5. Assume you built a new house, bought a used car, and bought some government bonds. Which of the following statements is true of the components of aggregate demand? A. consumption and government purchases went up since you bought a used car and government bonds B. investment went up since you built a new house C. investment and government purchases went up since you built a new house and bought government bonds D. consumption and investment went up since you bought a used car and government bonds E. consumption went up since you built a new house

5. Assume you built a new house, bought a used car, and bought some government bonds. Which of the following statements is true of the components of aggregate demand? A. consumption and government purchases went up since you bought a used car and government bonds B. investment went up since you built a new house C. investment and government purchases went up since you built a new house and bought government bonds D. consumption and investment went up since you bought a used car and government bonds E. consumption went up since you built a new house

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.8P

See similar textbooks

Similar questions

11. How do lower taxes affect aggregate demand? A) They increase disposable income, consumption, and aggregate demand. B) They reduce disposable income, consumption, and aggregate demand. C) They decrease corporate investment and aggregate demand. D) They increase aggregate supply and thus increase aggregate demand as well 12. Full-employment GDP is also known as A) realized GDP. B) potential GDP. C) politico-economic GDP. D) balanced-budget GDP.
a.) Explain how the Aggregate Demand - Aggregate Supply Model differs from the Aggregate Expenditures model Put the two models side by side, look for the differences and explain them.
5 Which of the following is not a reason for the increase in aggregate demand? a. Decrease in imports b. Increase in government expenditure c. Increase in consumption d. None of the options Clear my choice
4. Suppose an economy had aggregate demand components with the following relationships: Consumption Spending, C=195+0.80° (DY) Investment Spending, I-25 +0.10°Y Government Spending, G-6+0.15*Y Net Export Spending, X-14-0.05*Y Tax Collections, Tx = -20+0.25*Y a. What is the equilibrium income for this economy (Show your work)? b. At the equilibrium income, what is the size of the government surplus (or deficit)? den Cal Page 3 601 c. If the Government decided to Increase G spending by 15, what would be the new equilibrium income for this economy (Show your work)? d. If instead the Government decided to Reduce Tx (taxes) by 6, what would be the new equilibrium income for this economy (Show your work)? yanoM e. If instead the Government decided to Increase G spending and Increase Tx (taxes) both by 30, what would be the new equilibrium income for this economy (Show your work)?
7. If the government chooses to reduce government expenditure or to increase taxes, according to the Aggregate Supply-Aggregate Demand model: the price level will fall and GDP will increase. the price level will rise and GDP will increase. the price level will fall and GDP will decrease. the price level will rise and GDP will decrease.
3. Suppose an economy had aggregate demand components with the following relationships: Consumption Spending, C-140 +0.60*(DY) Investment Spending, I-25 +0.15"Y Government Spending, G-0 Net Export Spending, X=0 Tax Collections, Tx = 0 a. What is the equilibrium income for this economy (Show your work)? b. If the Government decided to Increase G spending by 6, what would be the new equilibrium income for this economy (Show your work)? Page 2 bed tooing c. If instead the Government decided to Reduce Tx (taxes) by 10 (i.e., send checks to people), what would be the new equilibrium income for this economy (Show your work)? d. If instead the Government decided to Increase G spending and Increase Tx (taxes) by 20, what would be the new equilibrium income for this economy (Show your work)?
1. State whether each of the following transactions is a part of aggregate demand in the United States, and if so whether it is Consumption spending, Investment, Government purchase, Exports, or IMPORTS For example, "Dieter, a German resident, buys frozen chickens that were raised in the U.S." Answer: No, IMPORTS a) David buys a keyboard synthesizer made in the United States. b) A Japanese automaker buys stock in an American auto company. c) A Japanese automaker builds an assembly plant in Illinois. d) Will buys a compact disc player made in Japan. e) The U.S government sends an insurance check to Renee, an unemployed keypunch operator. f) Mark buys a three-year-old used car. g) The state government sends a salary check to Karen, an economics instructor at CUNY.
If investment increases by $50 billion, by how much will aggregate demand change? Aggregate demand will _______. A. increase by less than $50 billion because there will be fewer goods and services produced for consumption expenditure B. increase by more than $50 billion because the increase in aggregate income induces an increase in consumption expenditure C. probably decrease by $50 billion, but it depends on the change in aggregate supply D. increase by exactly $50 billion because investment is a component of aggregate demand
42. What is happening when the aggregate demand curve moves to the left on the model? Consumers have more disposable income and are spending more money. Consumers are renting more and buying less. Consumers are investing more in the market for money. Consumers have less disposable income and are spending less money.
13 Which of the following would increase aggregate demand? Increase in savings. Increase in taxation. Decrease in consumption spending. Increase in government spending.
Economics
Question:4,5