Macro chapter 8
Which of the following appears in the full aggregate expenditures model but not in the simple aggregate expenditures model?
exports
The marginal propensity to consume is 0.8 and taxes are increased by a lump sum of 100 billion what will be the reduced in income.
.8 x 100=$80 $80 x 1/.2=$400
Using the balanced budget multiplier, what is the change in income if taxes are increased by $500,000 and government spending is increased by $500,000?
500,000
Which of the following is NOT a spending withdrawal from the economy?
exports
What is the change in income if taxes are increased by $1 million and government spending is increased by $1 million?
$1 million
_____ is the difference between income and consumption.
Savings
With respect to the economy, savings, taxes, and imports are all ____ of spending.
Widthdrawls
If the marginal propensity to save is 0.5, taxes are increased by $500,000, and government spending is increased by $500,000, what is the change in income?
$500,000
_____ is spending by individuals and household on both durable goods and nondurable goods.
consumption
The inflationary gap is the reduction in _____ that will move the economy back to full employment.
aggregate spending
The recessionary gap is the increase in _____ needed to bring a depressed economy back to full employment.
aggregate spending
Which of the following is NOT a spending withdrawal from the economy?
investment
_____ Depends on factors such as rate of return, the level of technology, and business expectations about the economy.
investment
_____ is spending by businesses that adds to the productive capacity of the economy.
investment
In a simple Keynesian model with no government and no international trade, if aggregate expenditures are $6 trillion and consumer spending is $3 trillion, business investment is:
$3 trillion
If the recessionary gap is $200 billion and the multiplier is 3, what is the total increase in GDP needed to reach full employment?
$600 billion
In the simple aggregate expenditures model with no government and no international trade, if business investment is $1 trillion and consumer spending is $6 trillion, what are aggregate expenditures?
$7 trillion
In a simple aggregate expenditures model with no government and no international trade, if saving is $2 trillion and consumer spending is $6 trillion, what are aggregate expenditures?
$8 trillion
What does the full aggregate expenditures model take into consideration that the simple aggregate expenditures model does not? Please choose the correct answer from the following choices, and then select the submit answer button.
Government spending , taxes, and the foreign sector
Before the Great Depression, the government was NOT expected to:
Stimulate economic growth
Which of the following is NOT an injection of spending into the economy?
Saving
The implication of Keynesian analysis for actual aggregate household saving and household intentions regarding saving is called the paradox of thrift. The paradox of thrift occurs because investment and household income have a(n) _____ relationship.
positive
_____ are increments of spending, including investment, government spending and exports.
injections
In a full aggregate expenditures model, the tax multiplier:
is smaller than the spending multiplier
Before the Great Depression, the government was NOT expected to:
stabilize prices
What is the average propensity to save if saving is $10,000 and income is $100,000?
0.1
Which of the following would decrease the amount of money a family saves?
higher taxes
_____ consists of consumer spending, business investment spending, government spending, and net foreign spending (exports minus imports).
Aggregate expenditures
In the summer of 2011 the economic recovery seemed to be stalled, and the government's budget deficit was rising. Some politicians were calling for higher taxes; others said that was a bad idea because an increase in taxes would result in:
Decreased consumption and decreasing saving
In the simple aggregate expenditures model with no government and no international trade, at the equilibrium level of income, business investment:
Equals saving
which of the following is true of the paradox of thrift.
The paradox of thrift causes consumers to save less
Which of the following is true of the paradox of thrift.
The paradox of thrift occurs when households intend to save more
Which of the following is true of the paradox of thrift?
The paradox of thrift occurs when investment is positively related to income.
Which of the following appears in the full aggregate expenditures model but not in the simple aggregate expenditures model?
Government spending
According to the full range expenditures model, if investment is $5 trillion, government spending is $2 trillion, exports are $1 trillion, saving is $4 trillion, and taxes are $2 trillion, what are imports...
$2 trillion
Since 1980 the annual change in consumption spending has typically been from:
0% to +10%
Because André received a raise in pay from $30,000 to $50,000, his saving increased from $1,000 to $5,000. What is André's marginal propensity to save?
0.2
Because Mayara received a raise in pay from $90,000 to $100,000, her consumption increased from $50,000 to $55,000. What is Mayara's marginal propensity to consume?
0.5
An increase in taxes will result in:
Decreased consumption and decreased saving
Which of the following appears in the full aggregate expenditures model but not in the simple aggregate expenditures model?
imports
Which of the following is NOT an injection of spending into the economy?
imports
Which of the following appears in the full keynesian model but not in the simple aggregate expenditures model
taxes
