Question 1

Because of recent corporate downsizing,Chuck loses his job.The most likely effect on his consumption function is a(n)

Accepted Answer

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

Question 2

U.S.imports are most likely to increase when

Accepted Answer

A)  U.S.GDP decreases. 
B)  U.S.unemployment rates fall. 
C)  U.S.prices fall. 
D)  foreign prices rise. 
A)  U.S.GDP decreases. 
B)  U.S.unemployment rates fall. 
C)  U.S.prices fall. 
D)  foreign prices rise.

Question 3

The relationship between consumption and disposable income is very unreliable and unpredictable.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not part of the investment component of GDP?

Accepted Answer

A)  residential construction 
B)  plant,equipment,and software 
C)  net imports 
D)  business structures 
A)  residential construction 
B)  plant,equipment,and software 
C)  net imports 
D)  business structures

Question 5

When computing gross domestic product,government services are valued at the

Accepted Answer

A)  price consumers pay for them. 
B)  value of the resources used to produce them. 
C)  value of comparable outputs from the private sector. 
D)  value of taxes collected from consumers. 
A)  price consumers pay for them. 
B)  value of the resources used to produce them. 
C)  value of comparable outputs from the private sector. 
D)  value of taxes collected from consumers.

Question 6

In the national income accounts,new investment goods are considered

Accepted Answer

A)  intermediate goods,and therefore,not counted. 
B)  final goods. 
C)  subtractions from final output. 
D)  depreciated goods 
A)  intermediate goods,and therefore,not counted. 
B)  final goods. 
C)  subtractions from final output. 
D)  depreciated goods

Question 7

Which of the following would be added to U.S.national income?

Accepted Answer

A)  an American consumer buying French wine 
B)  an American business selling aircraft to British Airways 
C)  a Swedish firm selling mobile phones to Americans 
D)  a French firm buying a Swedish cellular phone 
A)  an American consumer buying French wine 
B)  an American business selling aircraft to British Airways 
C)  a Swedish firm selling mobile phones to Americans 
D)  a French firm buying a Swedish cellular phone

Question 8

Most older persons regularly spend more than their current disposable income.How is this possible?

Accepted Answer

A)  They receive government transfer payments. 
B)  They work to supplement their retirement income. 
C)  They borrow and increase their debt levels. 
D)  They withdraw funds from accumulated wealth. 
A)  They receive government transfer payments. 
B)  They work to supplement their retirement income. 
C)  They borrow and increase their debt levels. 
D)  They withdraw funds from accumulated wealth.

Question 9

Aggregate demand is the sum of total domestic spending by the private sector.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is the best example of an intermediate good?

Accepted Answer

A)  a tire purchased by an auto company 
B)  a new house purchased by a newly married couple 
C)  grain sold to foreign farmers 
D)  All of the above are intermediate goods. 
A)  a tire purchased by an auto company 
B)  a new house purchased by a newly married couple 
C)  grain sold to foreign farmers 
D)  All of the above are intermediate goods.

Question 11

A savings account is an example of consumer income.

Accepted Answer

A) True 
 B)False

Question 12

The consumption function shows an indirect relationship between consumer spending and disposable income.

Accepted Answer

A) True 
 B)False

Question 13

The term "depreciation" in the national income accounts refers to

Accepted Answer

A)  the adjustment of GDP for inflation. 
B)  plant and equipment "used up" in producing current output. 
C)  citizenship differences among income recipients. 
D)  government transfer payments minus tax revenues. 
A)  the adjustment of GDP for inflation. 
B)  plant and equipment "used up" in producing current output. 
C)  citizenship differences among income recipients. 
D)  government transfer payments minus tax revenues.

Question 14

Which of the following observations concerning GDP calculations is true?

Accepted Answer

A)  Goods and services produced by governments are valued at market price. 
B)  Inventories are treated as if they are yet to be sold. 
C)  Goods produced but not sold during the year are counted in that year's GDP. 
D)  Goods that firms add to their inventories do not count in the GDP. 
A)  Goods and services produced by governments are valued at market price. 
B)  Inventories are treated as if they are yet to be sold. 
C)  Goods produced but not sold during the year are counted in that year's GDP. 
D)  Goods that firms add to their inventories do not count in the GDP.

Question 15

If real disposable income is $300 billion and real consumer expenditures are $250 billion,it can be assumed that

Accepted Answer

A)  the government is spending the difference. 
B)  the difference is being invested. 
C)  households are saving the difference. 
D)  transfer payments make up the difference. 
A)  the government is spending the difference. 
B)  the difference is being invested. 
C)  households are saving the difference. 
D)  transfer payments make up the difference.

Question 16

Explain why national income and domestic product must be equal.

Accepted Answer

When a firm produces goods and sells the

Question 17

The purchase of stocks and bonds is included in which component of GDP?

Accepted Answer

A)  saving 
B)  investment 
C)  consumer spending 
D)  They are not included in GDP. 
A)  saving 
B)  investment 
C)  consumer spending 
D)  They are not included in GDP.

Question 18

Taxes add to and transfers subtract from the flow of income and spending.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following methods could be used to calculate GDP?

Accepted Answer

A)  the sum of all spending on final goods and services 
B)  the sum of all factor payments plus depreciation and indirect business taxes 
C)  the sum of all values added at each stage of production 
D)  All of the above could be used. 
A)  the sum of all spending on final goods and services 
B)  the sum of all factor payments plus depreciation and indirect business taxes 
C)  the sum of all values added at each stage of production 
D)  All of the above could be used.

Question 20

If consumers' expectations about future income are very optimistic,then we should expect

Accepted Answer

A)  the consumption function to shift downward. 
B)  consumers to move up along the consumption function. 
C)  the consumption function to shift upward. 
D)  consumers to move down along the consumption function. 
A)  the consumption function to shift downward. 
B)  consumers to move up along the consumption function. 
C)  the consumption function to shift upward. 
D)  consumers to move down along the consumption function.

Because of recent corporate downsizing,Chuck loses his job.The most likely effect on his consumption function is a(n)

U.S.imports are most likely to increase when

The relationship between consumption and disposable income is very unreliable and unpredictable.

Which of the following is not part of the investment component of GDP?

When computing gross domestic product,government services are valued at the

In the national income accounts,new investment goods are considered

Which of the following would be added to U.S.national income?

Most older persons regularly spend more than their current disposable income.How is this possible?

Aggregate demand is the sum of total domestic spending by the private sector.

Which of the following is the best example of an intermediate good?

A savings account is an example of consumer income.

The consumption function shows an indirect relationship between consumer spending and disposable income.

The term "depreciation" in the national income accounts refers to

Which of the following observations concerning GDP calculations is true?

If real disposable income is $300 billion and real consumer expenditures are $250 billion,it can be assumed that

Explain why national income and domestic product must be equal.

The purchase of stocks and bonds is included in which component of GDP?

Taxes add to and transfers subtract from the flow of income and spending.

Which of the following methods could be used to calculate GDP?

If consumers' expectations about future income are very optimistic,then we should expect

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

Because of recent corporate downsizing,Chuck loses his job.The most likely effect on his consumption function is a(n)

U.S.imports are most likely to increase when

The relationship between consumption and disposable income is very unreliable and unpredictable.

Which of the following is not part of the investment component of GDP?

When computing gross domestic product,government services are valued at the

In the national income accounts,new investment goods are considered

Which of the following would be added to U.S.national income?

Most older persons regularly spend more than their current disposable income.How is this possible?

Aggregate demand is the sum of total domestic spending by the private sector.

Which of the following is the best example of an intermediate good?

A savings account is an example of consumer income.

The consumption function shows an indirect relationship between consumer spending and disposable income.

The term "depreciation" in the national income accounts refers to

Which of the following observations concerning GDP calculations is true?

If real disposable income is $300 billion and real consumer expenditures are $250 billion,it can be assumed that

Explain why national income and domestic product must be equal.

The purchase of stocks and bonds is included in which component of GDP?

Taxes add to and transfers subtract from the flow of income and spending.

Which of the following methods could be used to calculate GDP?

If consumers' expectations about future income are very optimistic,then we should expect

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