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Pre-Test Chap 28 e18

# Pre-Test Chap 28 e18 - Pre-Test Chap 28 e18 Student All...

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Pre-Test Chap 28 e18 Student: ___________________________________________________________________________ All figures are in billions of dollars. 1. Refer to the above data. Gross investment is \$8 billion, net exports are \$4 billion, and government collects a lump-sum tax of \$30 billion and spends \$30 billion. Assume all taxes are personal taxes and that government spending does not entail shifts in the consumption and investment schedules. The equilibrium GDP will be: A. \$280 billion B. \$290 billion C. \$300 billion D. \$310 billion 2. Refer to the above data. If gross investment is \$10 billion, net exports are \$6 billion, and there is no government, the equilibrium level of GDP will be: A. \$260 billion B. \$270 billion C. \$280 billion D. \$290 billion The data are for a no-government economy. All figures are in billions of dollars. 3. Refer to the above data. If gross investment is \$20 billion at all levels of GDP and net exports are zero, the equilibrium GDP will be: A. \$490 billion B. \$540 billion C. \$590 billion D. \$640 billion

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4. If the marginal propensity to consume in an economy is .80, government could eliminate a recessionary expenditure gap of \$100 billion by decreasing taxes by: A. \$80 billion B. \$100 billion C. \$125 billion D. \$130 billion 5. The value of the marginal propensity to save is 0.2. If real GDP increases by \$50 billion, this situation was the result of an increase in the aggregate expenditures schedule of: A. \$10 billion B. \$15 billion C. \$16 billion D. \$40 billion 6. A personal tax cut of \$50 billion will affect income differently than an increase in government spending by \$50 billion because: A. The increase in government spending will produce a political business cycle B. The increase in government spending is less expansionary than the increase in taxes C. Households may save part of the additional income from the tax cut D. Households may consume more than the additional income from the tax cut 7. Other things being equal, a decrease in an economy's exports will: A. Increase domestic aggregate expenditures and the equilibrium level of GDP B. Decrease domestic aggregate expenditures and the equilibrium level of GDP C. Have no effect on domestic GDP because imports will offset the change in exports
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Pre-Test Chap 28 e18 - Pre-Test Chap 28 e18 Student All...

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