5. The economy below would be characterized as a
domestic output | AE, closed economy | government |
200 | 230 | 20 |
250 | 270 | 20 |
300 | 310 | 20 |
350 | 350 | 20 |
400 | 390 | 20 |
450 | 430 | 20 |
500 | 470 | 20 |
A) private closed economy
B) private open economy
C) closed mixed economy
D) open mixed economy
6. If all forms of spending below are integrated into the economy, equilibrium GDP is
domestic output | AE, closed economy | government |
200 | 230 | 20 |
250 | 270 | 20 |
300 | 310 | 20 |
350 | 350 | 20 |
400 | 390 | 20 |
450 | 430 | 20 |
500 | 470 | 20 |
A) 300
B) 350
C)400
D)450
7. If the below economy was closed to international trade, the equilibrium GDP is
domestic output | AE, closed economy | exports | imports |
200 | 230 | 30 | 20 |
250 | 270 | 30 | 20 |
300 | 310 | 30 | 20 |
350 | 350 | 30 | 20 |
400 | 390 | 30 | 20 |
450 | 430 | 30 | 20 |
500 | 470 | 30 | 20 |
A) $300
B) $350
C) $400
D) $450
8. Refer to the below table. The spending multiplier in this economy would be
domestic output | AE, closed economy | exports | imports |
200 | 230 | 30 | 20 |
250 | 270 | 30 | 20 |
300 | 310 | 30 | 20 |
350 | 350 | 30 | 20 |
400 | 390 | 30 | 20 |
450 | 430 | 30 | 20 |
500 | 470 | 30 | 20 |
A) 2
B) 3
C) 4
D) 5
9. Refer to the below table. For the open economy, the equilibrium GDP is
domestic output | AE, closed economy | exports | imports |
200 | 230 | 30 | 20 |
250 | 270 | 30 | 20 |
300 | 310 | 30 | 20 |
350 | 350 | 30 | 20 |
400 | 390 | 30 | 20 |
450 | 430 | 30 | 20 |
500 | 470 | 30 | 20 |
A) $300
B) $350
C) $400
D) $450
10. If net exports decline from zero to some negative amount, the aggregate expenditures schedule would
A) shift upward
B) shift downward
C) not move, as net exports do not affect aggregate
expenditures
D) become steeper
11. If the spending multiplier in an economy is 5, a $20 billion decrease in taxes will
A) increase gdp by $80 billion
B) increase gdp by $100 billion
C) decrease gdp by $80 billion
D) decrease gdp by $100 billion
12. The tax multiplier for the below economy would be
domestic output | AE, closed economy | government |
200 | 230 | 20 |
250 | 270 | 20 |
300 | 310 | 20 |
350 | 350 | 20 |
400 | 390 | 20 |
450 | 430 | 20 |
500 | 470 | 20 |
A) -2
B) -3
C) -4
D) -5
13. If the economy is operating at a point above the equilibrium point, then
A) AE is greater than GDP
B) GDP is greater than AE
C) The economy is at a sustainable full employment level
D) Business inventories have been depleted
14. Which of the following is NOT true in the Keynesian aggregate expenditures model?
A) Price level is held constant
B) There is a direct relationship between aggregate expenditures
and GDP
C) The wealth effect has no bearing on the aggregate expenditures
model
D) All changes in spending are autonomous and do not change the MPC
15. Other things equal, of a change in the tastes of American consumers causes them to purchase more foreign goods at each level of US GDP
A) Unemployment will decrease domestically
B) US GDP will fall
C) Inflation will occur domestically
D) US real GDP will rise
(5) (C)
Since AE values are for closed economy, this is a closed economy. Since value of government spending is given, this is a mixed economy.
(6) (D)
In equilibrium, Domestic output = AE for closed economy + Government spending, which is satisfied when
450 = 430 + 20
(7) (B)
In closed-economy equilibrium, Domestic output = AE for closed economy, which is satisfied when
350 = 350
(8) (D)
Marginal propensity to consume (MPC) = Change in Domestic output / Change in AE = (270 - 230) / (250 - 200) = 40/50
= 0.8
Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.8) = 1/0.2 = 5
NOTE: As per Answering Policy, 1st 4 questions are answered.
5. The economy below would be characterized as a domestic output AE, closed economy government 200...
9. Refer to the below table. For the open economy, the equilibrium GDP is domestic output AE, closed economy exports imports 200 230 30 20 250 270 30 20 300 310 30 20 350 350 30 20 400 390 30 20 450 430 30 20 500 470 30 20 A) $300 B) $350 C) $400 D) $450 10. If net exports decline from zero to some negative amount, the aggregate expenditures schedule would A) shift upward B) shift downward C)...
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