Question 1

What is aggregate demand? What are its major components?

Accepted Answer

Aggregate demand is the total

Question 2

Most people base their current consumption spending at least partially on

Accepted Answer

A)  short-run debt. 
B)  long-run debt. 
C)  long-run real interest rates. 
D)  long-run income. 
A)  short-run debt. 
B)  long-run debt. 
C)  long-run real interest rates. 
D)  long-run income.

Question 3

One of the effects of a change in disposable income could not be a(n)

Accepted Answer

A)  movement up along the consumption function. 
B)  movement down along the consumption function. 
C)  change in the amount of consumption expenditures. 
D)  upward shift of the consumption function. 
A)  movement up along the consumption function. 
B)  movement down along the consumption function. 
C)  change in the amount of consumption expenditures. 
D)  upward shift of the consumption function.

Question 4

Discuss the major determinants of net exports.

Accepted Answer

National incomes: Although both exports

Question 5

To get a complete measure of the total spending on U.S.-produced final goods and services,one must adjust aggregate demand by

Accepted Answer

A)  adding imports and subtracting exports. 
B)  adding imports that are purchased by U.S.consumers. 
C)  adding exports and subtracting imports. 
D)  subtracting exports sold to foreigners. 
A)  adding imports and subtracting exports. 
B)  adding imports that are purchased by U.S.consumers. 
C)  adding exports and subtracting imports. 
D)  subtracting exports sold to foreigners.

Question 6

After years of hard work in the field of macroeconomics,you win the Nobel Prize in economics (currently about $1.5 million).What is the most likely effect of this prize on your consumption function?

Accepted Answer

A)  It will shift downward temporarily. 
B)  It will shift upward temporarily. 
C)  It will shift downward permanently. 
D)  It will shift upward permanently. 
E)  none of the above 
A)  It will shift downward temporarily. 
B)  It will shift upward temporarily. 
C)  It will shift downward permanently. 
D)  It will shift upward permanently. 
E)  none of the above

Question 7

The tax cut of 2009 had little significant effect on consumer spending because it

Accepted Answer

A)  was not large enough. 
B)  was perceived as temporary. 
C)  came too early in the year. 
D)  was subtracted from 2008 taxes due. 
A)  was not large enough. 
B)  was perceived as temporary. 
C)  came too early in the year. 
D)  was subtracted from 2008 taxes due.

Question 8

Price level changes have their greatest effect on consumers'

Accepted Answer

A)  income. 
B)  wealth. 
C)  debt. 
D)  expectations. 
A)  income. 
B)  wealth. 
C)  debt. 
D)  expectations.

Question 9

"Men are disposed,as a rule,and on the average,to increase their consumption as their income increases,but not by as much as the increase in their incomes." Which of the following is consistent with this statement by J.M.Keynes?

Accepted Answer

A)  The slope of the consumption function is positive and less than one. 
B)  The slope of the consumption function is greater than that of the 45-degree line. 
C)  The slope of the consumption function is negative. 
D)  The slope of the consumption function is equal to one. 
A)  The slope of the consumption function is positive and less than one. 
B)  The slope of the consumption function is greater than that of the 45-degree line. 
C)  The slope of the consumption function is negative. 
D)  The slope of the consumption function is equal to one.

Question 10

The tax cuts of 2008 and 2009 reduced the disposable income of U.S.consumers.

Accepted Answer

A) True 
 B)False

Question 11

In the circular flow model,which of the following is considered a leakage?

Accepted Answer

A)  investment spending 
B)  business spending 
C)  household saving 
D)  total exports 
A)  investment spending 
B)  business spending 
C)  household saving 
D)  total exports

Question 12

If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income,the slope of this line will equal the

Accepted Answer

A)  propensity to consume 
B)  variable propensity to consume. 
C)  marginal propensity to consume. 
D)  average propensity to consume. 
A)  propensity to consume 
B)  variable propensity to consume. 
C)  marginal propensity to consume. 
D)  average propensity to consume.

Question 13

The most volatile part of wealth is:

Accepted Answer

A)  ​transfer payments 
B)  ​bonds 
C)  ​the stockmarket 
D)  ​savings accounts 
A)  ​transfer payments 
B)  ​bonds 
C)  ​the stockmarket 
D)  ​savings accounts

Question 14

A sudden decrease in consumers' wealth-resulting,for example,from a stock market crash-would initially cause a(n)

Accepted Answer

A)  downward movement along the consumption function. 
B)  downward shift of the consumption function. 
C)  upward movement along the consumption function. 
D)  upward shift of the consumption function. 
A)  downward movement along the consumption function. 
B)  downward shift of the consumption function. 
C)  upward movement along the consumption function. 
D)  upward shift of the consumption function.

Question 15

Capital goods are counted the same as consumer goods in the national product accounts.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following will most likely have the greatest effect on an individual's consumption function?

Accepted Answer

A)  winning a small amount in the lottery 
B)  a one-time tuition grant 
C)  a week of high overtime pay 
D)  an inheritance paying a modest annual dividend 
A)  winning a small amount in the lottery 
B)  a one-time tuition grant 
C)  a week of high overtime pay 
D)  an inheritance paying a modest annual dividend

Question 17

An example of investment is the purchase of machinery by a manufacturing company.

Accepted Answer

A) True 
 B)False

Question 18

The book that is the basis for modern macroeconomic theory is

Accepted Answer

A)  The Wealth of Nations. 
B)  Principles of Political Economy. 
C)  The General History of Money and Banking. 
D)  The General Theory of Employment,Interest,and Money. 
A)  The Wealth of Nations. 
B)  Principles of Political Economy. 
C)  The General History of Money and Banking. 
D)  The General Theory of Employment,Interest,and Money.

Question 19

A major employer in a small town announces upcoming major layoffs of employees.What should we expect to happen to the consumption functions of the affected employees?

Accepted Answer

A)  the consumption functions will shift upward. 
B)  most employees will move upward along their consumption functions 
C)  the consumption functions will shift downward 
D)  most employees will move downward along their consumption functions 
A)  the consumption functions will shift upward. 
B)  most employees will move upward along their consumption functions 
C)  the consumption functions will shift downward 
D)  most employees will move downward along their consumption functions

Question 20

The tax cuts of 2008 and 2009 were effective because consumers believed that they were temporary.

Accepted Answer

A) True 
 B)False

What is aggregate demand? What are its major components?

Most people base their current consumption spending at least partially on

One of the effects of a change in disposable income could not be a(n)

Discuss the major determinants of net exports.

To get a complete measure of the total spending on U.S.-produced final goods and services,one must adjust aggregate demand by

After years of hard work in the field of macroeconomics,you win the Nobel Prize in economics (currently about $1.5 million).What is the most likely effect of this prize on your consumption function?

The tax cut of 2009 had little significant effect on consumer spending because it

Price level changes have their greatest effect on consumers'

"Men are disposed,as a rule,and on the average,to increase their consumption as their income increases,but not by as much as the increase in their incomes." Which of the following is consistent with this statement by J.M.Keynes?

The tax cuts of 2008 and 2009 reduced the disposable income of U.S.consumers.

In the circular flow model,which of the following is considered a leakage?

If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income,the slope of this line will equal the

The most volatile part of wealth is:

A sudden decrease in consumers' wealth-resulting,for example,from a stock market crash-would initially cause a(n)

Capital goods are counted the same as consumer goods in the national product accounts.

Which of the following will most likely have the greatest effect on an individual's consumption function?

An example of investment is the purchase of machinery by a manufacturing company.

The book that is the basis for modern macroeconomic theory is

A major employer in a small town announces upcoming major layoffs of employees.What should we expect to happen to the consumption functions of the affected employees?

The tax cuts of 2008 and 2009 were effective because consumers believed that they were temporary.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 8: Aggregate Demand and The Powerful Consumer

What is aggregate demand? What are its major components?

Most people base their current consumption spending at least partially on

One of the effects of a change in disposable income could not be a(n)

Discuss the major determinants of net exports.

To get a complete measure of the total spending on U.S.-produced final goods and services,one must adjust aggregate demand by

After years of hard work in the field of macroeconomics,you win the Nobel Prize in economics (currently about $1.5 million).What is the most likely effect of this prize on your consumption function?

The tax cut of 2009 had little significant effect on consumer spending because it

Price level changes have their greatest effect on consumers'

"Men are disposed,as a rule,and on the average,to increase their consumption as their income increases,but not by as much as the increase in their incomes." Which of the following is consistent with this statement by J.M.Keynes?

The tax cuts of 2008 and 2009 reduced the disposable income of U.S.consumers.

In the circular flow model,which of the following is considered a leakage?

If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income,the slope of this line will equal the

The most volatile part of wealth is:

A sudden decrease in consumers' wealth-resulting,for example,from a stock market crash-would initially cause a(n)

Capital goods are counted the same as consumer goods in the national product accounts.

Which of the following will most likely have the greatest effect on an individual's consumption function?

An example of investment is the purchase of machinery by a manufacturing company.

The book that is the basis for modern macroeconomic theory is

A major employer in a small town announces upcoming major layoffs of employees.What should we expect to happen to the consumption functions of the affected employees?

The tax cuts of 2008 and 2009 were effective because consumers believed that they were temporary.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters