Macro Ch 9 Midterm 2

D. equals the MPC.

20. When investment remains the same at each level of GDP in a private closed economy, the slope of the aggregate expenditures schedule: A. exceeds the MPC. B. is less than the MPC. C. equals the MPS. D. equals the MPC.

C. Ca + Ig + Xn + G = GDP.

19. In a mixed open economy the equilibrium level of GDP exists where: A. Ca + Ig + Xn intersects the 45-degree line. B. Ca + Ig = Sa + T + X. C. Ca + Ig + Xn + G = GDP. D. Ca + Ig + Xn = Sa + T.

A. C + Ig.

2. For a private closed economy aggregate expenditures consist of: A. C + Ig. B. C - Ig. C. C + S. D. C - S.

A. expenditures of consumers and businesses.

1. The level of aggregate expenditures in the private closed economy is determined by the: A. expenditures of consumers and businesses. B. intersection of the saving schedule and the 45-degree line. C. equality of the MPC and MPS. D. intersection of the saving and consumption schedules.

C. planned and actual investment are equal.

10. At equilibrium real GDP in a private closed economy: A. the MPC must equal the APC. B. the slope of the aggregate expenditures schedule equals the MPS. C. planned and actual investment are equal. D. planned saving and consumption are equal.

B. actual investment.

11. Saving is always equal to: A. planned less unintended investment. B. actual investment. C. planned investment. D. unintended investment.

D. saving.

12. Imports have the same macroeconomic effect on GDP as: A. exports. B. investment. C. consumption. D. saving.

B. Canadian GDP will fall.

13. Other things equal, if a change in the tastes of Canadian consumers causes them to purchase more foreign goods at each level of Canadian GDP: A. unemployment will decrease domestically. B. Canadian GDP will fall. C. inflation will occur domestically. D. Canadian real GDP will rise.

C. the change in imports divided by a change in GDP.

14. The marginal propensity to import is: A. the change in imports divided by a change by exports. B. the change in imports divided by a change in consumption. C. the change in imports divided by a change in GDP. D. the change in imports multiplied by a change in GDP.

D. has a contractionary effect on GDP.

15. In the above private open economy, international trade: refer to quiz A. is inflationary. B. is a source of additional jobs for domestic workers. C. has no effect on GDP. D. has a contractionary effect on GDP.

D. a country's net exports to fall.

16. If the dollar appreciates relative to foreign currencies, we would expect: A. the multiplier to decrease. B. a country's exports and imports to both fall. C. a country's net exports to rise. D. a country's net exports to fall.

D. increase the dollar price of foreign currencies.

17. If Canada wants to increase its net exports, other things equal, it might take steps to: A. increase its GDP. B. reduce existing tariffs and import quotas. C. decrease the dollar price of foreign currencies. D. increase the dollar price of foreign currencies.

B. increase output and employment.

18. In the aggregate expenditures model, an increase in government spending will: A. decrease real GDP. B. increase output and employment. C. shift the aggregate expenditures schedule downward. D. do all of the above.

A. an increase in the real interest rate

3. Which of the following will cause the investment schedule to shift downward? A. an increase in the real interest rate B. a decline in wage rates C. a significant decline in the real interest rate D. a new technological advance which cuts the price of steel by one-half

D. all of the above are true.

4. Refer to the above diagram for a private closed economy. At the $300 level of GDP: refer to actual quiz A. aggregate expenditures and GDP are equal. B. consumption is $250 and planned investment is $50. C. saving equals investment. D. all of the above are true.

D. planned investment exceeds saving.

5. In a private closed economy, where aggregate expenditures exceed domestic output: A. domestic output will decline to the break-even level. B. business inventories will rise. C. saving exceeds planned investment. D. planned investment exceeds saving.

D. only at the equilibrium GDP.

6. Planned investment equals saving: A. at all levels of GDP. B. at all below-equilibrium levels of GDP. C. at all above-equilibrium levels of GDP. D. only at the equilibrium GDP.

C. actual investment will exceed planned investment.

7. Refer to the above diagram for a private closed economy. At the $300 level of GDP: A. planned investment will exceed saving, but actual investment will be equal to saving. B. aggregate expenditures will exceed GDP, causing GDP to rise. C. actual investment will exceed planned investment. D. households will consume in excess of their incomes.

D. will decrease.

8. If an unplanned increase in business inventories occurs at some level of GDP, then GDP: A. entails a rate of aggregate expenditures in excess of the rate of aggregate production. B. may be either above or below the equilibrium output. C. is too low for equilibrium. D. will decrease.

C. we can expect businesses to lower the level of production.

9. If an unplanned increase in business inventories occurs: A. we can expect aggregate production to be unaffected. B. we can expect businesses to increase the level of production. C. we can expect businesses to lower the level of production. D. aggregate expenditures must exceed the domestic output.