Chapter 17 Self-test questions

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Using the same notation as in the text, and using the following relationships:
Y = C + I + G + (X – IM)
C = a + b(1-t)Y
IM = mY
What is the value of the multiplier (rounded to two decimal places) when b=0.8; t=0.1 and m = 0.25?

5 correct incorrect

3.57 correct incorrect

1.89 correct incorrect

1.64 correct incorrect

1.55 correct incorrect

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Using the same notation as in the text, and using the following relationships:
Y = C + I + G + (X - IM)
C = a + b(1-t)Y
IM = mY
What is the value of the multiplier (rounded to two decimal places) when b=0.8; t=0.2 and m = 0.25?

5 correct incorrect

1.64 correct incorrect

1.89 correct incorrect

3.57 correct incorrect

1.55 correct incorrect

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The balanced budget multiplier ______

Is the largest of all multipliers correct incorrect

Does not exist correct incorrect

Is the reciprocal of the simple multiplier correct incorrect

is the ratio of the GDP level to the aggregate spending correct incorrect

Is the ratio of the change in GDP to the balanced budget spending that generated it correct incorrect

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A stabilization policy implies ________

Government tax and expenditure programmes are being used to affect the level of GDP. correct incorrect

A budget deficit is low correct incorrect

Potential GDP exceeds actual GDP correct incorrect

None of the above correct incorrect

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Net taxes refer to ____________

Taxes on fishing nets correct incorrect

Total tax revenues to government less total transfer payments paid by the government correct incorrect

Disposable income less taxes correct incorrect

Total taxes les depreciation correct incorrect

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When the budget is neither in surplus nor in deficit, it is

In equilibrium correct incorrect

Well planned correct incorrect

In error correct incorrect

balanced correct incorrect

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The net export function shows the

Positive relationship between exports and GDP correct incorrect

Positive relationship between net exports and GDP correct incorrect

Inverse relationship between net exports and GDP correct incorrect

Inverse relationship between exports and GDP correct incorrect

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Other things being equal, when the GDP of Germany rises, the quantity demanded of British products that are traded in the EU will

fall correct incorrect

rise correct incorrect

no effect correct incorrect

none of the above correct incorrect

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In finding the equilibrium GDP, leakages and injections must ____________

Be equal correct incorrect

decline correct incorrect

rise correct incorrect

None of the above correct incorrect

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As GDP rises, the budget surplus ____________

Turns into deficit correct incorrect

Falls correct incorrect

Rises correct incorrect

Falls to zero correct incorrect