Question : 81) Consider a macro model with demand-determined output. The equations : 1384387

81) 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.

82) Consider the following macro model with demand-determined output: C = 150 + 0.9, = 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.

83) Refer to Figure 22-2. What is the equilibrium national income in this economy?

A) $187.50

B) $294

C) $333.34

D) $625

E) $1666.67

84) In an open economy with government and demand-determined output, an increase in the equilibrium level of national income could be caused by

A) an increase in taxes at all levels of income.

B) an increase in the desired level of imports at all levels of income.

C) a decrease in desired consumption at all levels of income.

D) a decrease in the desired level of saving at all levels of income.

E) a decrease in government purchases.

85) In an open economy with government and demand-determined output, a decrease in the equilibrium level of national income could be caused by

A) a decrease in taxes at all levels of income.

B) a decrease in the desired level of imports at all levels of income.

C) a decrease in desired consumption at all levels of income.

D) a decrease in the desired level of saving at all levels of income.

E) an increase in government purchases.

86) In an open economy with government and demand-determined output in the short run, a specific “target” level of national income

A) cannot be achieved by any of the government’s fiscal policy tools.

B) can be achieved by changing G, but not T.

C) can be achieved by changing T, but not G.

D) can be achieved by changes in G, T, or both.

E) can be achieved only by changing both G and T at the same time.

87) Consider the following news headline: “Minister of Defence announces $2 billion purchase of military helicopters.” Assuming that aggregate output is demand-determined, and that the helicopters are purchased domestically, what will be the effect of this action, all other things equal, on the AE function and equilibrium national income?

A) The AE function will shift down parallel to itself and equilibrium national income will fall.

B) The AE function will rotate upward (become steeper) and equilibrium national income will rise.

C) The AE function will rotate downward (become flatter) and national income will fall.

D) The AE function will shift up parallel to itself and equilibrium national income will rise.

E) There will be no change in the AE function or in equilibrium national income.

88) Consider the following news headline: “Finance minister announces that the federal income-tax rate will rise by three percentage points.” Assuming that aggregate output is demand-determined, what will be the effect of this action, all other things equal, on the AE function and equilibrium national income?

A) The AE function will shift down parallel to itself and equilibrium national income will fall.

B) The AE function will rotate upward (become steeper) and equilibrium national income will rise.

C) The AE function will rotate downward (become flatter) and national income will fall.

D) The AE function will shift up parallel to itself and equilibrium national income will rise.

E) There will be no change in the AE function or in equilibrium national income.

89) Consider the following news headline: “Business community gloomy about the economy—investment plans axed.” Assuming that aggregate output is demand-determined, what effect will this have, all other things equal, on the AE function and on equilibrium national income?

A) The AE function will shift down parallel to itself and equilibrium national income will fall.

B) The AE function will rotate upward (become steeper) and equilibrium national income will rise.

C) The AE function will rotate downward (become flatter) and national income will fall.

D) The AE function will shift up parallel to itself and equilibrium national income will rise.

E) There will be no change in the AE function or in equilibrium national income.

90) Consider the following news headline: “Canadian exporters hurt by foreign recession.” Assuming that aggregate output is demand-determined, what effect will this have, all other things equal, on the AE function and on equilibrium national income?

A) The AE function will shift down parallel to itself and equilibrium national income will fall.

B) The AE function will rotate upward (become steeper) and equilibrium national income will rise.

C) The AE function will rotate downward (become flatter) and national income will fall.

D) The AE function will shift up parallel to itself and equilibrium national income will rise.

E) There will be no change in the AE function or in equilibrium national income.