ECON103 Study Guide - Quiz Guide: Loanable Funds, Aggregate Supply, Output Gap

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copperelk215

18 Jan 2017

School

University of Delaware

Department

Economics

Course

ECON103

Professor

Harris William

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Document Summary

Net exports in the u. s. economy were positive from 1946-1975. Net exports in the u. s. economy were negative from 1975-today. Negative net exports cause the aggregate expenditure schedule to shift downward. Positive net exports cause the aggregate expenditure schedule to shift upward. Net exports are positive when exports>imports and are negative when imports>exports. If you add 100billion of government purchases, it will cause gdp to increase by more than 100b. If you add 100billion of government purchases, it will cause the aggregate expenditure schedule to increase by exactly 100b. Mpc x new imposed taxes = ______ decrease. Equal imposed taxes and spending will cause equilibrium gdp to increase. Formula: (equal tax and spending value) x mpc = _____ > ans x multiplier. According to the keynesian view: increased government purchases and financing additional spending with an income tax of an equal amount, gdp will: increase.

Related Questions

Multiple Choice (2 points each)

Identify the choice that best completes the statement or answers the question.

____ 16. Government purchases, under the expenditure approach to GDP accounting, do not include:

a.	state government purchases of plumbing services.
b.	Social Security benefit payments to retirees.
c.	the salaries of military officers.
d.	federal government purchases of computers.

____ 17. GDP equals $8 trillion. If consumption equals $5.5 trillion, investment equals $500 billion, and government spending equals $1.5 trillion, then:

a.	exports exceed imports by $500 billion.
b.	imports exceed exports by $500 billion.
c.	net exports equal zero.
d.	exports exceed imports by $1 trillion.
e.	imports exceed exports by $1 trillion.

____ 18. If some non-price level determinant causes total spending to increase, then the effect on aggregate demand will be a:

a.	movement upward along the curve.
b.	movement downward along the curve.
c.	shift to the left.
d.	shift to the right.

____ 19. An increase in the U.S. price level will:

a.	increase U.S. exports.
b.	increase U.S. imports.
c.	increase RGDP demanded in the United States.
d.	both a. and c.
e.	both b. and c.

carminehornet803

Assume that the equations below describe the expenditures within a particular macroeconomy and that these equations conform to the assumptions we've made in the lecture regarding the fixed price level Aggregate Expenditure model. All values for expenditure and income are dollar amounts, but for simplicity, we've dropped the $ below.

C = 0.8(DI) + 1000	C = Consumption expenditure, DI = Disposable Income
I = 2000	I = Investment expenditure
G = 1000	G = government expenditure
X = 1600	X = spending on exports
M = 1800	M = spending on imports
DI = Y - T	Y = real GDP, T = tax revenues/>
T = 1000
Yp = 12000	Yp = Potential GDP

Given the equations above, we can describe the GDP, government budget, and net exports in this economy. Select three characteristics from the list below which accurately describe this economy. Note that there is no partial credit on this question. I.e., your answer will either be all correct, or all wrong.

	a.	inflationary gap
	b.	recessionary gap
	c.	no output gap
	d.	government budget surplus
	e.	government budget deficit
	f.	balanced government budget
	g.	trade deficit
	h.	trade surplus
	i.	net exports of zero

pucearmadillo585

Since the United States has negative net foreignâ investment, its

A. net capital flow must be negative.

B. domestic saving must be less than its domestic investment.

C. exports must be greater than its imports.

D. domestic investment must be less than its domestic saving.

Expansionary fiscal policy is less effective in an open economy because

A. increases in the money supply will reduce interest rates and lower the value of theâ dollar, reducing aggregate demand.

B. increases in government spending can increase interestâ rates, which increases the value of the dollar and crowds out net exports.

C. increases in government spending will be partly spent on importedâ goods, which do not benefit the domestic economy.

D. increases in taxes reduceâ consumption, which in turn reduces consumption of imports and increases net exports.

When the Federal reserve uses contractionary monetary policy to reduceâ inflation, it

A. sells treasury securities increasing interestâ rates, leading to a stronger dollar that lowers net exports in an open economy.

B. buys treasury securities decreasing interestâ rates, leading to a weaker dollar that lowers consumption of durables in a closed economy.

C. sells treasury securities decreasing interestâ rates, leading to a stronger dollar that lowers domestic investment in a closed economy.

D. buys treasury securities increasing interestâ rates, leading to a weaker dollar that increases net exports in an open economy.

If a country saves more than it investsâ domestically, then its net foreign investment must be (positive, negative, or zero)?

ECON103 Study Guide - Quiz Guide: Loanable Funds, Aggregate Supply, Output Gap

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