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Which one of the following is correct regarding contractionary fiscal policy in the Keynesian
model? It will…
[1] decrease inventories
[2] increase inventories
[3] increase investment
[4] decrease investment
n the Keynesian model, when the tax rate increases...
[1] the multiplier increases.
[2] the equilibrium level of income increases.
[3] net exports increase.
[4] the equilibrium level of income decreases.
The multiplier for a Keynesian model with a foreign sector is _____ the multiplier of a
Keynesian model without a foreign sector.
a) lower than
b) higher than
c) same as
[1] a is correct
[2] b is correct
[3] c is correct
[4] all of them are correct
If the multiplier is 4, a R40 billion increase in net exports will …
[1] increase GDP by 160 billion
[2] increase GDP by 40 billion
[3] increase GDP by 10 billion
[4] the multiplier does not have an effect on net exports
ihle’s monthly disposable income increases from R4 900 to R5 300. As a result, his monthly
savings increase from R510 to R670. This implies that his marginal propensity to consume is …
[1] 0,20
[2] 0,40
[3] 0,60
[4] 0,8
Use the information below to answer questions 3.15 to 3.16.
If 𝐶̅= R20 billion, I = R30 billion, G = R25 billion, X = R15 billion, Z = R12 billion, c = 0.75 and t =
0.20
3.15 The value of the multiplier is …
[1] 4.0
[2] 3.5
[3] 2.0
[4] 2.5
3.16 The equilibrium level of income is …
[1] 195
[2] 312
[3] 156
[4] 273
As income rises following an increase in autonomous net exports, induced imports will
_____.
[1] decrease
[2] remain unchanged
[3] increase
[4] increase by the same value as increase in income
Introducing the positive net exports to the Keynesian model …
[1] means that graphically X - Z is added to C + I + G, and the A curve shifts upward.
[2] means that graphically X - Z is added to C + I + G, and the A curve shifts downward.
[3] has no impact on the model with C and I.
[4] means that the multiplier increases.
Which one of the following is correct about government spending in the Keynesian model?
[1] Government spending affect the size of the multiplier.
[2] Government spending decreases aggregate spending in the economy.
[3] A decrease in repo rate discourage social spending by government.
[4] Government spending has an effect on the income level in the economy.
Which one of the following is correct about government spending in the Keynesian model?
[1] Government spending affect the size of the multiplier.
[2] Government spending decreases aggregate spending in the economy.
[3] A decrease in repo rate discourage social spending by government.
[4] Government spending has an effect on the income level in the economy.
Use the figure below to answer question 3.12.
3.12 The movement from A to A’’ can result from …
[1] an increase in government spending.
[2] a decrease in government spending.
[3] an increase in taxes.
[4] a decrease in taxes.
