Chapter 7: FIXED BLUR

Question 1 (1 point) Saved Suppose exports (X) = 100, real GDP (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 O A) 50%. O B) 1%. O C) 5%. O DJ 10%. O E) 20%. Question 2 (1 point) Saved Consider the simple macroeconomic model, with government and trade. Which of the following changes would cause an increase in the simple multiplier in this model? O a) An increase in the tax rate. O b) A decrease in the marginal propensity to import. O c) An increase in the marginal propensity to save. O d) A decrease in investment. O e) An increase in government purchases. Question 3 (1 point) In the demand-determined macroeconomic model with government and trade, which of the following changes would lead to a decrease in the Canadian marginal propensity to import? O a) A depreciation of the Canadian dollar. O b) An increase in foreign income. O c) An appreciation of the Canadian dollar. O d) An increase in the marginal propensity to consume. O e) A decrease in foreign income.Question 4 (1 point) Consider the simple macro model with demand-determined output and constant prices. If inventories are accumulating, this is likely a sign that: O a) Potential GDP is less than actual GDP. O b) Potential GDP is greater than actual GDP. O c) Desired aggregate expenditure is less than actual national income. O d) Desired aggregate expenditure is greater than actual national income. Question 5 (1 point) Consider the following news headline: "Minister of Defence announces $2 billion purchase of military helicopters." Assuming that aggregate output is demand- determined, and that the helicopters are purchased domestically, what will be the effect of this action, all other things equal, on the AE function and equilibrium national income? ON The AE function will shift down parallel to itself, and equilibrium national income will fall. Op) The AE function will rotate upward (become steeper), and equilibrium national income will rise. O c) The AE function will rotate downward (become flatter), and national income will fall. O D) The AE function will shift up parallel to itself, and equilibrium national income will rise. O E) There will be no change in the AE function or in equilibrium national income. Question 6 (1 point) Consider a macro model with a constant price level and demand-determined output. A rise in the net tax rate the simple multiplier and equilibrium national income. O A) lowers; lowers O B) lowers; raises O C) raises; raises O D) lowers; has no effect on O E) raises; has no effect onQuestion 7 (1 point) Which of the following can cause an upward shift and flattening of the net export (NX) function? O A) an increase in domestic national income O B) a decrease in foreign national income O C) a decrease in domestic prices relative to foreign prices O D) an increase in the Canadian-dollar price of foreign currency O E) both C and D are correct Question 8 (1 point) Suppose that exports are X = 440 and imports are given by IM = 0.10Y. At what level of national income, Y, will net exports equal zero? (Nearest dollar.) Your Answer: Answer Question 9 (1 point) In equilibrium, an economy is characterized by shortages in labour and goods markets, and the intensive use of capital equipment. Which of the following is likely true in this economy? O a) Desired aggregate expenditure is less than actual national income. O b) Desired aggregate expenditure is greater than actual national income. O c) Potential GDP is less than actual GDP. O d) Potential GDP is greater than actual GDP.Question 10 (1 point) Consider a simple macroeconomic.... characterized by the following equations: . C = 300 + 0.75YD . 1 = 200 . G = 250 . T = 0.2Y . X = 400 . IM = 0.3Y If national income were 1600, then... a) Inventories would be falling, companies would respond, and as a result, national income would fall. b) Inventories would be falling, companies would respond, and as a result, national income would rise. O c) Inventories would be rising, companies would respond by increasing production, and as a result, national income would rise. O d) Inventories would be unchanged, and as a result, national income is at equilibrium. O e) Inventories would be rising, companies would respond, and as a result, national income would fall. Question 11 (1 point) Consider a simple macro model with a constant price-level and demand-determined output. The equations of the model are: . C = 1325 +0.75YD . | = 1175 . G = 1100 . T = 0.20Y . X = 1825 . IM = 0.25Y The equilibrium income in this economy is: (Nearest dollar.) Your Answer: Answer Question 12 (1 point) Assume that at "full employment", the unemployment rate is 5%. If the current unemployment rate is 6%, the most appropriate fiscal policy response would be to: O a) Reduce net exports, NX. Ob) Increase government spending, G. c) Reduce the marginal propensity to consume, MPC. O d) Increase autonomous investment, I. O e) Increase the net tax rate, t