase aggregate expenditures.
If an unintended increase in business inventories occurs at some level of GDP, then GDP:
  • increase output and employment.
  • is too high for equilibrium.
  • business inventories will fall.
  • declined by 27 percent; rose to 25 percent
The level of aggregate expenditures in the private closed economy is determined by the:
  • upward and increase aggregate expenditures.
  • expenditures of consumers and businesses.
  • depress real output and employment in the U.S. economy.
  • a rapid decline in investment spending.
A lump-sum tax means that:
  • households and businesses, but not government or international trade.
  • the same amount of tax revenue is collected at each level of GDP.
  • equal increases in government spending and taxes increase the equilibrium GDP.
  • the Great Depression and Keynes's macroeconomic theory.
Other things equal, an increase in an economy's exports will:
  • increase saving.
  • aggregate expenditures and real GDP are equal.
  • depress real output and employment in the U.S. economy.
  • increase its domestic aggregate expenditures and therefore increase its equilibrium GDP.
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:
  • a portion of a tax cut will be saved.
  • declined by 27 percent; rose to 25 percent
  • an $8 billion downshift in the consumption schedule.
  • some of the tax increase will be paid out of income that would otherwise have been saved.
In the aggregate expenditures model, an increase in government spending may:
  • upward and increase aggregate expenditures.
  • does not change when real GDP changes.
  • increase output and employment.
  • business inventories will fall.
Suppose the economy's multiplier isOther things equal, a $25 billion decrease in government expenditures on national defense will cause equilibrium GDP to:
  • increase output and employment.
  • MPS in this economy is .4.
  • increase saving.
  • decrease by $50 billion.
Actual investment is $62 billion at an equilibrium output level of $620 billion in a private closed economy. The average propensity to save at this level of output is:
  • GDP is $60 billion.
  • a portion of a tax cut will be saved.
  • $40 billion.
  • 0.10.
In the aggregate expenditures model, a reduction in taxes may:
  • decrease by $50 billion.
  • increase output and employment.
  • actual investment.
  • increase saving.
Saving is always equal to:
  • increase saving.
  • at all levels of GDP.
  • planned investment equals saving.
  • actual investment.
In a private closed economy, when aggregate expenditures exceed GDP:
  • does not change when real GDP changes.
  • planned investment will exceed saving.
  • increase output and employment.
  • business inventories will fall.
If aggregate expenditures exceed GDP in a private closed economy:
  • business inventories will fall.
  • reduced taxes and increased government spending.
  • planned investment will exceed saving.
  • planned investment equals saving.
Unintended changes in inventories:
  • bring actual investment and saving into equality at all levels of GDP.
  • the same amount of tax revenue is collected at each level of GDP.
  • households and businesses, but not government or international trade.
  • Saving equals planned investment only at the equilibrium level of GDP.
Which of the following would reduce GDP by the greatest amount?
  • an $8 billion downshift in the consumption schedule.
  • A $20 billion decrease in government spending.
  • A $20 billion increase in government spending
  • planned investment will exceed saving.
Other things equal, a serious recession in the economies of U.S. trading partners will:
  • depress real output and employment in the U.S. economy.
  • an $8 billion downshift in the consumption schedule.
  • expenditures of consumers and businesses.
  • reduced taxes and increased government spending.
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:
  • increase its domestic aggregate expenditures and therefore increase its equilibrium GDP.
  • is the price that the currencies of any two nations exchange for one another.
  • some of the tax increase will be paid out of income that would otherwise have been saved.
  • a portion of a tax cut will be saved.
Assume the MPC is .If government were to impose $50 billion of new taxes on household income, consumption spending would initially decrease by:
  • $40 billion.
  • 0.10.
  • A $20 billion decrease in government spending.
  • $38 billion.
In a mixed open economy, the equilibrium GDP is determined at that point where:
  • investment schedule upward.
  • a rapid decline in investment spending.
  • Sa + M + T = Ig + X + G.
  • increase output and employment.
In the United States from 1929 to 1933, real GDP _____________ and the unemployment rate ________________.
  • does not change when real GDP changes.
  • upward and increase aggregate expenditures.
  • depreciate the dollar compared to foreign currencies.
  • declined by 27 percent; rose to 25 percent
If the equilibrium level of GDP in a private open economy is $1,000 billion and consumption is $700 billion at that level of GDP, then:
  • an $8 billion downshift in the consumption schedule.
  • is too high for equilibrium.
  • Ig + Xn must equal $300 billion.
  • net exports may be either positive or negative.
(Last Word) Classical macroeconomics was dealt severe blows by:
  • unplanned decreases in inventories occur.
  • reduced taxes and increased government spending.
  • aggregate expenditures and real GDP are equal.
  • the Great Depression and Keynes's macroeconomic theory.
If the United States wants to increase its net exports in the short term, it might take steps to:
  • declined by 27 percent; rose to 25 percent
  • depreciate the dollar compared to foreign currencies.
  • depress real output and employment in the U.S. economy.
  • equal to that associated with a change in investment or consumption.
At the $180 billion equilibrium level of income, saving is $38 billion in a private closed economy. Planned investment must be:
  • $38 billion.
  • an $8 billion downshift in the consumption schedule.
  • increase saving.
  • $40 billion.
Other things equal, the multiplier effect associated with a change in government spending is:
  • depress real output and employment in the U.S. economy.
  • an $8 billion downshift in the consumption schedule.
  • increase its domestic aggregate expenditures and therefore increase its equilibrium GDP.
  • equal to that associated with a change in investment or consumption.
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