宏觀經(jīng)濟學課件chapter03

Macroeconomics,6e(Blanchard/Johnson)

Chapter3:TheGoodsMarket

3.1MultipleChoiceQuestions

1)FortheU.S.economy,whichofthefollowingrepresentsthelargestcomponentofGDP?

A)imports

B)investment

C)governmentspending

D)exports

E)noneoftheabove

Answer:E

Diff:1

2)WhichofthefollowingtypesofgovernmentspendingisincludedwhencalculatingGDP?

A)spendingatthefederallevel

B)spendingatthestatelevel

C)spendingatthemunicipallevel

D)alloftheabove

E)onlyAandB

Answer:D

Diff:1

3)WhichofthefollowingwouldNOTbeconsideredpartoffixedinvestmentspending(I)?

A)Toyotabuysanewrobotforitsautomobileassemblyline.

B)Applecomputerbuildsanewfactory.

C)Exxonincreasesitsinventoriesofunsoldgasoline.

D)Anaccountantbuysanewlybuilthomeforherselfandherfamily.

E)alloftheabove

Answer:C

Diff:1

4)Whichofthefollowingistruefora"closedeconomy"?

A)governmentspendingequalstaxes

B)therearenoimportsorexports

C)exportsequalimports

D)thereisnosaving

E)thereisnogovernmentspendingortaxes

Answer:B

Diff:1

5)WhichofthefollowingisanexogenousvariableinourmodelofthegoodsmarketinChapter3?

A)consumption(C)

B)saving(S)

C)disposableincome(YD)

D)governmentspending(G)

E)noneoftheabove

Answer:D

Diff:2

6)WhichofthefollowingisanendogenousvariableinourmodelofthegoodsmarketinChapter3?

A)consumption(C)

B)disposableincome(YD)

C)saving(S)

D)totalincome(Y)

E)alloftheabove

Answer:E

Diff:2

7)Disposableincomeequals

A)incomeminussaving.

B)incomeminusbothsavingandtaxes.

C)consumptionminustaxes.

D)thesumofconsumptionandsaving.

E)noneoftheabove

Answer:D

Diff:1

8)Themarginalpropensitytoconsumerepresents

A)thelevelofconsumptionthatoccursifdisposableincomeiszero.

B)theratiooftotalconsumptiontodisposableincome.

C)totalincomeminustotaltaxes.

D)thechangeinoutputcausedbyaone-unitchangeinautonomousdemand.

E)thechangeinconsumptioncausedbyaone-unitchangeindisposableincome.

Answer:E

Diff:1

9)Lettheconsumptionfunctionberepresentedbythefollowingequation:C=c0+c1YD.Forthisequation,weassumethatc1is

A)negative.

B)largerthanc0.

C)differentatdifferentlevelsofincome.

D)equaltoone.

E)noneoftheabove

Answer:E

Diff:1

10)Supposetheconsumptionequationisrepresentedbythefollowing:C=250+.75YD.Themultiplierinthiseconomyis

A).25.

B).75.

C)1.

D)4.

E)5.

Answer:D

Diff:2

11)Supposetheconsumptionequationisrepresentedbythefollowing:C=250+.75YD.Giventhisinformation,themarginalpropensitytosaveis

A).25.

B).7.

C)1.

D)4.

E)noneoftheabove

Answer:A

Diff:2

12)Whichofthefollowingoccurswhendisposableincomeiszero?

A)consumptionmustbezero

B)savingmustbezero

C)savingmustbepositive

D)consumptionisnegative

E)noneoftheabove

Answer:E

Diff:2

13)Equilibriuminthegoodsmarketrequiresthat

A)productionequalsincome.

B)productionequalsdemand.

C)consumptionequalssaving.

D)consumptionequalsincome.

E)governmentspendingequalstaxesminustransfers.

Answer:B

Diff:1

14)Aneconomyisinequilibriumwhenwhichofthefollowingconditionsissatisfied?

A)consumptionequalssaving

B)outputequalsconsumption

C)totalsavingequalszero

D)totalsavingequalsinvestment

E)alloftheabove

Answer:D

Diff:1

15)WhichofthefollowingisincludedinG?

A)medicare

B)socialsecuritypayments

C)interestpaymentsonthegovernmentdebt

D)governmentpurchases

E)alloftheabove

Answer:D

Diff:2

16)Supposetheconsumptionequationisrepresentedbythefollowing:C=250+.8YD.Themultiplierfortheaboveeconomyequals

A)2.

B)3.

C)4.

D)5.

E)noneoftheabove

Answer:D

Diff:2

17)Supposetheconsumptionequationisrepresentedbythefollowing:C=250+.75YD.Nowassumegovernmentspendingincreasesby100fortheaboveeconomy.Giventheaboveinformation,weknowthatequilibriumoutputwillincreaseby

A)200.

B)400.

C)800.

D)1000.

E)noneoftheabove

Answer:B

Diff:2

18)WhichofthefollowingwillNOTincreaseequilibriumoutputintheshortrun?

A)increasesinR&D

B)increasesinconsumerconfidence

C)increasesininvestmentdemand

D)increasesingovernmentspending

E)decreasesintaxes

Answer:A

Diff:2

19)Whichofthefollowingwouldtendtomakethemultipliersmaller?

A)anincreaseinthemarginalpropensitytoconsume

B)anincreaseinthemarginalpropensitytosave

C)areductionintaxes

D)areductioningovernmentspending

E)noneoftheabove

Answer:B

Diff:2

20)Whichofthefollowingrepresentstotalsavingforaneconomy?

A)thesumofprivatesavingandfixedinvestment

B)thesumofprivatesavingandconsumption

C)thesumoftaxesandgovernmentspending

D)theexcessoftaxesovergovernmentspending

E)noneoftheabove

Answer:E

Diff:1

21)Basedonourunderstandingoftheparadoxofsaving,weknowthatareductioninthedesiretosave

willcause

A)anincreaseinequilibriumGDP.

B)areductioninGDP.

C)anincreaseinthedesiretoinvest.

D)nochangeinequilibriumGDP.

E)apermanentreductioninthelevelofsaving.

Answer:A

Diff:2

22)Whichofthefollowingeventswillcauseareductioninequilibriumoutput?

A)anincreaseinthemarginalpropensitytosave

B)anincreaseintaxes

C)areductioninthemarginalpropensitytoconsume

D)alloftheabove

E)noneoftheabove

Answer:D

Diff:2

23)Basedonourunderstandingofconsumptionandsaving,weknowthatthemarginalpropensitytoconsumeandthemarginalpropensitytosavemust

A)beequaltoeachother.

B)sumtoexactlyone.

C)sumtolessthanone.

D)sumtomorethanone.

E)beequaltothemultiplier.

Answer:B

Diff:1

24)Supposethereisanincreaseinautonomousconsumption.Specifically,supposec0increaseswhereC=c0+c1YD.Thisincreaseinautonomousconsumptionwillcausewhichofthefollowingtoincrease?

A)equilibriumincome

B)equilibriumdisposableincome

C)demand

D)alloftheabove

E)noneoftheabove

Answer:D

Diff:2

25)IfC=2000+.9YD,whatincreaseingovernmentspendingmustoccurforequilibriumoutputtoincreaseby1000?

A)100

B)200

C)250

D)500

E)1000

Answer:A

Diff:2

26)Whichofthefollowingequalsdemandinanopeneconomy?

A)C+I+G+X

B)C+I+G+X-IM

C)C+I+G+IM-X

D)C+I+G

Answer:B

Diff:1

27)Whichofthefollowingequalsdemandinaclosedeconomy?

A)C+I+G+X

B)C+I+G+X-IM

C)C+I+G+IM-X

D)noneoftheabove

Answer:D

Diff:1

28)Supposeanopeneconomyisinequilibrium.Giventhisinformation,weknowwithcertaintythat

A)G=T.

B)X=IM.

C)S=I.

D)Y=Z.

Answer:D

Diff:1

29)Foraclosedeconomy,whichofthefollowingconditionsmustbesatisfiedforequilibriumtobemaintained?

A)G=T

B)X=IM=0

C)C=S

D)noneoftheabove

Answer:D

Diff:2

30)Autonomousspendinginaclosedeconomyequalswhichofthefollowing?

A)c0+I+G-c1T

B)C+I+G

C)Z

D)c0+I+G+c1T

Answer:A

Diff:2

31)BasedonourunderstandingofthemodelpresentedinChapter3,weknowthatanincreaseinc1(whereC=c0+c1YD)willcause

A)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

B)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

C)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

D)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

Answer:B

Diff:2

32)BasedonourunderstandingofthemodelpresentedinChapter3,weknowthatareductioninc1(whereC=c0+c1YD)willcause

A)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

B)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

C)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

D)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

Answer:C

Diff:2

33)Anincreaseinthemarginalpropensitytosavefrom.3to.4willcause

A)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

B)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

C)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0))tohaveasmallereffectonoutput.

D)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

Answer:B

Diff:2

34)Areductioninthemarginalpropensitytosavefrom.4to.3willcause

A)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

B)theZZlinetobecomesteeperandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

C)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

D)theZZlinetobecomeflatterandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

Answer:C

Diff:2

35)Anincreaseinthemarginalpropensitytosavefrom.1to.2willcause

A)anincreaseinthemultiplierandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

B)anincreaseinthemultiplierandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

C)areductioninthemultiplierandagivenchangeinautonomousconsumption(c0)tohaveasmallereffectonoutput.

D)areductioninthemultiplierandagivenchangeinautonomousconsumption(c0)tohavealargereffectonoutput.

Answer:C

Diff:2

36)Whentheeconomyisinequilibrium,weknowwithcertaintythat

A)publicsavingequalsinvestment.

B)privatesavingequalsinvestment.

C)G=T.

D)noneoftheabove

Answer:D

Diff:1

37)Whenaclosedeconomyisinequilibrium,weknowwithcertaintythat

A)I=S+(T-G).

B)I=S.

C)I=S+(G-T).

D)G=TandS=I.

Answer:A

Diff:1

38)Anincreaseinthedesiretosavebyhouseholdswillcause

A)areductioninoutput.

B)areductionininvestment.

C)anincreaseinoutput.

D)nochangeininvestmentandnochangeinoutput.

Answer:A

Diff:2

39)Anincreaseintaxeswillcause

A)areductionininvestment.

B)anincreaseininvestment.

C)nochangeininvestment.

D)nochangeinautonomousspending.

Answer:C

Diff:2

40)Ataxcutwillcause

A)areductionininvestment.

B)anincreaseininvestment.

C)nochangeininvestment.

D)nochangeinautonomousspending.

Answer:C

Diff:2

41)BasedonourunderstandingofthemodelpresentedinChapter3,weknowwithcertaintythatanequalandsimultaneousincreaseinGandTwillcause

A)anincreaseinoutput.

B)nochangeinoutput.

C)areductioninoutput.

D)anincreaseininvestment.

Answer:A

Diff:3

42)BasedonourunderstandingofthemodelpresentedinChapter3,weknowwithcertaintythatanequalandsimultaneousreductioninGandTwillcause

A)anincreaseinoutput.

B)nochangeinoutput.

C)areductioninoutput.

D)anincreaseininvestment.

Answer:C

Diff:3

43)BasedonourunderstandingofthemodelpresentedinChapter3,areductionininvestmentwillcause

A)anincreaseinthemultiplier.

B)areductioninthemultiplier.

C)areductioninthemarginalpropensitytosave.

D)areductioninoutput.

E)bothBandD

Answer:D

Diff:2

44)Supposebusinessconfidencedecreasescausingareductionininvestment.BasedonourunderstandingofthemodelpresentedinChapter3,weknowwithcertaintythatareductionininvestmentwillcause

A)anincreaseinthemultiplier.

B)areductioninthemultiplier.

C)areductioninthemarginalpropensitytosave.

D)areductioninconsumptionastheeconomyadjuststothisdecreaseininvestment.Answer:D

Diff:2

45)Supposethemarginalpropensitytoconsumeequals.8(i.e.,c1=.8).Giventhisinformation,whichofthefollowingeventswillcausethelargestincreaseinoutput?

A)Gincreasesby200

B)Tdecreasesby200

C)Iincreasesby150

D)bothAandB

Answer:A

Diff:3

46)Inventoryinvestmentrefersto

A)thedifferencebetweenproductionandsalesinagivenyear.

B)fixedinvestment.

C)nonresidentialinvestment.

D)thepurchasebyfirmsofnewmachines.

Answer:A

Diff:3

47)Supposetheconsumptionequationisrepresentedbythefollowing:C=250+.75YD,thenprivatesavingsis

A)-250+0.25YD.

B)-250+0.75YD.

C)-1000+0.25YD.

D)-1000+0.75YD.

Answer:A

Diff:3

48)WhichofthefollowingaboutISrelationisNOTcorrect?

A)Itisthetherelationbetweeninterestrateandsavings.

B)Itistheequilibriumconditionforthegoodsmarket.

C)Itstandsfor"Investmentequalssaving."

D)Itshowswhatfirmswanttoinvestmustbeequaltowhatpeopleandthegovernmentwanttosave.

Answer:A

Diff:3

49)IfC=2000+.9YD,whatdecreaseintaxesmustoccurforequilibriumoutputtoincreaseby1000?

A)111

B)100

C)1000

D)500

Answer:A

Diff:3

3.2EssayQuestions

1)Discusswhatismeantbytheparadoxofsaving.

Answer:Theparadoxofsavingreferstotheeffectsofanincreaseddesiretosaveonoutputandonthefinallevelofsaving.Theincreaseddesiretosaveisequivalenttoareductioninconsumption.Thisdropindemandwillcauseadropinoutput.Furthermore,inthissimpleeconomy,thefinallevelofsavingwillequaltheinitiallevelofsaving.So,anincreaseddesiretosavehasanegativeeffectontheeconomyandhasnopermanenteffectonthelevelofsaving(becauseS=Iinthesimplemodel).

2)SupposetheUnitedStateseconomyisrepresentedbythefollowingequations:

Z=C+I+GC=500+.5YDT=600I=300

YD=Y-TG=2000

a.Giventheabovevariables,calculatetheequilibriumlevelofoutput.Hint:Firstspecify(usingtheabovenumbers)thedemandequation(Z)forthiseconomy.Second,usingtheequilibriumcondition,equatethisexpressionwithY.Onceyouhavedonethis,solvefortheequilibriumlevelofoutput.UsingtheZZ-Ygraph(i.e.,agraphthatincludestheZZlineand45-degreelinewithZontheverticalaxis,andYonthehorizontalaxis),illustratetheequilibriumlevelofoutputforthiseconomy.

b.Now,assumethatconsumerconfidencedecreasescausingareductioninautonomousconsumption(c0)from500to400.Whatisthenewequilibriumlevelofoutput?Howmuchdoesincomechangeasaresultofthisevent?Whatisthemultiplierforthiseconomy?

c.Graphicallyillustratetheeffectsofthischangeinautonomousconsumptiononthedemandline(ZZ)andY.Clearlyindicateinyourgraphtheinitialandfinalequilibriumlevelsofoutput.

d.Brieflyexplainwhythisreductioninoutputisgreaterthan(inabsoluteterms)theinitialreductioninautonomousconsumption.

Answer:a.Y=5000.Thegraphiseasytoshow.

b.Y=4800;themultiplieris2.

c.Graph.

d.Whendemandfallsby100,firmscutproductionby100.Asproductionfallsby100,incomefallswhichcausesasubsequentreductioninconsumptionanddemand.ThisY-inducedfallindemandcausesanotherreductioninproduction.ThiscontinuesandweobserveafinalchangeinYthatexceedstheinitialchangeinautonomousdemand.

3)Explainwhatthemultiplierrepresents.

Answer:Themultiplierillustratestheextenttowhichequilibriumoutputwillchangeasaresultofagivenchangeinautonomousdemand.

4)Discussandexplainwhateffectareductioninthemarginalpropensitytoconsumehasonthesizeofthemultiplier.

Answer:Areductioninthemarginalpropensitytoconsumewillcauseareductioninthemultiplier.Whenfirmsincreaseproductioninresponsetosomeinitialchangeindemand,householdswillincreasetheirconsumptionbyasmalleramountwhenthempcfalls.So,theincome-inducedchangeindemandwillbethatmuchsmallercausingasmallermultipliereffect.

5)UsetheZZ-Ymodelpresentedinchapter3toillustratetheeffectsofareductioninconsumerconfidenceontheeconomy.Also,explainwhateffectthisreductioninconsumerconfidencehasontheeconomy.

Answer:Thegraphiseasy.Thereductioninconsumerconfidencewillcauseareductioninconsumptionanddemand.Asdemandfalls,firmswillcutproduction.So,thiseventwillcausealowerlevelofequilibriumoutput.

6)Supposethat,atagivenlevelofdisposableincome,consumersdecidetosavemore.Explainwhateffectthisdecisionwillhaveonequilibriumincome.Also,explainwhateffectthisdecisionwillhaveonthelevelofsavingoncetheeconomyhasreachedthenewequilibrium.

Answer:Thisistheparadoxofsaving.Here,consumptionwillfallcausingareductionindemandandareductioninoutput.Despitetheinitialincreaseinsavingattheinitiallevelofincome,savingwillreturntotheinitiallevelasincomefallsinordertomaintainthealternativeequilibriumcondition:S=I.So,theinitialincreaseinthedesiretosavewillhavenopermanenteffectonthelevelofsaving.

7)Explainthedifferencebetweenendogenousandexogenousvariables.

Answer:Endogenousvariablesaredeterminedbythemodel.Exogenousvariablesaretakenasgivenand,forexampleinthismodel,donotchangeasincomechanges.

8)Discussthetwocomponentsoffixedinvestment.

Answer:Nonresidentialinvestmentrepresentsthepurchaseofnewequipmentandstructures.Residentialinvestmentrepresentsthepurchasebypeopleofnewhomes,condos,andapartments.

9)Forthisquestion,assumethattaxesareindependentofincome(i.e.,theincometaxrateiszero).Nowsupposethatfiscalpolicymakerswishtodecreaseequilibriumoutputby$500billion.Furthersupposethatpolicymakerscanchooseoneofthefollowingtwooptions:(1)changeingovernmentspending;or(2)changeintaxes.Compareandexplaintherelativesizeofthechangesingovernmentspendingandtaxesneededtoobtainthisdesiredchangeinoutput.Answer:Thechangeintaxeswillhavetobelargerbecausepartofanytaxincreasewillcausesavingtofall.So,tocausethesamereductionindemand,thesizeofthetaxcutwillhavetobelargerthanthesizeofanyreductioningovernmentspending.

10)ExplainwhatfactorscauseshiftsandchangesintheslopeoftheZZcurvepresentedinchapter3.

Answer:TheZZcurveisupwardsloping.TheZZcurveillustratesthelevelofdemandateachlevelofincome.AsYincreases,householdsconsumemorecausinganincreaseindemand.So,asYrises,sodoesdemand.Themarginalpropensitytoconsumewilldeterminethesizeoftheslope.TheZZcurvewillshiftwhenanyautonomouscomponentofdemandchan