When the government raises its purchases, the planned expenditure (PE) line shifts ________ and equilibrium output __________.
downward; falls
upward; rises
upward; falls
downward; rises
Upward ; rises
When government expenditure increases PE line shifts upward and equilibrium output rises
When the government raises its purchases, the planned expenditure (PE) line shifts ________ and equilibrium output...
According to the Keynesian-cross analysis, when there is a shift upward in the government-purchases schedule by an amount ΔG and the planned expenditure schedule increases by an equal amount, the equilibrium income rises by: ΔG x 1/(1-MPC) ΔG x 1/(1+MPC) One unit ΔG
17) The aggregate expenditure line is upward sloping since as GDP increases, A) government purchases increase C) investment increases B) consumption increases D) net exports increase
The economy is in equilibrium, TP = TE, and Real GDP is $2,000 billion. The MPC is 0.75, the multiplier is operative, and idle resources exist at each expenditure round. Autonomous investment spending falls by $10 billion. As a result, the TE curve shifts __________, inventory levels unexpectedly __________, business firms __________ the quantity of goods and services they produce, and Real GDP __________ by __________. downward; rise; decrease; falls; $7.5 billion downward; fall; increase; rises; $40 billion downward; rise;...
16) Consider a macro model with a constant price level and demand-determined output. A rise in the net tax rate ________ the simple multiplier and ________ equilibrium national income. A) lowers; raises B) lowers; lowers C) raises; raises D) lowers; has no effect on E) raises; has no effect on 17) Other things being equal, an exogenous fall in the domestic price level leads to a rise in private-sector wealth. As a result, there is A) a downward shift in...
The following table shows the relationship between aggregate planned expenditure and real GOP in the hypothetical economy of Econoworld Real GDP bbons of 2007 dollars) Aggregate planned expenditure (billions of 2007 dollars) 100 200 300 420 1131 The level GPS 580 740 Ол ееn O Canadians' Wealth Rises Canadian net saving in the first quarter of 2017 was 522 billion Holdings of financial assets increased by 5162 bilion and the value of shares in corporations increased by $113 billion Explain...
Suppose the government raises its revenue by a net tax of 35 percent on income, t = 0.35. The marginal propensity to consume out of disposable income is 0.85 and the marginal propensity to import is 0.25. Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least two decimal places. a) What is the slope of the AE function? What is the size of the multiplier? Slope of AE = 0...
Income Or Output Y Consumption Expenditure C Investment Expenditure I Government Expenditure G Net export Expenditure NX $4,000 3,925 100 100 25 4,100 4,000 100 100 25 4,200 4,075 100 100 25 4,300 4,150 100 100 25 4,400 4,225 100 100 25 4,500 4,300 100 100 25 4,600 4,375 100 100 25 4,700 4,450 100 100 25 4,800 4,525 100 100 25 4,900 4,600 100 100 25 5,000 4,675 100 100 25 a) Determine equilibrium level...
1. If the government reduces spending A) the IS curve will shift to the right B) output will increase if interest rates remain fixed C) consumption will increase D) all of the above 2. If the government cuts taxes A) disposable income falls B) planned expenditures rise C) the IS curve shifts to the left D) all of the above 3. Qualitatively, an increase in government purchases has the same impact as an increase in autonomous A) consumption B) investment...
9. Refer to the Figure13-2. If the economy were initially in equilibrium at r0 and E0 and the government removed import quotas, what would happen to the exchange rate? a. It would appreciate to E1. b. It would appreciate to E2. c. It would depreciate to E1. d. It would depreciate to E2. ____ 10. When a country experiences capital flight, which of the following best explains the effects? a. The interest rate falls because the demand for loanable funds shifts left....
Problem 4 Consider the following economy: Consumption Expenditure 446,832 million Planned Investment Expenditure 346,877 million Government Expenditure 446,832 million Exports 402,443 million Imports 388,374 million Marginal Propensity to Save 0.3 Marginal Tax Rate 0.32 Autonomous Taxes 301,240 million Marginal Propensity to Import (nx) 0.04 (a) Calculate the equilibrium level of income. (0.5 mark) (b) Calculate autonomous consumption. (0.5 mark) (c) Calculate autonomous net exports. (0.5 mark) (d) Calculate autonomous planned expenditures. (0.5 mark) (e) Calculate the marginal leakage rate. (0.5 mark) (f) Assume that the...