Adding Government And Trade To The Simple Macro Model

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Economic Issues and Concepts
Economic Theories,Data,and Graphs
Demand,Supply,and Price
Elasticity
Price Controls and Market Efficiency
Consumer Behaviour
Producers in the Short Run
Producers in the Long Run
Competitive Markets
Monopoly,cartels,and Price Discrimination
Imperfect Competition and Strategic Behaviour
Economic Efficiency and Public Policy
How Factor Markets Work
Labour Markets and Income Inequality
Interest Rates and the Capital Market
Market Failures and Government Intervention
The Economics of Environmental Protection
Taxation and Public Expenditure
What Macroeconomics Is All About
The Measurement of National Income
The Simplest Short-Run Macro Model
Adding Government and Trade to the Simple Macro Model
Output and Prices in the Short Run
From the Short Run to the Long Run: The Adjustment of Factor Prices
Long-Run Economic Growth
Money and Banking
Money,Interest Rates,and Economic Activity
Monetary Policy in Canada
Inflation and Disinflation
Unemployment Fluctuations and the Nairu
Government Debt and Deficits
The Gains From International Trade
Trade Policy
Exchange Rates and the Balance of Payments

All Questions

Question 1

Free

Multiple Choice

Why are government expenditures such as Old Age Security payments,employment insurance payments,or welfare benefits paid to individuals not considered part of G,the government component of aggregate expenditure?

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These are transfer payments and place no direct demand on Canada's total output.

These payments are directly included as part of C,consumption,because they become consumption expenditure for the recipient.

Since the revenues from which these payments are made did not originate from tax collection,they are not considered part of G.

Since these expenditures are transfers from recipients to taxpayers,they are not included in G.

These payments are included in G only when the payments are made directly by the federal government.

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Question 2

Free

Multiple Choice

The G and T components in the national-income accounts measure purchases and net taxes collected by

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all levels of government.

only provincial governments and the federal government.

only the federal government.

only provincial governments.

only local governments.

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Question 3

Free

Multiple Choice

When economists use the term "budget surplus" they are referring to

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net tax revenues minus government purchases.

national income minus transfer payments.

national income minus consumption.

disposable income minus consumption.

net tax revenues minus transfer payments.

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Question 4

Free

Multiple Choice

Transfer payments made by the government affect its net tax revenues

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directly.

indirectly through government purchases.

indirectly through net exports.

indirectly through the investment function.

indirectly through the consumption function.

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Question 5

Free

Multiple Choice

Consider the net tax rate,denoted by t.Which of the following correctly defines the net tax rate?

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it is total tax revenue minus transfer payments

it is the sum of the federal income tax rate plus an average of provincial income tax rates

it is the increase in net tax revenue when national income rises by one dollar

it is the sum of all government tax revenues

both A and C are correct

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Question 6

Multiple Choice

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is equal to 0.14Y.When Y = 2000,the government is running a budget

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deficit of 20.

surplus of 20.

balance.

deficit of -20.

surplus of 40.

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Question 7

Multiple Choice

Consider the government's budget balance.Suppose G = 2500 and the government's net tax revenue is equal to 0.2Y.When Y = 11 000,the government is running a budget

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deficit of 1500.

surplus of 300.

balance.

deficit of 300.

surplus of 1500.

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Question 8

Multiple Choice

Consider the government's budget balance.Suppose G = 500 and the government's net tax revenue is equal to 0.25Y.When Y = 2920,the government is running a budget

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deficit of 730.

surplus of 230.

balance.

deficit of 230.

surplus of 730.

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Question 9

Multiple Choice

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is equal to 0.12Y.The government budget is balanced when Y equals

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350.

1000.

2000.

2500.

3600.

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Question 10

Multiple Choice

Consider the government's budget balance.Suppose G = 2500 and the government's net tax revenue is equal to 0.2Y.The government budget is balanced when Y equals

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9500.

10 500.

11 500.

12 500.

13 500.

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Question 11

Multiple Choice

Consider the government's budget balance.Suppose G = 500 and the government's net tax revenue is equal to 0.2Y.The government budget is balanced when Y equals

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2000.

2200.

2400.

2500.

2800.

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Question 12

Multiple Choice

Consider the government's budget balance.Suppose G = 400 and the government's net tax revenue is 20% of national income (Y).Government saving is negative for all values of Y

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above 10 000.

above 8000.

above 2000.

below 8000.

below 2000.

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Question 13

Multiple Choice

Consider the government's budget balance.Suppose G = 600 and the government's net tax revenue is 10% of Y.The government budget is balanced when Y equals

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660.

1320.

3000.

4500.

6000.

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Question 14

Multiple Choice

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is 0.3Y.The government budget is in surplus only when Y is

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less than 350.

less than 1000.

greater than 1000.

greater than 2500.

greater than 3000.

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Question 15

Multiple Choice

Suppose that real national income (Y)is equal to 800 and that government purchases are equal to 200.If the government's net tax revenues are equal to tY,where t is the net tax rate,then what is the value of t necessary for the government to have a balanced budget?

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20%

25%

30%

35%

40%

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Question 16

Multiple Choice

Suppose Y=400 and the government's net tax rate is 10%.If we are told that the government has a budget surplus,then government purchases must be

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greater than 30.

less than 30.

greater than 40.

less than 40.

Not enough information to know.

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Question 17

Multiple Choice

If the government's net tax rate increases,then for a given level of national income disposable income will and net tax revenue will .

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decrease; decrease

decrease; increase

increase; increase

increase; decrease

not change; increase

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Question 18

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through and indirectly through .

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the net taxes; the government purchases of goods and services

the net taxes; its affect on disposable income

the government purchases of goods and services; its effect on net exports

the government purchases of goods and services; its effect on disposable income

the government purchases of goods and services; its effect on investment

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Question 19

Multiple Choice

Exports are treated as autonomous expenditure in our simple macro model because

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exports typically do not change as a result of a change in Canadian national income.

exports are always constant in dollar terms.

they are a component of net exports,which is autonomous in our model.

exports are a small component in the Canadian economy and are not significant in the model.

exports are a function of Canadian national income,which is autonomous in our model.

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Question 20

Multiple Choice

In a simple macro model,it is generally assumed that a country's exports

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and imports are autonomous.

and imports are induced.

are autonomous whereas imports are induced.

are induced whereas imports are autonomous.

are always equal to investment.

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Adding Government And Trade To The Simple Macro Model

Why are government expenditures such as Old Age Security payments,employment insurance payments,or welfare benefits paid to individuals not considered part of G,the government component of aggregate expenditure?

The G and T components in the national-income accounts measure purchases and net taxes collected by

When economists use the term "budget surplus" they are referring to

Transfer payments made by the government affect its net tax revenues

Consider the net tax rate,denoted by t.Which of the following correctly defines the net tax rate?

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is equal to 0.14Y.When Y = 2000,the government is running a budget

Consider the government's budget balance.Suppose G = 2500 and the government's net tax revenue is equal to 0.2Y.When Y = 11 000,the government is running a budget

Consider the government's budget balance.Suppose G = 500 and the government's net tax revenue is equal to 0.25Y.When Y = 2920,the government is running a budget

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is equal to 0.12Y.The government budget is balanced when Y equals

Consider the government's budget balance.Suppose G = 2500 and the government's net tax revenue is equal to 0.2Y.The government budget is balanced when Y equals

Consider the government's budget balance.Suppose G = 500 and the government's net tax revenue is equal to 0.2Y.The government budget is balanced when Y equals

Consider the government's budget balance.Suppose G = 400 and the government's net tax revenue is 20% of national income (Y).Government saving is negative for all values of Y

Consider the government's budget balance.Suppose G = 600 and the government's net tax revenue is 10% of Y.The government budget is balanced when Y equals

Consider the government's budget balance.Suppose G = 300 and the government's net tax revenue is 0.3Y.The government budget is in surplus only when Y is

Suppose that real national income (Y)is equal to 800 and that government purchases are equal to 200.If the government's net tax revenues are equal to tY,where t is the net tax rate,then what is the value of t necessary for the government to have a balanced budget?

Suppose Y=400 and the government's net tax rate is 10%.If we are told that the government has a budget surplus,then government purchases must be

If the government's net tax rate increases,then for a given level of national income disposable income will ________ and net tax revenue will ________ .

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through ________ and indirectly through ________ .

Exports are treated as autonomous expenditure in our simple macro model because

In a simple macro model,it is generally assumed that a country's exports

If the government's net tax rate increases,then for a given level of national income disposable income will and net tax revenue will .

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through and indirectly through .