Question : 41) Consider an open economy that has a marginal propensity : 1384383

Economics

41) Consider an open economy that has a marginal propensity to import equal to 0.30. If national income rises by $2500, imports will rise by

A) $30.

B) $300.

C) $750.

D) $7500.

E) $8333.

42) Suppose exports (X)=100, Y=500, and imports are equal to mY, where m is the marginal propensity to import. Net exports would be equal to zero if the marginal propensity to import were

A) 1%.

B) 5%.

C) 10%.

D) 20%.

E) 50%.

43) When compared to a simple macroeconomic model (with only consumption and investment), adding government and foreign trade to the AE function causes

A) the autonomous component of AE to increase.

B) the autonomous component of AE to fall.

C) the AE function to become downward sloping.

D) the AE function to become perfectly horizontal.

E) no change in the AE function.

44) The AE function for an open economy with government can be written as

A) AE = C + I – G + (X-IM).

B) AE = C + I + G – (X-IM).

C) AE = C + I – G – (X+IM).

D) AE = C + I + S + (X+IM).

E) AE = C + I + G + (X-IM).

45) Consider the general form of the consumption function in a simple macro model. Once government and taxes are included in the model, desired consumption can be expressed as ________, where a = autonomous consumption, t = net tax rate, Y = national income, = disposable income, and MPC = marginal propensity to consume.

A) C = a + MPC(1 – t)

B) C = a – (1 – t)

C) C = a + MPC ? Y

D) C = a + MPC ? t ?

E) C = a + MPC(1 – t)Y

46) In our simple macro model with government, which statement is correct regarding the following equation: T = (0.2)Y?

A) Total tax revenues are equal to 20% of disposable income.

B) Total tax revenues are equal to 20% of real GDP.

C) Net tax revenues are equal to 20% of disposable income.

D) If national income increases by $1.00, then net tax revenue increases by $0.20.

E) If total tax revenue increases by $0.20, then national income increases by $1.00.

47) In our simple macro model with government, which statement is correct regarding the following equation: = (0.75)Y?

A) If disposable income increases by $0.75, then national income increases by $1.00 and total tax revenue rises by $0.75.

B) Net tax revenue is equal to 75% of national income.

C) If national income increases by $1.00, then disposable income increases by $0.75 and net tax revenue increases by $0.25.

D) Net tax revenue is equal to 25% of disposable income.

E) If national income increases by $1.00, then disposable income increases by $0.25 and net tax revenue increases by $0.75.

48) In our simple macro model with government and foreign trade, the marginal propensity to consume out of disposable income is ________ whereas the marginal propensity to consume out of national income is ________.

A) MPC; MPC(1 – t)

B) MPC(1 – t); MPC

C) MPC(1 – t) – m; MPC(1 – t)

D) MPC; MPC(1 – t) – m

E) MPC(1 – t); MPC(1 – t) – m

49) Consider a consumption function in a simple macro model with government and taxes. Given a marginal propensity to consume out of disposable income of 0.9 and a net tax rate of 10% of national income, the marginal propensity to consume out of national income is

A) 0.09.

B) 0.72.

C) 0.81.

D) 0.90.

E) 1.00.

50) Consider a consumption function in a simple macro model with government and taxes. Given a marginal propensity to consume out of disposable income of 0.8 and a net tax rate of 20% of national income, the marginal propensity to consume out of national income is

A) 0.36.

B) 0.64.

C) 0.80.

D) 0.90.

E) 1.00.

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July 1, 2023

9.1 The United States in the International Economy

1) Following the tariff imposed on Chinese tires, some businesspeople correctly argued that the U.S. tariff would result in

A) China retaliating by raising tariffs on some U.S. exports.

B) China halting the sale of all products in the United States.

C) U.S. firms never being able to meet the demand for U.S.-produced tires.

D) the government demanding price cuts from U.S. tire manufacturers.

2) Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

A) they do not want to offend their employers who want them.

B) politicians lobby to convince workers the restrictions will make them better off.

C) they believe the restrictions will protect their jobs.

D) they don't understand that the restrictions will threaten their jobs.

3) The intention of the U.S. tariff on Chinese tires was to

A) protect jobs in the U. S. tire industry.

B) protect infant industries in tire U.S. tire market.

C) insure that Chinese tires meet U.S. quality and safety standards.

D) save the government money by restricting the sale of more expensive Chinese-made tires.

4) In the 1930s, the United States charged an average tariff rate ________. Today, the rate is ________.

A) of 100 percent; 20 percent

B) above 50 percent; less than 1.5 percent

C) of less than 10 percent; over 40 percent

D) of 17 percent; 33 percent

5) A tariff is a tax imposed by a government on

A) exports.

B) services.

C) imports.

D) luxury items.

6) Goods and services bought domestically but produced in other countries are referred to as

A) exports.

B) imports.

C) transfer payments.

D) foreign consumption.

7) Exports are domestically produced goods and services

A) sold to other countries.

B) sold to the government.

C) sold at home.

D) which are used to produce other goods and services.

8) When Roxanne, a U.S. citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is

A) both a U.S. and an Italian import.

B) a U.S. import and an Italian export.

C) a U.S. export and an Italian import.

D) neither an export nor an import for either country.

9) When BMW, a German company, purchases a welding machine that was made in Toronto, the purchase is

A) both a German and a Canadian import.

B) a German import and a Canadian export.

C) a German export and a Canadian import.

D) neither an export nor an import for either country.

10) Which of the following statements about the importance of trade to the U.S. economy is true?

A) Since 1950, both exports and imports have steadily decreased as a fraction of U.S. gross domestic product.

B) Overall, about 80 percent of U.S. manufacturing jobs depend directly or indirectly on exports.

C) The United States is the second largest exporter in the world.

D) The U.S. economy is highly dependent on international trade for growth in its gross domestic product.