ECN 211 Midterm Exam Questions
and Answers 100% Pass
Net Taxes (T) - CORRECT ANSWER-Government tax revenue-government
transfer payments
T=total tax revenue- transfers
Disposable Income - CORRECT ANSWER-the income households have left after
net taxes are taken away. Either spend or saved. total income minus net taxes
Disposable Income=GDP-T
Total Income - CORRECT ANSWER-Total output or GDP
Household Savings (S) - CORRECT ANSWER-the portion of after-tax income
that households do not spend on consumption (C)
S= Disposable income- C
Trade deficit - CORRECT ANSWER-when a country's exports are less than its
imports
its currency held by foreigners further increases the supply of loanable funds
Trade Deficit= IM(imports)-X (exports)
, Planned Investment Spending (IP) - CORRECT ANSWER-Business purchases of
plant and equipment
over a period of time is equal to the amount available in the loanable funds market
after the government has borrowed from or added savings to it AND after
accounting for any funds provided or borrowed by foreigners
Ip=S- (G-T)+(IM-X)
Ip=I (total investment) - change in investment
In the classical model, a decrease in net taxes has what effect? - CORRECT
ANSWER-has no effect on the total output
Total Spending - CORRECT ANSWER-In an open economy, is the sum of
purchases made by the household sector (C), the business sector (Ip), the
government sector (G) and the difference between exports (X) and imports (IM)
Total spending=C+Ip+G+(X-M)
Total Spending= Total Output IF Leakages=Injections
Injections into Total Spending - CORRECT ANSWER-spending on country's
output from sources other than its households.
Exports, Planned Investment, Gov. purchases
Injections= G+ Ip
and Answers 100% Pass
Net Taxes (T) - CORRECT ANSWER-Government tax revenue-government
transfer payments
T=total tax revenue- transfers
Disposable Income - CORRECT ANSWER-the income households have left after
net taxes are taken away. Either spend or saved. total income minus net taxes
Disposable Income=GDP-T
Total Income - CORRECT ANSWER-Total output or GDP
Household Savings (S) - CORRECT ANSWER-the portion of after-tax income
that households do not spend on consumption (C)
S= Disposable income- C
Trade deficit - CORRECT ANSWER-when a country's exports are less than its
imports
its currency held by foreigners further increases the supply of loanable funds
Trade Deficit= IM(imports)-X (exports)
, Planned Investment Spending (IP) - CORRECT ANSWER-Business purchases of
plant and equipment
over a period of time is equal to the amount available in the loanable funds market
after the government has borrowed from or added savings to it AND after
accounting for any funds provided or borrowed by foreigners
Ip=S- (G-T)+(IM-X)
Ip=I (total investment) - change in investment
In the classical model, a decrease in net taxes has what effect? - CORRECT
ANSWER-has no effect on the total output
Total Spending - CORRECT ANSWER-In an open economy, is the sum of
purchases made by the household sector (C), the business sector (Ip), the
government sector (G) and the difference between exports (X) and imports (IM)
Total spending=C+Ip+G+(X-M)
Total Spending= Total Output IF Leakages=Injections
Injections into Total Spending - CORRECT ANSWER-spending on country's
output from sources other than its households.
Exports, Planned Investment, Gov. purchases
Injections= G+ Ip
