If net exports are positive: a. The equilibrium GDP must be greater thanthe full

Question

If net exports are positive:



a. The equilibrium GDP must be greater thanthe full-employment GDP.

b. Imports must exceedexports

c. Aggregate expenditures aregreater at each level of GDP than when net exports are zero ornegative.

If the MPC is .70 and gross investment increases by $3 billion, theequilibrium GDP will:



a. Increase by $10 billion

b. Increase by $2.10billion

c. Decrease by $4.29billion

d. Increase by $4.29billion. The interest rate effect suggestthat:



a. A decrease in the supply of money willincrease interest rates and reduce interest-sensitive consumptionand investment spending.

b. An increase in the pricelevel will increase the demand for money, reduce interest rates,and decrease consumption and investment spending.

c. An increase in the pricelevel will increase the demad for money, increase interest rates,and decrease cosumption and investment spending

d. An increase in the pricelevel will decrease the demand for money, reduce interest rates,and increase consumption and investmentspending.

If net exports are positive:



a. The equilibrium GDP must be greater thanthe full-employment GDP.

b. Imports must exceedexports

c. Aggregate expenditures aregreater at each level of GDP than when net exports are zero ornegative.

If the MPC is .70 and gross investment increases by $3 billion, theequilibrium GDP will:



a. Increase by $10 billion

b. Increase by $2.10billion

c. Decrease by $4.29billion

d. Increase by $4.29billion. The interest rate effect suggestthat:



a. A decrease in the supply of money willincrease interest rates and reduce interest-sensitive consumptionand investment spending.

b. An increase in the pricelevel will increase the demand for money, reduce interest rates,and decrease consumption and investment spending.

c. An increase in the pricelevel will increase the demad for money, increase interest rates,and decrease cosumption and investment spending

d. An increase in the pricelevel will decrease the demand for money, reduce interest rates,and increase consumption and investmentspending.

The interest rate effect suggestthat:



a. A decrease in the supply of money willincrease interest rates and reduce interest-sensitive consumptionand investment spending.

b. An increase in the pricelevel will increase the demand for money, reduce interest rates,and decrease consumption and investment spending.

c. An increase in the pricelevel will increase the demad for money, increase interest rates,and decrease cosumption and investment spending

d. An increase in the pricelevel will decrease the demand for money, reduce interest rates,and increase consumption and investmentspending.

Explanation / Answer

C net export would be positive if aggregate expenditures weregreater. A increase by 10 billion. C is suggestive of the interest rate.

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