Unformatted text preview: c benefits without costs.
b) decreased domestic saving.
c) benefited domestic savers because of higher interest rates paid on saving accounts.
d) caused debt crises because the returns on the investments were less than the interest
cost of the capital.
e) caused debt crises because the returns on the investments were greater than the
interest cost of the capital.
4. If actual output equals potential output, but potential is growing very rapidly, then an
a) is in an expansion.
d) is in a recession.
b) has an expansionary gap.
e) has an output gap.
c) has a recessionary gap.
5. In Macroland autonomous consumption equals 100, the marginal propensity to consume
equals .75, net taxes are fixed at 40, planned investment is fixed at 50, government
purchases are fixed at 150, and net exports are fixed at 20. Autonomous expenditure
a) 290 b) 350 c) 360 d) 320 e) 100 Page 2 of 11 ECO 2013 – Section 0008 – QUIZ IV – Version 1
O. Mikhail – http://www.bus.ucf.edu/omikhail 6. If planned aggregate expenditure (PAE) in an economy equals 1,000 + .9Y and potential
output (Y*) equals 11,000, then this economy has:
a) no output gap.
d) no induced expenditure.
b) an expansionary gap.
e) a recessionary gap.
c) no autonomous expenditure.
7. In the short-run Keynesian model, to close a recessionary gap of $1 billion dollars taxes
a) decreased by $1 billion.
d) decreased by less than $1 billion.
b) increased by less than $1 billion.
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This note was uploaded on 03/31/2012 for the course ECON 112 taught by Professor Merinoff during the Spring '12 term at SUNY Jefferson.
- Spring '12