Details of this Paper

If the MPC in an economy is.8




1. If the MPC in an economy is.8, government could shift the aggregate demand curve;rightward by $100 billion by;a) increasing government spending by $80 billion;b) increasing government spending by $25 billion;c) decreasing taxes by $100 billion;d) decreasing taxes by $ 25 billion;2. In an aggregate expenditure diagram a lump-sum tax (T) will;a)shift the C+Ig+Xn line upward by an amount equal T;b)shift the C+Ig+Xn line downward by an amount equal T;c)not affect the C+Ig+Xn line;d) Shift the C+Ig+Xn line downward by an amount equal to T x MPC;3. In the above diagram, a shift from AS2 to AS3 be caused by a(n);a) increase in business taxes and costly government regulation;b) decrease in the prices of domestic resources;c) decrease in interest rates;d) decrease in the price level;4. Capital Goods, because their purchase can be postpone like ______ consumer goods, tend to;contribute to ______ in investment spending.;a) nondurable, instability;b) nondurable, stability;c) durable, instability;d)durable, stability;5. Refer to the above diagram. The impact the public sector on the equilibrium GDP;a) Is expansionary;b) is contractionary;c) Is neutral;d) cannot be determinate from the information given;6) Which of the following would most likely reduce aggregate demand (shift the AD curve to;the left)?;a) An appreciation of the U.S. dollar;b) Increased government spending on military equipment;c) Increased consumer optimism regarding future economic conditions;d) A reduced amount of excess capacity;7.In the last 1990s the U.S. stock marked boomed, causing U.S consumption to rise. Economist;refer to this outcome as the;a)Keynes Effect;b)Interest-rate effect;c) wealth effect;d)multiplier effect;8. An inflationary expenditure is the amount by which;a) savings exceed investment as the full-employment GDP;b)aggregate expenditures exceed the full-employment level of GDP;c) aggregate expenditures exceed any given level of GDP;d) Equilibrium GDP falls short of the full-employment GDP;Real GDP;$0;10;40;70;100;130;160;Consumption;(after taxes);- $ 20;0;20;40;60;80;100;Gross;Investment;$10;10;10;10;10;10;10;Net Exports;$ +5;+5;+5;+5;+5;+5;+5;Government;Purchases;$15;15;15;15;15;15;15;9) Refer to the above table. If the full-employment real GDP is $ 70 the;a) inflationary expenditure gap is $ 10;b) recessionary and inflationary expenditure gaps are both 0$;c) inflationary expenditure gap is $30;d) recessionary gap is $ 10;10. Refer to the above table. If the full-employment GDP is $40 the;a)inflationary expenditure gap is $ 10;b)inflationary expenditure gap is $ 20;c) recessionary expenditure gap is $ 30;d) recessionary expenditure gap is $ 10;11. If nation imposes tariffs and quotas on foreign products, the immediate effect will be to;a) increase efficiency in the world economy;b) increase domestic output and employment;c) reduce domestic output and employment;d) reduce the rate of domestic inflation;12.If the dollar price of foreign currencies falls (that is, the dollar appreciates), we could;expect;a) aggregate demand to decrease and aggregate supply to increase;b) both aggregate demand and aggregate supply to decrease;c)aggregate demand to increase and aggregate supply to decrease;d) both aggregate demand and aggregate supply to increase;13. Refer to the above diagram for a private closed economy. At the $200 Level of GDP;a) Consumption is 200 and planned investment is $ 50 so the aggregate expenditure are $ 250.;b) aggregate expenditure fall short of GDP with investment is $ 50 so the aggregate expenditure;are $ 300;c) consumption is $ 250 and the actual investment is $50 so the aggregate expenditures are $300;d) consumption is $ 200 and planed investment is $ 100 so the aggregate expenditure are $300;14. In a certain year the aggregate amount demanded at the existing price level consists of $100;billion of consumptions, $40 billion of investment, $10 billion of net exports, and $20 billion;of government purchases. Full employment GDP is $120 billion. To obtain price level stability;under these conditions the government should;a) Increase tax rates and/or reduce government spending;b) encourage private investment by reducing corporate income taxes;c) increase government expenditures;d) discourage personal saving by reducing the interest rate on government bonds;15. Savings is always equal to;a) actual investment;b) unintended changes in inventories;c) planned investment;d) planned investment less unintended increases in inventories;16. Refer to the above diagrams, in which AD1 and AS1 are the "before" curves and AD2 and;AS2 are the "after" curves. Other things equal, an increase in investment spending is depicted;by;a) Panels (B) and (C);b) Panel (C) only;c) Panel (B) only;d) Panel (A) only


Paper#24126 | Written in 18-Jul-2015

Price : $22