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| 1 | |
In a private closed economy: |
| | A) | saving always equals planned investment |
| | B) | saving always equals actual investment |
| | C) | unintended changes in inventories are always zero |
| | D) | saving always equals the actual change in inventories |
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| 2 | |
At equilibrium real GDP in a private closed economy: |
| | A) | saving equals the actual change in inventories |
| | B) | the slope of the aggregate expenditures line is 1 |
| | C) | real GDP equals aggregate expenditures |
| | D) | planned saving equals unplanned investment |
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| 3 | |
The change in GDP associated with a change in government spending is: |
| | A) | equal to the change in government spending |
| | B) | smaller than -- and opposite in sign to -- that associated with an equal change in taxes |
| | C) | smaller than -- and of same sign as -- that associated with an equal change in net exports |
| | D) | larger than -- and opposite in sign to -- that associated with an equal change in taxes |
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| 4 | |
If the MPC is .8, a $100 billion increase in government spending will: |
| | A) | increase GDP by $500, the same as would a $100 billion decrease in taxes |
| | B) | increase GDP by $500, more than would a $100 billion decrease in taxes |
| | C) | increase GDP by $500 if accompanied by a $100 billion increase in taxes |
| | D) | have no impact on GDP if accompanied by a $100 billion increase in taxes |
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| 5 | |
A lump-sum tax increase will: |
| | A) | shift the aggregate expenditures line upward by the amount of the tax increase |
| | B) | shift the aggregate expenditures line downward by the amount of the tax increase |
| | C) | shift the aggregate expenditures line downward by an amount less than the tax increase |
| | D) | not affect the aggregate expenditures line |
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| 6 | |
Answer the next 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. All figures are in billions of dollars.
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The equilibrium level of GDP for this economy is: |
| | A) | $450 |
| | B) | $420 |
| | C) | $400 |
| | D) | $224 |
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| 7 | |
If the MPC is .75 and the economy has a recessionary expenditure gap of $10 billion, then equilibrium GDP is: |
| | A) | $10 billion below the full-employment GDP |
| | B) | $10 billion above the full-employment GDP |
| | C) | $40 billion below the full-employment GDP |
| | D) | $40 billion above the full-employment GDP |
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| 8 | |
Use the following table for the next question. All figures are in billions of dollars.
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Refer to the table. Assuming no government or foreign sector, the equilibrium level of GDP in this closed economy is: |
| | A) | $200 billion |
| | B) | $300 billion |
| | C) | $400 billion |
| | D) | $500 billion |
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| 9 | |
Use the following table for the next question. Initially, government spending and taxes are zero, as are net exports. All figures are in billions of dollars.
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Refer to the table. If government spending rises to $80 billion and taxes remain at zero, equilibrium GDP will be: |
| | A) | $300 billion |
| | B) | $400 billion |
| | C) | $500 billion |
| | D) | $600 billion |
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| 10 | |
Assume the MPC is 2/3. If government spending decreases by $6 billion, equilibrium GDP will: |
| | A) | fall by $2 billion |
| | B) | fall by $18 billion |
| | C) | fall by $6 billion |
| | D) | fall by $4 billion |
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