Question 1

Which of the following will most likely cause movement along the consumption function?

Accepted Answer

A)  a change in disposable income 
B)  a change in interest rates 
C)  a change in tastes 
D)  a change in consumers' expectations 
A)  a change in disposable income 
B)  a change in interest rates 
C)  a change in tastes 
D)  a change in consumers' expectations

Question 2

If you produce a graph with consumption spending on the vertical axis and disposable income on the horizontal axis,the relation between consumption and income will

Accepted Answer

A)  be inverse. 
B)  be transcendental. 
C)  shift unpredictably. 
D)  be direct. 
A)  be inverse. 
B)  be transcendental. 
C)  shift unpredictably. 
D)  be direct.

Question 3

GDP can be calculated by the value-added approach,which

Accepted Answer

A)  is useful in avoiding double counting. 
B)  includes only the value-added portion from the sale of goods and services. 
C)  includes the revenue a firm receives from selling a product minus the amount paid for goods purchased from other firms. 
D)  All of the above correct. 
A)  is useful in avoiding double counting. 
B)  includes only the value-added portion from the sale of goods and services. 
C)  includes the revenue a firm receives from selling a product minus the amount paid for goods purchased from other firms. 
D)  All of the above correct.

Question 4

Consumers increased consumption by a relatively small amount in 2008 and 2009 because they believed the tax cuts were temporary.

Accepted Answer

A) True 
 B)False

Question 5

National income can be calculated by subtracting

Accepted Answer

A)  depreciation from GDP. 
B)  indirect business taxes from GDP. 
C)  depreciation and indirect business taxes from GDP. 
D)  transfer payments and taxes from GDP. 
A)  depreciation from GDP. 
B)  indirect business taxes from GDP. 
C)  depreciation and indirect business taxes from GDP. 
D)  transfer payments and taxes from GDP.

Question 6

Which factors will cause the consumption function to shift? Which factors do not cause the function to shift?

Accepted Answer

The principal factors that will cause th

Question 7

The numerical value of the MPC is typically

Accepted Answer

A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  unpredictable. 
A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  unpredictable.

Question 8

The net export component of aggregate demand is defined as U.S.

Accepted Answer

A)  imports minus U.S.exports. 
B)  imports plus U.S.exports. 
C)  exports minus U.S.imports. 
D)  exports minus taxes and customs duties. 
A)  imports minus U.S.exports. 
B)  imports plus U.S.exports. 
C)  exports minus U.S.imports. 
D)  exports minus taxes and customs duties.

Question 9

Figure 8-2  
-In Figure 8-2,which of the following moves can be explained by an increase in government transfer payments?

Accepted Answer

A)  A to B 
B)  A to C 
C)  A to D 
D)  A to E 
A)  A to B 
B)  A to C 
C)  A to D 
D)  A to E

Question 10

The typical value for the MPC is less than 1.0.

Accepted Answer

A) True 
 B)False

Question 11

According to the data in Table 8-1,the value of NNP is

Accepted Answer

A)  900. 
B)  805. 
C)  750. 
D)  705. 
A)  900. 
B)  805. 
C)  750. 
D)  705.

Question 12

The national income accounts include a value for the amount of capital stock "used up" during the production of current output.This dollar amount is called

Accepted Answer

A)  appreciation. 
B)  dollarization. 
C)  amortization. 
D)  depreciation. 
A)  appreciation. 
B)  dollarization. 
C)  amortization. 
D)  depreciation.

Question 13

Figure 8-1  
-Given the scatter diagram in Figure 8-1,how much will consumption decrease if the price level rises by 5 percent?

Accepted Answer

A)  $50 billion 
B)  $100 billion 
C)  $200 billion 
D)  cannot be determined 
A)  $50 billion 
B)  $100 billion 
C)  $200 billion 
D)  cannot be determined

Question 14

Bank accounts and bonds are examples of money-fixed assets.

Accepted Answer

A) True 
 B)False

Question 15

Aggregate demand is a ____ rather than a ____.

Accepted Answer

A)  fixed number,concept 
B)  schedule,fixed number 
C)  set number,concept 
D)  government aggregate,private aggregate 
A)  fixed number,concept 
B)  schedule,fixed number 
C)  set number,concept 
D)  government aggregate,private aggregate

Question 16

Aggregate demand is the sum of

Accepted Answer

A)  C + I + G + (X − IM). 
B)  C + I + X. 
C)  C + I + X − IM. 
D)  C + I + G. 
A)  C + I + G + (X − IM). 
B)  C + I + X. 
C)  C + I + X − IM. 
D)  C + I + G.

Question 17

The equation representing the final demand approach to calculating GDP is

Accepted Answer

A)  Y = C + I + X + IM. 
B)  Y = C + I + G. 
C)  Y = G + I + X − IM. 
D)  Y = C+ I + G + (X − IM). 
A)  Y = C + I + X + IM. 
B)  Y = C + I + G. 
C)  Y = G + I + X − IM. 
D)  Y = C+ I + G + (X − IM).

Question 18

The one category of goods that are not sold but are,nevertheless,included in GDP is

Accepted Answer

A)  inventories. 
B)  imports. 
C)  consumer services. 
D)  exports. 
A)  inventories. 
B)  imports. 
C)  consumer services. 
D)  exports.

Question 19

Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts?

Accepted Answer

A)  Permanent tax cuts have a greater effect on expected long-run inflation. 
B)  Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective. 
C)  Permanent tax cuts cause movement along the consumption function,while temporary tax cuts shift the consumption function. 
D)  Permanent tax cuts affect expectations of long-run income more than temporary tax cuts. 
A)  Permanent tax cuts have a greater effect on expected long-run inflation. 
B)  Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective. 
C)  Permanent tax cuts cause movement along the consumption function,while temporary tax cuts shift the consumption function. 
D)  Permanent tax cuts affect expectations of long-run income more than temporary tax cuts.

Question 20

Figure 8-2  
-In Figure 8-2,which of the following moves can be explained by a tax cut?

Accepted Answer

A)  A to B 
B)  A to C 
C)  A to D 
D)  A to E 
A)  A to B 
B)  A to C 
C)  A to D 
D)  A to E

Which of the following will most likely cause movement along the consumption function?

If you produce a graph with consumption spending on the vertical axis and disposable income on the horizontal axis,the relation between consumption and income will

GDP can be calculated by the value-added approach,which

Consumers increased consumption by a relatively small amount in 2008 and 2009 because they believed the tax cuts were temporary.

National income can be calculated by subtracting

Which factors will cause the consumption function to shift? Which factors do not cause the function to shift?

The numerical value of the MPC is typically

The net export component of aggregate demand is defined as U.S.

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by an increase in government transfer payments?

The typical value for the MPC is less than 1.0.

According to the data in Table 8-1,the value of NNP is

The national income accounts include a value for the amount of capital stock "used up" during the production of current output.This dollar amount is called

Figure 8-1 -Given the scatter diagram in Figure 8-1,how much will consumption decrease if the price level rises by 5 percent?

Bank accounts and bonds are examples of money-fixed assets.

Aggregate demand is a rather than a .

Aggregate demand is the sum of

The equation representing the final demand approach to calculating GDP is

The one category of goods that are not sold but are,nevertheless,included in GDP is

Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts?

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by a tax cut?

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

Which of the following will most likely cause movement along the consumption function?

If you produce a graph with consumption spending on the vertical axis and disposable income on the horizontal axis,the relation between consumption and income will

GDP can be calculated by the value-added approach,which

Consumers increased consumption by a relatively small amount in 2008 and 2009 because they believed the tax cuts were temporary.

National income can be calculated by subtracting

Which factors will cause the consumption function to shift? Which factors do not cause the function to shift?

The numerical value of the MPC is typically

The net export component of aggregate demand is defined as U.S.

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by an increase in government transfer payments?

The typical value for the MPC is less than 1.0.

According to the data in Table 8-1,the value of NNP is

The national income accounts include a value for the amount of capital stock "used up" during the production of current output.This dollar amount is called

Figure 8-1 -Given the scatter diagram in Figure 8-1,how much will consumption decrease if the price level rises by 5 percent?

Bank accounts and bonds are examples of money-fixed assets.

Aggregate demand is a ____ rather than a ____.

Aggregate demand is the sum of

The equation representing the final demand approach to calculating GDP is

The one category of goods that are not sold but are,nevertheless,included in GDP is

Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts?

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by a tax cut?

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

Aggregate demand is a rather than a .