 |
1 | |
If a $100 billion increase in disposable income leads to a $70 billion increase in consumption, |
| | A) | the marginal propensity to save equals 0.3. |
| | B) | ΔS/ΔYd = 0.4. |
| | C) | the marginal propensity to consume equals 0.7. |
| | D) | all of the above. |
| | E) | a and c. |
|
|
2 | |
The income elasticity of demand for imports is the |
| | A) | percentage change in the demand for imports divided by the percentage change in income. |
| | B) | marginal propensity to import divided by the average propensity to import. |
| | C) | same as the marginal propensity to import. |
| | D) | a and b. |
|
|
3 | |
Use the following simple Keynesian model to answer Questions 3, 4, and 5.Y = C + I + G + X - M
C = 200 +0.8Yd
Yd = Y - T
T = 0.1Y
I = G = 500
X = 300
M = 50 + 0.1Y The equilibrium level of national income in this model will be __________; the equilibrium level of disposable income will be __________. |
| | A) | 3,815.8; 3,434.2 |
| | B) | 1805.6; 1211.1 |
| | C) | 2137.4; 1678.9 |
| | D) | 5000; 3600 |
|
|
4 | |
The current account balance in this model shows a |
| | A) | deficit of 131.6. |
| | B) | surplus of 99.5. |
| | C) | deficit of 59.6. |
| | D) | surplus of 59.6. |
|
|
5 | |
In this economy, saving, S, is equal to |
| | A) | 486.8. |
| | B) | -200 + 0.2Yd. |
| | C) | X - M + I - (T - G). |
| | D) | all of the above. |
| | E) | a and b only. |
|
|
6 | |
Since 1973, the average propensity to import of the United States has __________, indicating a(n) __________ openness to trade. |
| | A) | decreased; decreased |
| | B) | decreased; increased |
| | C) | increased; decreased |
| | D) | increased; increased |
|
|
7 | |
The closed-economy multiplier is |
| | A) | larger than the open economy multiplier. |
| | B) | smaller than the open economy multiplier. |
| | C) | exactly equal to the open economy multiplier. |
| | D) | possibly any of the above (not enough information is given). |
|
|
8 | |
If the marginal propensity to import is 0.08 and the marginal propensity to consume is 0.9, the open-economy multiplier is |
| | A) | -1.0. |
| | B) | 3.33. |
| | C) | 5.6. |
| | D) | 8.6. |
|
|
9 | |
A country with a current account in balance is said to exhibit |
| | A) | external and internal balance. |
| | B) | external balance. |
| | C) | internal balance. |
| | D) | neither internal nor external balance. |
|
|
10 | |
A country with a current account deficit and a high inflation rate |
| | A) | is in external balance but not in internal balance. |
| | B) | is in internal balance but not in external balance. |
| | C) | should engage in expansionary fiscal and monetary policy. |
| | D) | none of the above. |
|