Macroeconomics chapters 10-13

The two reasons why bankruptcy is a false concern about the public debt are:

refinancing and taxation

If the MPC in an economy is 0.75 and aggregate expenditures increase by $5 billion, then equilibrium GDP will increase by:

$20 billion

Other things constant, if domestic consumers purchase fewer foreign goods at each level of GDP in the short-run:

GDP will rise

The more progressive the tax system, the:

Greater is the built-in stability for the economy

If a government raises its expenditures by $50 billion and at the same time levies a lump-sum tax of $50 billion, the net effect on the economy will be to:

Increase GDP by $50 billion

A decrease in business taxes will tend to:

Increase aggregate demand and increase aggregate supply

the crowding-out effect suggests that:

Increases in government spending may reduce private investment.

The aggregate demand curve shows the :

Inverse relationship between the price level and the quantity of real GDP purchased

The real-balances effect on aggregate demand suggests that a:

Lower price level will increase the real value of many financial assets and therefore cause an increase in spending.

An increase in the public debt and its subsequent repayment will tend to:

Mildly increase the income inequality in the U.S.

Refer to the figure above. (https://500px.com/photo/149953197/fullsizerender-by-volleychica187?ctx_page=1&from=user&user_id=17184137) If the aggregate demand curve shifts from AD2 to AD1, the full multiplier effect on real GDP will be a decrease from:

Q2 to Q4

Inflation tends to:

Reduce the strength of the multiplier

When the aggregate expenditure is greater than GDP, then there will be an:

Unplanned decrease in inventories and GDP will increase

The upward slope of the short-run aggregate supply curve is based on the assumption that:

Wages and other resource prices do not respond to price level changes

Refer to the graph above for a private closed economy. (https://500px.com/photo/149953183/fullsizerender-by-volleychica187?ctx_page=1&from=user&user_id=17184137)The equilibrium level of GDP in this economy is:

$450 billion

Refer to the consumption schedule above. (link to image: https://500px.com/photo/149953129/fullsizerender-by-volleychica187ctx_page=1&from=user&user_id=17184137) If disposable income is $42,000, then saving is:

$6,000

The relationship between the MPS and the MPC is such that:

1-MPC = MPS

Which of the following expansionary fiscal policy changes would be the most favored by those economists who think that the government is too larger and inefficient?

A $40 billion tax cut

Refer to the graph above. (https://500px.com/photo/149953139/fullsizerender-by-volleychica187 ctx_page=1&from=user&user_id=17184137) Which of the following would shift the investment demand curve from ID2 to ID3?

A more rapid rate of technological progess

The following factors explain the inverse relationship between the price level and the total demand for output, except:

A substitution effect

Refer to the graph above. (https://500px.com/photo/149953143/fullsizerender-by-volleychica187?ctx_page=1&from=user&user_id=17184137)Which of the following factors will shift AS1 to AS3?

An increase in input prices

Refer to the graph above. (https://500px.com/photo/149953167/fullsizerender-by-volleychica187?ctx_page=1&from=user&user_id=17184137) Which of the following factors will shift AD1 to AD2?

An increase in national incomes abroad

The slope of the immediate-short-run aggregate supply curve is based on the assumption that:

Both input and output prices are fixed

The long-run aggregate supply analysis assumes that:

Both input and product prices are variable

If the U.S. Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of a(n):

Contractionary fiscal policy

The Great Recession of 2007-09 and the consequent policy response made the:

Cyclically-adjusted deficit grow during that period

In aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a:

Decrease in government spending or an increase in taxes

When national income in other nations decreases, aggregate demand in our economy:

Decreases because our exports will decrease

Refer to the figure above. (link to image: https://500px.com/photo/149953109/fullsizerender-by-volleychica187ctx_page=1&from=user&user_id=17184137) The economy is at equilibrium at point A.What fiscal policy would be most appropriate to control demand-pull inflation?

Shift aggregate demand by increasing taxes

If the government wishes to increase the level of real GDP, it might reduce:

Taxes

The cyclically-adjusted budget estimates the Federal budget deficit or surplus if:

The economy were at full employment