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EC140 > Lecture 5 > Flashcards

Lecture 5 Flashcards

1
Q

A rise in domestic prices relative to foreign prices, other things being equal, causes the net export (NX) function to shift ________ and ________.

A) upward; become flatter
B) upward; become steeper
C) downward; become flatter
D) downward; keep the same slope
E) downward; become steeper
A

E) downward; become steeper

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2
Q

Suppose exports are $200 and imports are given by IM = 0.2Y. At what level of national income will net exports equal zero?

A) $1250
B) $1000
C) $0
D) $250
E) $200
A

B) $1000

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3
Q

Consider the government’s budget balance. Suppose G = 300 and the government’s net tax revenue is equal to 0.14Y. When Y = 2000, the government is running a budget

A) deficit of 20.
B) deficit of -20.
C) surplus of 40.
D) surplus of 20.
E) balance.
A

A) deficit of 20.

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4
Q

Consider the simplest macro model with demand-determined output. The equations are: C = 150 + 0.8Yd, Yd = Y -T, I = 400, G = 700, T = .2Y, X = 130, and IM = 0.14Y. The marginal propensity to spend on national income in this model is

A) 0.86.
B) 0.50.
C) 0.84.
D) 0.54.
E) 0.64.
A

B) 0.50.

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5
Q

Refer to Figure 22-4. The rotation from AE1 to AE0 could be caused by

A) an increase in the marginal propensity to consume out of disposable income.
B) a decrease in the net tax rate.
C) a decrease in government purchases.
D) a decrease in the marginal propensity to import.
E) an increase in the marginal propensity to import.

A

E) an increase in the marginal propensity to import.

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6
Q

A decrease in domestic national income will cause a ________ the net exports (NX) function.

A) parallel downward shift of
B) parallel upward shift of
C) rotation downward in
D) movement to the left along
E) rotation upward in
A

D) movement to the left along

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7
Q

The AE function for an open economy with government can be written as

A) AE = C + I - G - (X + IM).
B) AE = C + I + G + (X - IM).
C) AE = C + I - G + (X - IM).
D) AE = C + I + S + (X + IM).
E) AE = C + I + G - (X - IM).
A

B) AE = C + I + G + (X - IM).

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8
Q

Suppose Y=400 and the government’s net tax rate is 10%. If we are told that the government has a budget surplus, then government purchases must be

A) greater than 40.
B) less than 40.
C) less than 30.
D) greater than 30.
E) Not enough information to know.
A

B) less than 40.

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9
Q

A movement along the net export (NX) function can be caused by a change in

A) foreign national income.
B) domestic prices.
C) foreign prices
D) the exchange rate.
E) domestic national income.
A

E) domestic national income.

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10
Q

If the government’s net tax rate increases, then for a given level of national income disposable income will ________ and net tax revenue will ________.

A) increase; increase
B) decrease; decrease
C) decrease; increase
D) not change; increase
E) increase; decrease
A

C) decrease; increase

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11
Q

Suppose exports (X)=100, Y=500, and imports are equal to mY, where m is the marginal propensity to import. Net exports would be equal to zero if the marginal propensity to import were

A) 1%.
B) 10%.
C) 20%.
D) 50%.
E) 5%.
A

C) 20%.

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12
Q

A parallel downward shift in the net export (NX) function can be caused by

A) a decrease in domestic prices.
B) a decrease in foreign prices.
C) a decrease in foreign national income.
D) an increase in the Canadian-dollar price of foreign currency.
E) an increase in domestic national income.

A

C) a decrease in foreign national income.

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13
Q

Refer to Figure 22-4. The rotation from AE0 to AE1 could be caused by

A) a balanced budget.
B) higher government purchases.
C) a lower net tax rate.
D) lower government purchases.
E) a higher net tax rate.
A

C) a lower net tax rate.

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14
Q

Consider the simplest macro model with demand-determined output. The equations are: C = 150 + 0.8Yd, Yd = Y-T, I = 400, G = 700, T = .2Y, X = 130, and IM = 0.14Y. Autonomous expenditures in this model are

A) 1120.
B) 5400.
C) 1380.
D) 1350.
E) 2700.
A

C) 1380.

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15
Q

Refer to Table 22-1. What is the marginal propensity to import?

A) 0.01
B) 0.10
C) 1.0
D) 10.0
E) not enough data to determine
A

B) 0.10

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16
Q

Refer to Figure 22-4. Autonomous expenditures ________ as the AE curve rotates from AE1 to AE0 and equilibrium national income ________.

A) decrease; decreases
B) remain constant; decreases
C) remain constant; remains constant
D) remain constant; increases
E) increase; decreases
A

B) remain constant; decreases

17
Q

In a simple macro model with a constant price level, an increase in the net tax rate causes the AE curve to

A) rotate upward.
B) remain stationary.
C) shift parallel upward.
D) rotate downward.
E) shift parallel downward.
A

D) rotate downward.

18
Q

The G and T components in the national-income accounts measure purchases and net taxes collected by

A) all levels of government.
B) only the federal government.
C) only local governments.
D) only provincial governments and the federal government.
E) only provincial governments.
A

A) all levels of government.

19
Q

Consider a macro model with demand-determined output. The equations are: C = 150 + 0.8Yd, Yd = Y-T, I = 400, G = 700, T = 0.2Y, X = 130, and IM = 0.14Y. Equilibrium national income in this model is

A) 1120.
B) 1350.
C) 2760.
D) 2240.
E) 5400.
A

C) 2760.

20
Q

In our simple macro model with government, which statement is correct regarding the following equation: T = (0.2)Y?

A) If national income increases by $1.00, then net tax revenue increases by $0.20.
B) Total tax revenues are equal to 20% of real GDP.
C) Total tax revenues are equal to 20% of disposable income.
D) Net tax revenues are equal to 20% of disposable income.
E) If total tax revenue increases by $0.20, then national income increases by $1.00.

A

A) If national income increases by $1.00, then net tax revenue increases by $0.20.

21
Q

In a simple macro model, it is generally assumed that a country’s exports

A) are induced whereas imports are autonomous.
B) and imports are induced.
C) and imports are autonomous.
D) are autonomous whereas imports are induced.
E) are always equal to investment.

A

D) are autonomous whereas imports are induced.

22
Q

In our simple macro model with government and foreign trade, the marginal propensity to consume out of disposable income is ________ whereas the marginal propensity to consume out of national income is ________.

A) MPC; MPC(1 - t) - m
B) MPC(1 - t) - m; MPC(1 - t)
C) MPC(1 - t); MPC
D) MPC; MPC(1 - t)
E) MPC(1 - t); MPC(1 - t) - m
A

D) MPC; MPC(1 - t)

23
Q

Consider a consumption function in a simple macro model with government and taxes. Given a marginal propensity to consume out of disposable income of 0.9 and a net tax rate of 10% of national income, the marginal propensity to consume out of national income is

A) 1.00.
B) 0.72.
C) 0.90.
D) 0.81.
E) 0.09.
A

D) 0.81.

EC140 (15 decks)

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