Eco 3 – Flashcards
76 test answers
Unlock all answers in this set
Unlock answers 76question
refer to the above data the MPS IS
answer
3/10
Unlock the answer
question
the equilibrium level of GDP in a private closed economy is where
answer
aggregate expenditures equal GDP
Unlock the answer
question
in a private closed economy when aggregate expenditures equal GDP
answer
planned investment equals saving
Unlock the answer
question
in a private closed economy when aggregate expenditures exceeds GDP
answer
business inventories will fall
Unlock the answer
question
if at some level of GDP the economy is experiencing an unintended decrease in inventories
answer
domestic output will increase
Unlock the answer
question
if an unintended increase in business inventories occurs
answer
we can expect businesses to lower the level of production
Unlock the answer
question
for a private closed economy and unintended decline in inventories suggest that
answer
aggregate expenditures exceed GDP
Unlock the answer
question
for a private closed economy aggregate expenditures consist of
answer
c+Ig
Unlock the answer
question
when investment remains the same at each level of GDP in a private closed economy , the slope of the aggregate expenditures schedule
answer
equals the MPC
Unlock the answer
question
Actual investment is 62 billion at an equilibrium output level is
answer
.10
Unlock the answer
question
if unintended increase in business inventories occur we can expect
answer
a decline in GDP and rising unemployment
Unlock the answer
question
in a private economy .... investment is equal to saving at all levels of GDP and equilibrium occurs only at the level of GDP where... investment is equal to saving
answer
actual; planned
Unlock the answer
question
In the aggregate expenditures model, equilibrium GDP IN A PRIVATE CLOSED ECONOMY IS INDICATED BY
answer
All of the above
Unlock the answer
question
in the aggregate expenditures model, technological progress will shift the investment schedule
answer
upward and increase aggregate expenditures.
Unlock the answer
question
at equilibrium real GDP in a private closed economy;
answer
aggregate expenditures and real GPD are equal
Unlock the answer
question
which of the following statements is correct for a private closed economy
answer
saving equals planned investment only at the equilibrium level of GDP
Unlock the answer
question
at the 180 billion equilibrium level of income saving is 38 billion in a private closed economy planned investment must be
answer
38 billion equilibrium level of income saving
Unlock the answer
question
saving is always equal to
answer
actual investment
Unlock the answer
question
actual investment is
answer
planned investment plus unintended increases inventories
Unlock the answer
question
investment and savings are respectively
answer
injections and leakages
Unlock the answer
question
imports have the same effect on the current size of GDP
answer
saving
Unlock the answer
question
exports have the same effect on the current size of GDP
answer
investment
Unlock the answer
question
at the equilibrium GDP for an open economy
answer
net exports may be either positive or negative
Unlock the answer
question
other things equal if change in the tastes of consumers causes them to purchase more foreign goods at each level of US GDP
answer
Us GDP will fall
Unlock the answer
question
If net exports decline from zero to some negative amount the aggregate expenditures schedule would
answer
shift downward
Unlock the answer
question
if net exports are positve
answer
aggregate expenditures are greater at each level of GDP then when net exports are zero or negative
Unlock the answer
question
other things equal an increase in economy exports will
answer
increase its domestic aggregate expenditures and therefore increase its equilibrium GDP
Unlock the answer
question
If the dollar appreciates relative to foreign currencies we would expect
answer
a country's net exports to fall
Unlock the answer
question
if a nation imposes tariffs and quotas on foreign products the immediate effect will be to
answer
increase domestic output and employment
Unlock the answer
question
if the multiplier in an economy is 5, a 20 billion increase in net exports will
answer
increase by 100 billion
Unlock the answer
question
if the equilbrium level of GDP in a private open economy is 100 billion and consumption is 700 billion at that level of GDP then
answer
Ig+Cn must equal 300 billion
Unlock the answer
question
an exchange rate
answer
is the price at that the currencies of any two nations exchange for one another
Unlock the answer
question
if the unitied states wants to increase its net exports it might take steps to
answer
increase the dollar price of foreign currencies
Unlock the answer
question
other things equal serious recession in the economies of US trading partners will
answer
depress real output and employment in the US economy
Unlock the answer
question
In a mixed economy the equilibrium GDP exists where
answer
Sa+M+T=Ig+X+G
Unlock the answer
question
other things equal, if 100 billion of government purchases G is added to private spending C+Ig+Xn
answer
...
Unlock the answer
question
in which of the following situation for a mixed economy will the level of GDP expand
answer
when Ig+X+G exceeds Sa+M+T
Unlock the answer
question
If a lump -sum income tax of 25 billion is levied and the and the MPS is .20 the
answer
consumption schedule will shirft downward by 20 billion
Unlock the answer
question
Suppose the economy is operating at its ful employment noninflationary GDP and the MPC is .75 the federal government now finds that it must increase spending on military goods by 21 billion in response to deterioration in the international political situation to sustain full employment non inflation GDP government must
answer
increase taxes by 28 billion
Unlock the answer
question
a 1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP that will 1 decline in taxes because
answer
a portion of a tax cut will be saved
Unlock the answer
question
ignoring international trade in a mixed economy aggregate expenditures are comprised of
answer
Ca+Ig+Xn+G
Unlock the answer
question
if APC=.6 and MPC=.7 the immediate impact of an increase in personal taxes of 20 will be to
answer
decrease consumption by 14
Unlock the answer
question
when the public sector is added to the aggregate expenditures are model
answer
we add a new leakage in the form of taxes and a new injection in the form of government spending
Unlock the answer
question
the level of aggregate expenditures in a mixed open economy is comprised of
answer
Ca+Ig+Xn+G
Unlock the answer
question
in a mixed closed economy
answer
taxes and saving are leak ages while investment and government purchases are injections
Unlock the answer
question
an increase in taxes will have a greater effect on the equilibrium GDP
answer
the larger the MPC
Unlock the answer
question
which of the following would increase GDP by the greatest amount
answer
a 20 billion increase in government spending
Unlock the answer
question
what do investment and government expenditures have in common
answer
both represent injection to the circular flow
Unlock the answer
question
taxes represent
answer
a leakage of purchasing power like, savings
Unlock the answer
question
suppose government finds it can increase the equilibrium real GDP 45 billion by increasing government purchases by 18 billion
answer
MPS in the economy is .4
Unlock the answer
question
in the aggregate expenditures model, a reduction in taxes may
answer
increase saving
Unlock the answer
question
in the agregate expenditures model an in increase in government spending may
answer
increase output and employment
Unlock the answer
question
if a 20 billion increase in government expenditures increases equilibrium GDP by 50 billion then
answer
the MPC for this economy is .6
Unlock the answer
question
a lump sum tax mean that
answer
the same amount of tax revenue is collected at each level of GDP
Unlock the answer
question
equal increase in government purchases and taxes will
answer
increase the equilibrium GDP and the size of that increase is independent of the size of the MPC
Unlock the answer
question
an inflationary expenditure gap is the amount by which
answer
aggregate expenditures exceed the full employment level of GDP
Unlock the answer
question
cyclical unemployment in the US is essentially the consequence of
answer
a deficient level of aggregate expenditures
Unlock the answer
question
the aggregate demand curve
answer
shows the amount of real output that will be purchased at each possible price level
Unlock the answer
question
the interest rate effect suggest that
answer
an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending
Unlock the answer
question
the real balances effect indicates that
answer
a higher price level will decrease the real value of many financial assets and therefore reduce spending
Unlock the answer
question
the foreign purchases effect suggest that an increase in the US price level relative to other countires will
answer
increase us imports and decrease us exports
Unlock the answer
question
the real balances interest rate and foreign purchases effects all help explain
answer
why the aggregate demand curve is down sloping
Unlock the answer
question
the factors that affect the amounts that consumers businesses governemtn and foreigners wish to purchase at each price level are the
answer
determinants of aggregate demand
Unlock the answer
question
Other things equal if the national incomes of the major trading partners of the US were to rise the US
answer
aggregate demand curve would shift to the right
Unlock the answer
question
other things equal a decrease in the real interest rate will
answer
expand investment and shift AD curve to the right
Unlock the answer
question
a decline in investment will shift the AD curve
answer
left by a multiple of the change in investment
Unlock the answer
question
and economy s aggregate demand curve shifts leftward or rightward by more than changes in initial spending because
answer
multiplier effect
Unlock the answer
question
the economy's long run AS curve assumes that wages and other resources prices
answer
eventually rise and fall to match upward or downward changes in the price level
Unlock the answer
question
the aggregate supply curbe (short run)
answer
is steeper above the full employment output than below it
Unlock the answer
question
monopoly or market power is the ability of a firm to
answer
set its price
Unlock the answer
question
other things equal a reduction in personal and business taxes can be expected to
answer
increase both aggregate demand and aggregate supply
Unlock the answer
question
prices and wages ten to be
answer
flexible upward but inflexible downward
Unlock the answer
