BECO101 Assignment 1 Section 001/002/003 Submission Deadline 30 March 2010
Name_______________________________Stduent ID ________________________Section ______
Choose the one alternative that best completes the statement or answers the question. Explain WHY.
Table 6.3
$Billions
Compensation of employees 475
Proprietorsʹ income 60
Corporate profit 40
Net interest 25
Rental income 10
Deprecation 70
Indirect taxes 40
Direct taxes 80
Subsidies 15
Payments of factor income to the rest of the world 20
Receipts of factor income from the rest of the world 15
1) Refer to Table 6.3. The value for national income in billions of dollars is
A) 585. B) 600. C) 635. D) 850.
Table 6.4
$Billions
Depreciation 40
Receipts of factor income from the rest of the world 30
Government purchases 100
Imports 50
Payments of factor income to the rest of the world 50
Net private domestic investment 200
Personal income taxes 120
Personal consumption expenditures 600
Dividends 20
Exports 60
Amount of national income not going to households 20
2) Refer to Table 6.4. The value for personal income in billions of dollars is
A) 870. B) 890. C) 950. D) 960.
Table 8.3
All Figures in Billions of Dollars
Aggregate Output Aggregate Consumption Planned Investment
200 300 100
400 450 100
600 600 100
800 750 100
1,000 900 100
3) Refer to Table 8.3. At an aggregate output level of $400 billion, planned expenditure equals
A) $550 billion. B) $850 billion. C) $500 billion. D) $450 billion.
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4) Refer to Table 8.3. At an aggregate output level of $800 billion, aggregate saving
A) equals -$50 billion. B) equals $50 billion.
C) equals $0. D) cannot be determined from this information.
5) Refer to Table 8.3. At an aggregate output level of $200 billion, the unplanned inventory change is
A) -$150 billion. B) -$200 billion. C) $100 billion. D) -$50 billion.
6) Refer to Table 8.3. At an aggregate output level of $600 billion, the unplanned inventory change is
A) $0. B) -$100 billion. C) -$50 billion. D) $50 billion.
7) Refer to Table 8.3. If aggregate output equals ________, there will be a $100 billion unplanned decrease in
inventories.
A) $200 billion B) $600 billion C) $400 billion D) $800 billion
8) Refer to Table 8.3. The equilibrium level of aggregate output equals
A) $800 billion. B) $400 billion. C) $1,000 billion. D) $600 billion.
9) Refer to Table 8.3. Which of the following statements is FALSE?
A) At an output level of $400 billion, there is a $150 billion unplanned inventory decrease.
B) The MPC for this economy is .75.
C) At output levels greater than $800 billion, there is a positive unplanned inventory change.
D) If aggregate output equals $1000 billion, then aggregate saving equals $100.
10) Refer to Table 8.3. Planned saving equals planned investment at an aggregate output level
A) of $600 billion.
B) of $800 billion.
C) of $1000 billion.
D) that cannot be determined from this information.
11) Refer to Table 8.3. Planned investment equals actual investment at
A) $1000 billion. B) all income levels above $600 billion.
C) all income levels below $600 billion. D) all income levels.
Figure 8.8
12) Refer to Figure 8.8. What is the equation for the aggregate expenditure function ( AE)?
A) AE = 350 + .6Y. B) AE = 150 + .25Y. C) AE = 200 + .8Y. D) AE = 200 + .5Y.
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13) Refer to Figure 8.8. Equilibrium output equals
A) 150. B) 300. C) 100. D) 200.
14) Refer to Figure 8.8. At aggregate output level $300 million, there is a
A) $100 million increase in inventories. B) $100 million decrease in inventories.
C) $75 million unplanned decrease in inventories. D) $75 million unplanned increase in inventories.
15) Refer to Figure 8.8. At aggregate output level $100 million, there is a
A) $100 million increase in inventories. B) $75 million unplanned decrease in inventories.
C) $100 million decrease in inventories. D) $75 million unplanned increase in inventories.
16) Refer to Figure 8.8. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a
result of a decrease in investment by $20 million?
A) AE line shifts down, increasing equilibrium output and equilibrium expenditure.
B) AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure.
C) AE line shifts up, increasing equilibrium output and equilibrium expenditure.
D) AE line shifts down, decreasing equilibrium output and equilibrium expenditure.
17) Refer to Figure 8.8. Leakages are greater than injections at an aggregate output level of
A) $200 million. B) $300 million.
C) $100 million. D) cannot be determined from the figure
Figure 8.11
18) Refer to Figure 8.11. What is the equation for aggregate expenditure AE1 ?
A) AE1 = 600 + .4Y. B) AE1 = 400 + .4Y. C) AE1 = 1,000 + .5Y. D) AE1 = 1,000 + .6Y.
19) Refer to Figure 8.11. Suppose AE1 , AE2 and AE3 are parallel. What is the value of Point B?
A) $750 million
B) $900 million
C) $800 million
D) cannot be determined from the given information
20) Refer to Figure 8.11. Suppose AE1 , AE2 and AE3 are parallel. What is the value of Point A?
A) $510 million
B) $540 million
C) $450 million
D) cannot be determined from the given information
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21) Refer to Figure 8.11. Suppose the economyʹs aggregate expenditure line is AE1 . A $10 million increase in
planned investment causes aggregate equilibrium output to increase to
A) $1,010 million. B) $1,016.7 million. C) $1,215.6 million. D) $1,125.5 million.
22) If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is
A) 10%. B) 11.1%. C) 18%. D) 80%.
23) If net investment in 2008 is $500 billion and gross investment in 2008 is $900 billion, depreciation in 2008 is
A) -$500 billion. B) $0. C) $400 billion. D) $1,400 billion.
24) Assume there is no government or foreign sector. If the MPS is .05, the multiplier is
A) 0.95. B) 50. C) 10. D) 20.
Table 6.5
Production Prices
Year 1 Year 2 Year 3 Year 1 Year 2 Year 3
Good X 60 80 100 $1.00 $1.00 $1.40
Good Y 100 110 130 $0.80 $0.90 $1.00
25) Refer to Table 6.5. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the
base year, the value for this economyʹs real GDP in year 2 is
A) $168. B) $179. C) $202. D) $214.
