ECN 211 Midterm #1 exam Graded A {2024/2025}
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 incom...
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
Leakages out of Total Spending - CORRECT ANSWER income earned by
households that they do NOT spend on country's output in a given
year.
Imports, Net Taxes, Household Savings
Leakages= T+S
According to the rule of 70, approx. how many years will it take for the
economy to double in size? - CORRECT ANSWER 35 years
Growth Equation - CORRECT ANSWER *%change Real GDP per capita=
%change productivity+ %change EPR + %change Average Hours
*%change EPR= %change Real GDP per capita-%change productivity-
%change Avg Hours
All else held equal, an increase in the EPR ______ real GDP per capita -
CORRECT ANSWER does not decrease
Can continually increasing the EPR achieve sustained economic
growth? - CORRECT ANSWER No
Can increases in capital stock alone create permanently high rates of
economic growth? - CORRECT ANSWER No
What is economic growth from new capital limited by? - CORRECT ANSWER
Diminishing returns and depreciation
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