MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Chapter 11, Problem 6RQ
To determine
Depression.
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Reductions in the personal income tax, often advocated by supply-siders to increase labor supply and effort, can be expected to also
a.
decrease consumption spending.
b.
increase export sales.
c.
increase consumption spending.
d.
decrease investment spending.
If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would
a
rise, making aggregate demand shift left.
b
rise, making aggregate demand shift right.
c
fall, making aggregate demand shift left.
d
fall, making aggregate demand shift right.
What is the effect of an increase in investment?
When investment increases,
A. aggregate demand increases and income increases. The increase in income induçes an increase in consumption expenditure so aggregate demand increases by more than the initial increase in investment
B. aggregate demand increases and aggregate supply increases
C. aggregate demand increases by an amount equal to the increase in investment
O D. aggregate supply increases. The increase in aggregate supply is greater than the increase in investment because capital increases, which increases potential GDP
Click to select your answer.
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Chapter 11 Solutions
MACROECONOMICS W/CONNECT
Ch. 11.2 - Prob. 1QQCh. 11.2 - Prob. 2QQCh. 11.2 - Prob. 3QQCh. 11.2 - Prob. 4QQCh. 11.7 - Prob. 1QQCh. 11.7 - Prob. 2QQCh. 11.7 - Prob. 3QQCh. 11.7 - Prob. 4QQCh. 11 - Prob. 1DQCh. 11 - Prob. 2DQ
Ch. 11 - Prob. 3DQCh. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
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- Which of the following would not increase Aggregate Demand? a. Increased Consumption b. Increased Government Expenditure c. Increased Investment Expenditure d. Decrease in the overall price levelarrow_forwardWhich of the following is an example of an expenditure-increasing policy? a. a decrease in import quotas b. an increase in the money supply c. an increase in import tariffs d. higher income taxesarrow_forwardDetermine whether each of the following, other factors held constant, would, in the short run, lead to an increase, a decrease, or no change in the level of real GDP demanded: a. A decrease in government purchases b. An increase in net taxes c. A reduction in transfer payments d. A decrease in the marginal propensity to consume.arrow_forward
- Someone Please Answer this question ASAP without explanantionA reduction in U.S net exports would shift U.S. aggregate demand A. leftward. In an attempt to stabilize the economy, the government could raise taxes. B. leftward. In an attempt to stabilize the economy, the government could cut taxes. C. rightward. In an attempt to stabilize the economy, the government could cut taxes. D. rightward. In an attempt to stabilize the economy, the government could raise taxes.arrow_forwarda. Draw the circular flow of spending and income. Put a proper label on every box and flow. b. Assume T, a, b, G, I, and NX are exogenous. Find GDP at equilibrium. Notice that C=a+b*DI. c. Now assume that a, b, G, I, and NX are exogenous but T=To+t*GDP. Find GDP at equilibrium. (We did this in our class.)arrow_forwardTrue or False: Aggregate demand (AD) represents the total amount of goods and services that households, firms, the government, and foreigners are willing to buy at various price levels. A. True B. Falsearrow_forward
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- c. Given the original $20 billion level of exports, what would be net exports and the equilibrium GDP if imports were $10 billion greater at each level of GDP? Fill in the gray-shaded cells. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers (1) Real Domestic Output (GDP-DI), Billions $250 300 350 400 450 500 550 600 (2) Aggregate Expenditures, Private Closed Economy, Billions $290 330 370 410 450 490 530 570 billion Net exports = $ Equilibrium GDP=$ d. What is the multiplier in this example? (3) Exports, Billions billion $20 2222222 20 20 20 20 20 20 20 (4) Imports, Billions $40 40 40 40 40 40 40 40 (5) Net Exports, Billions (6) Aggregate Expenditures, Open Economy, Billionsarrow_forwardThe graph shows an economy that has experienced a fall in total spending. What is the long run output level in this economy? (Answer in trillions of $.) $_____arrow_forwardDuring recessions, taxes tend to a. rise and thereby increase aggregate demand. b. fall and thereby decrease aggregate demand. c. fall and thereby increase aggregate demand. d. rise and thereby decrease aggregate demand.arrow_forward
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