Question

1.the text's analytical model assumes that the following are functions of current income

a. consumption

b. exports

c.imports

d. government expenditure

e. both consumption and imports

2. suppose that a hypothetical economy has consumption function of c=200+0.8Y, investment equal to 300, government purchases equal to 500, exports equal to 240 and in import function im=40+0.1Y. what is the level of income when the economy in equilibrium?

a.1800

b.4000

c.2000

d.4400

e.1400

3. An aggregate expenditure function illustrates that as national income rises

a. interest rates must also rise

b. prices rise

c. desired expenditure on currently produced goods will rise by a proportion of the increase in national income

d. desired expenditures on currently produced goods fall

e. employment rises

4. which of the following factors will cause an upward shift of the consumption function

a. an unexpected decrease in wealth

b. a sudden decrease in consumer confidence

c. a more negative attitude towards saving

d. an increase in the rate of interest

e. an increase in disposable income

Answer #1

The economy of Beverly Hills has a consumption function of C =
10 + 0.8Y, investment equal to
6, government expenditure equal to 10, exports equal to 10, and an
import function of M = 0.1Y.
1) Refer to Fact 27.5.1. What is the equation for the aggregate
expenditure curve for this
economy?
A) AE = 16 + 0.7Y
B) AE = 36 - 0.7Y
C) AE = 26 + 0.8Y
D) AE = 36 + 0.9Y
E) AE =...

1.Which of the following is a true statement about the
multiplier? *
The multiplier effect does not occur when autonomous
expenditures decrease
The multiplier is a value between zero and one
The smaller the MPC, the larger the multiplier
The multiplier rises as the MPC rises
2.According to the Keynesian model of the macroeconomic, the
most effective means for closing a recessionary gap is *
Decrease in marginal tax rates which shift SRAS
Increases in government spending which shift AD...

consider the Macroeconomic model
G=30(government expenditure)
I=90 (planned investment)
C= 0.8Y+20 (consumption)
Y= C+G+I(equilibrium)
work out the change in the national income Y when government
expenditure rises by 1 unit.

Question 1
The relationship between consumption and disposable income is
such that as
consumption rises, disposable income falls
disposable income rises, consumption falls
disposable income rises, consumption rises
disposable income rises, saving falls
Question 2
The federal government’s principal tool in altering consumer
spending is
changing corporate taxes
changing federal sales taxes
changing unemployment insurance benefits
changing personal income taxes
Question 3
The difference between disposable income and consumption
spending is
transfer payments
personal taxes
saving
personal investment
Question 4...

Suppose the following aggregate expenditure model describes the
US economy:
C = 1 + (8/9)Yd T = (1/4)Y I = 2 G = 4 X = 3 IM = (1/3)Y where C
is consumption, Yd is disposable income, T is taxes, Y is national
income, I is investment, G is government spending, X is exports,
and IM is imports, all in trillions $US.
(a) Derive a numerical expression for aggregate expenditure (AE)
as a function of Y. Calculate the equilibrium...

1. Given the following functions which represent an open
economy: Consumption: C=100+0.8Y Investment: I= 50 Government
Expenditure: G=130 Exports: X=100 Imports: M=50+0.2Y Equilibrium:
Y=C+I+G+X-M a) determine the values of the equilibrium level of
income, and b) determine the values of C and M at the
equilibrium
2. Given the following functions: Consumption: C=50+0.8Y
Investment: I= 750 -30r Money supply: Ms=4000
Transaction-Precautionary demand for money: L1=100 Speculative
demand for money: L2=3825-20r Determine the values of the national
income (Y), and interest...

1. Suppose the consumption equation is represented by the
following: C = 250 + .75YD.
If no other variables depend on Y, then the Keynesian Cross
expenditure multiplier in this economy is
A) .25.
B) .75.
C) 1.
D) 4.
E) 5.
2. Use the following information to answer this question. If
nominal GDP rises from $100 trillion to $120 trillion, while the
GDP deflator rises from 2.0 to 2.2, the percentage change in real
GDP is approximately equal to...

In a closed economy, given the following:
The consumption function C = 0.8(1 – 0.25) Y +
12
The average tax rate t = 25%
The level of private investment I = 26
The level of government spending G = 14
Where Y is the national income.
Calculate the equilibrium level of income and output in the
economy.
Calculate the expenditure multiplier and show the effect
of
an increase in government spending and
an increase in private investment.

In a closed economy, the consumption function is:
c = 1.15 + 0.75(y - t) billions of 1992 dollars.
The tax function is:
t = 0.1y + 0.1 billions of 1992 dollars.
Planned investment is $1 billion and planned government
expenditures
are $1.5 billion. Calculate:
The equilibrium level of real GDP.
2. Consumer expenditure
3. Saving
4. The investment multiplier
5. The government budget deficit
6. The leakages from and injections into the circular flow of
income and
expenditure. Do...

1. If the multiplier is 6 and exports
decrease by $30, what impact will that have on aggregate
expenditure?
A) decrease by $180
B) increase by $180
C) increase by $30
D)
decrease by $30
2, An increase of the tax on business
income will reduce aggregate demand because
A) consumption spending will fall
B) government spending will fall
C) investment spending will fall
D) wages will increase
3.
Saving equals
A) disposable income...

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