Question 1

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Desired consumption expenditure at equilibrium national income is
A)3113.5.
B)3307.7.
C)3824.6.
D)4250.
E)Not enough information to determine

Accepted Answer

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Question 2

Consider the following macro model with demand-determined output: C = 150 + 0.9Yd,Yd= 0.8Y,I = 400,G = 700,T = (0.2)Y,X = 130,IM = (0.08)Y.Equilibrium national income is
A)1380.00.
B)1916.67.
C)2156.25.
D)3833.33.
E)4928.57.

Accepted Answer

To find the equilibrium national income (Y), use the equation: Y = C + I + G + (X - IM). Substitute C = 150 + 0.9(0.8Y), I = 400, G = 700, X = 130, and IM = 0.08Y. Solve for Y: Y = (150 + 0.72Y) + 400 + 700 + (130 - 0.08Y). Simplifying gives Y = 1380 + 0.64Y. Solving for Y gives Y = 3833.33.

Question 3

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Equilibrium national income is
A)2037.48.
B)3615.24.
C)4000.00.
D)4307.70.
E)8000.00.

Accepted Answer

Equilibrium national income (Y) is found by setting aggregate demand (AD) equal to aggregate supply (AS):
AD = C + I + G + X - IM
AD = (120 + 0.86Y) + 300 + 520 + 180 - 0.12Y
AD = 1120 + 0.74Y
AS = Y (since it is assumed that output is demand determined)
AD = AS
1120 + 0.74Y = Y
0.26Y = 1120
Y = 4307.70

Question 4

Consider a macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = 0.2Y,X = 130,and IM = 0.14Y.Equilibrium national income in this model is
A)1120.
B)1350.
C)2240.
D)2760.
E)5400.

Accepted Answer

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Question 5

Suppose that the marginal propensity to consume out of disposable income is 0.6 and the marginal propensity to import is 0.14.If the net tax rate is 0.1,then what is the marginal propensity to spend in this economy?
A)0.30
B)0.40
C)0.46
D)0.50
E)0.60

Accepted Answer

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Question 6

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.Desired consumption expenditure at equilibrium national income is
A)1675.44.
B)4060.04.
C)4830.00.
D)4980.00.
E)6815.40.

Accepted Answer

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Question 7

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory ________ will induce firms to________ the rate of output production.
A)depletion; lower
B)depletion; raise
C)buildup; lower
D)buildup; raise
E)at zero; maintain the current

Accepted Answer

When national income falls short of desired aggregate expenditures, it means that actual sales are higher than expected, leading to unplanned inventory depletion. Firms will respond by raising the rate of output production to replenish their inventories and meet the higher demand.

Question 8

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.Equilibrium national income is
A)560.00.
B)888.89.
C)1142.85.
D)1302.33.
E)1513.50.

Accepted Answer

In this model, equilibrium national income (Y) is determined where aggregate demand (AD) equals aggregate supply (AS), which in a simple model is the same as the national income (Y). Aggregate demand is the sum of consumption (C), investment (I), government spending (G), exports (X), minus imports (IM). The equation for equilibrium is:$$ Y = C + I + G + X - IM $$Substituting the given values:$$ Y = (60 + 0.43Y) + 150 + 260 + 90 - 0.06Y $$Combining like terms and solving for Y:$$ Y = 560 + 0.37Y $$$$ 0.63Y = 560 $$$$ Y = \frac{560}{0.63} $$$$ Y = 888.89 $$Therefore, the equilibrium national income is 888.89.

Question 9

The simple macro model that is considered in Chapters 21 and 22 of the textbook is characterized by
A)a given (constant)price level,and equilibrium national income determined by demand and supply.
B)an endogenous price level,and national income that is solely demand determined.
C)a given (constant)price level,and national income that is solely demand determined.
D)an endogenous price level,and equilibrium national income determined by demand and supply.
E)an open economy with an endogenous exchange rate.

Accepted Answer

The simple macro model typically assumes a given (constant) price level with national income determined solely by demand, reflecting a short-term perspective where prices are not flexible.

Question 10

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.Equilibrium national income is
A)1816.
B)5750.
C)7307.
D)7935.
E)17 250.

Accepted Answer

The answer of Consider a simple macro model with a...

Question 11

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The trade balance at equilibrium national income is
A)a deficit of 36.67.
B)a deficit of 21.43.
C)zero.
D)a surplus of 21.43.
E)a surplus of 36.67.

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Question 12

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,X = 130,IM = 0.08Y,T = 0.Equilibrium national income is 5000 when G is equal to
A)-40.
B)520.
C)580.
D)740.
E)812.

Accepted Answer

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Question 13

In the simple macro model that is considered in Chapters 21 and 22 of the textbook,
A)the economy is always in equilibrium.
B)there is no government or foreign trade.
C)the price level is determined within the model.
D)there are no supply-side influences on national income.
E)the simple multiplier is always equal to 1.

Accepted Answer

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Question 14

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.The trade balance at equilibrium national income is a
A)deficit of 504.8.
B)deficit of 460.0.
C)deficit of 330.0.
D)surplus of 125.0.
E)surplus of 15.3.

Accepted Answer

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Quiz 22: Adding Government and Trade to the Simple Macro Model

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Desired consumption expenditure at equilibrium national income is

Consider the following macro model with demand-determined output: C = 150 + 0.9Yd,Yd= 0.8Y,I = 400,G = 700,T = (0.2) Y,X = 130,IM = (0.08) Y.Equilibrium national income is

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Equilibrium national income is

Consider a macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = 0.2Y,X = 130,and IM = 0.14Y.Equilibrium national income in this model is

Suppose that the marginal propensity to consume out of disposable income is 0.6 and the marginal propensity to import is 0.14.If the net tax rate is 0.1,then what is the marginal propensity to spend in this economy?

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.Desired consumption expenditure at equilibrium national income is

Consider a simple macro model with a constant price level and demand-determined output.When national income falls short of desired aggregate expenditures,unplanned inventory will induce firms to the rate of output production.

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.Equilibrium national income is

The simple macro model that is considered in Chapters 21 and 22 of the textbook is characterized by

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.Equilibrium national income is

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 60 + 0.43Y,I = 150,G = 260,T = 0,X = 90,IM = 0.06Y.The trade balance at equilibrium national income is

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,X = 130,IM = 0.08Y,T = 0.Equilibrium national income is 5000 when G is equal to

In the simple macro model that is considered in Chapters 21 and 22 of the textbook,

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.The trade balance at equilibrium national income is a