Question : 21) A $100 million increase in government spending causes A) an : 1381288

21) A $100 million increase in government spending causes

A) an equal amount of change in equilibrium output in an open and a closed economy.

B) a larger change in an open economy than in a closed economy.

C) a larger change in a closed economy than in an open economy.

D) a larger change in a closed economy than in an open economy if the MPM is zero.

22) Which of the following statements is true?

A) The larger a nation’s marginal propensity to consume, the smaller the open-economy multiplier.

B) The smaller a nation’s marginal propensity to import, the smaller the open-economy multiplier.

C) The larger a nation’s marginal propensity to export, the smaller the open-economy multiplier.

D) The larger a nation’s marginal propensity to import, the smaller the open-economy multiplier.

23) Which of the following is/are likely to affect the demand for imports?

A) the relative prices of domestically produced and foreign-produced goods

B) the after-tax real wage

C) interest rates

D) all of the above

24) Which of the following is likely to increase the exports of a country?

A) an increase in income in the domestic country

B) a decrease in income in the domestic country

C) a decrease in income in foreign countries

D) an increase in income in foreign countries

25) The tendency for an increase in the economic activity of one country to lead to a worldwide increase in economic activity is the

A) multiplier effect.

B) trickle-down effect.

C) trade feedback effect.

D) spontaneous growth effect.

26) An increased growth rate in Malaysia has increased the Malaysian demand for U.S.-produced coal. Malaysia increases its imports of U.S.-produced coal by $20 million. U.S. net exports will

A) increase by $20 million.

B) increase by less than $20 million.

C) increase by more than $20 million.

D) increase by $20 million or more.

27) Assume that a $1.00 increase in exports increases GDP by $3.00, and a $1.00 increase in income increases import spending by $0.15. In this case, a $1,000 million increase in exports will increase net exports by

A) $550 million.

B) $700 million.

C) $1,000 million.

D) $1,350 million.

28) The trade feedback effect illustrates the fact that

A) an increase in U.S. economic activity leads to a decrease in the economic activity of other countries.

B) U.S. imports depress the imports of other countries.

C) imports and exports are unrelated to one another.

D) imports affect exports and exports affect imports.

29) Economic activity increases in Western Europe, and this causes economic activity to increase in the United States. This is an example of

A) the price feedback effect.

B) the trade feedback effect.

C) the export feedback effect.

D) the import feedback effect.

30) The trade feedback effect includes all of the following steps EXCEPT

A) an increase in U.S. economic activity stimulates U.S. imports.

B) an increase in foreign imports stimulates U.S. exports.

C) an increase in U.S. exports stimulates U.S. economic activity.

D) an increase in foreign income stimulates U.S. imports.