QZ5 studyguide

B decreased domestic saving c benefited domestic

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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 economy: 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 equals: 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 must be: a) decreased by $1 billion. d) decreased by less than $1 billion. b) increased by less than $1 billion. e)...
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