Question 1

The marginal propensity to consume (MPC)is calculated by which formula?

Accepted Answer

A)  MPC = change in DI divided by change in C 
B)  MPC = change in GDP divided by change in DI 
C)  MPC = change in C divided by change in DI 
D)  MPC = change in C divided by change in GDP 
A)  MPC = change in DI divided by change in C 
B)  MPC = change in GDP divided by change in DI 
C)  MPC = change in C divided by change in DI 
D)  MPC = change in C divided by change in GDP

Question 2

Suppose the stock market rises,causing a rapid increase in consumers' wealth.This would lead to

Accepted Answer

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

Question 3

The relationship between consumption and disposable income is such that as

Accepted Answer

A)  consumption rises,disposable income falls. 
B)  disposable income rises,consumption rises. 
C)  disposable income rises,consumption falls. 
D)  disposable income rises,saving falls. 
A)  consumption rises,disposable income falls. 
B)  disposable income rises,consumption rises. 
C)  disposable income rises,consumption falls. 
D)  disposable income rises,saving falls.

Question 4

Pat Robertson,a TV evangelist and former Republican Party candidate for president,once said that "debt is an affront to God," so good Christians should not spend beyond their incomes.Indeed,Robertson wants Christians to save more.If more Americans,Christians as well as others,took his message seriously,how would we represent the result using a Keynesian macroeconomic model?

Accepted Answer

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

Question 5

Households can finance their consumer spending from current

Accepted Answer

A)  income. 
B)  wealth. 
C)  debt. 
D)  income and current wealth. 
A)  income. 
B)  wealth. 
C)  debt. 
D)  income and current wealth.

Question 6

If the price level increases,we would expect consumers to

Accepted Answer

A)  raise their consumption functions. 
B)  move downward along their consumption functions. 
C)  lower their consumption functions. 
D)  move upward along their consumption functions. 
A)  raise their consumption functions. 
B)  move downward along their consumption functions. 
C)  lower their consumption functions. 
D)  move upward along their consumption functions.

Question 7

Which of the following is a transfer payment?

Accepted Answer

A)  Work-study students receive wages transferred from the university budget. 
B)  A company pays the moving expenses for a transferred employee. 
C)  A student transfers to another college and receives a tuition rebate. 
D)  A student receives a tuition grant from the federal government. 
A)  Work-study students receive wages transferred from the university budget. 
B)  A company pays the moving expenses for a transferred employee. 
C)  A student transfers to another college and receives a tuition rebate. 
D)  A student receives a tuition grant from the federal government.

Question 8

The slope of the scatter diagram representing the relationship between consumption and disposable income in the United States is approximately

Accepted Answer

A)  1.10. 
B)  0.30 
C)  0.50 
D)  0.90 
A)  1.10. 
B)  0.30 
C)  0.50 
D)  0.90

Question 9

Aggregate demand is the total demand for

Accepted Answer

A)  all intermediate and final goods. 
B)  all monetary investments. 
C)  real and financial investments. 
D)  all final goods and services. 
A)  all intermediate and final goods. 
B)  all monetary investments. 
C)  real and financial investments. 
D)  all final goods and services.

Question 10

When aggregate demand decreases rapidly,the economy is likely to experience

Accepted Answer

A)  inflation. 
B)  an economic boom. 
C)  economic growth. 
D)  recession. 
A)  inflation. 
B)  an economic boom. 
C)  economic growth. 
D)  recession.

Question 11

Aggregate demand is defined as the total spending

Accepted Answer

A)  of all consumers,business firms,government agencies,and foreigners on final goods and services produced in the United States. 
B)  by all consumers,business firms,government agencies,and foreigners in the United States. 
C)  consumers,businesses,government agencies,and foreigners wish to make in one year. 
D)  of consumers,businesses,and government agencies on final output. 
A)  of all consumers,business firms,government agencies,and foreigners on final goods and services produced in the United States. 
B)  by all consumers,business firms,government agencies,and foreigners in the United States. 
C)  consumers,businesses,government agencies,and foreigners wish to make in one year. 
D)  of consumers,businesses,and government agencies on final output.

Question 12

Scatter diagrams are a useful way to depict the relationship between two variables.

Accepted Answer

A) True 
 B)False

Question 13

Assume that consumption in the United States is $9,000 billion in 2009.If the MPC is 0.8 and disposable income increases by $1,000 billion in 2010,then the level of consumption in 2010 will be

Accepted Answer

A)  $10,000 billion. 
B)  $9,800 billion. 
C)  $9,000 billion. 
D)  $7,200 billion. 
A)  $10,000 billion. 
B)  $9,800 billion. 
C)  $9,000 billion. 
D)  $7,200 billion.

Question 14

The value of both exports and imports are added to the value of national product.

Accepted Answer

A) True 
 B)False

Question 15

In the circular flow model,which of the following is an injection?

Accepted Answer

A)  investment spending 
B)  government taxes 
C)  total exports 
D)  imports 
A)  investment spending 
B)  government taxes 
C)  total exports 
D)  imports

Question 16

Figure 8-2  
-In Figure 8-2,which of the following moves can be explained by a decrease in the price level?

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 17

Residential construction (new houses and apartments)are included in which component of GDP?

Accepted Answer

A)  government purchases 
B)  retail spending 
C)  investment spending 
D)  net exports 
A)  government purchases 
B)  retail spending 
C)  investment spending 
D)  net exports

Question 18

Which of the following will most likely cause a shift in the consumption function?

Accepted Answer

A)  a change in consumer confidence 
B)  a change in national output 
C)  a change in real GDP 
D)  a change in disposable income 
A)  a change in consumer confidence 
B)  a change in national output 
C)  a change in real GDP 
D)  a change in disposable income

Question 19

Government spending is an injection in the sense that it

Accepted Answer

A)  increases the amount of total spending. 
B)  increases the size of the federal deficit. 
C)  decreases the amount of household saving. 
D)  decreases the amount of taxes paid. 
A)  increases the amount of total spending. 
B)  increases the size of the federal deficit. 
C)  decreases the amount of household saving. 
D)  decreases the amount of taxes paid.

Question 20

Which of the following would be counted as investment in the national income accounts?

Accepted Answer

A)  the purchase of a newly issued stock 
B)  the purchase of a newly built apartment house 
C)  the purchase of a newly minted coin 
D)  the payment of tuition at a private college 
A)  the purchase of a newly issued stock 
B)  the purchase of a newly built apartment house 
C)  the purchase of a newly minted coin 
D)  the payment of tuition at a private college

The marginal propensity to consume (MPC)is calculated by which formula?

Suppose the stock market rises,causing a rapid increase in consumers' wealth.This would lead to

The relationship between consumption and disposable income is such that as

Households can finance their consumer spending from current

If the price level increases,we would expect consumers to

Which of the following is a transfer payment?

The slope of the scatter diagram representing the relationship between consumption and disposable income in the United States is approximately

Aggregate demand is the total demand for

When aggregate demand decreases rapidly,the economy is likely to experience

Aggregate demand is defined as the total spending

Scatter diagrams are a useful way to depict the relationship between two variables.

Assume that consumption in the United States is $9,000 billion in 2009.If the MPC is 0.8 and disposable income increases by $1,000 billion in 2010,then the level of consumption in 2010 will be

The value of both exports and imports are added to the value of national product.

In the circular flow model,which of the following is an injection?

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by a decrease in the price level?

Residential construction (new houses and apartments)are included in which component of GDP?

Which of the following will most likely cause a shift in the consumption function?

Government spending is an injection in the sense that it

Which of the following would be counted as investment in the national income accounts?

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

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Exam 8: Aggregate Demand and The Powerful Consumer

The marginal propensity to consume (MPC)is calculated by which formula?

Suppose the stock market rises,causing a rapid increase in consumers' wealth.This would lead to

The relationship between consumption and disposable income is such that as

Households can finance their consumer spending from current

If the price level increases,we would expect consumers to

Which of the following is a transfer payment?

The slope of the scatter diagram representing the relationship between consumption and disposable income in the United States is approximately

Aggregate demand is the total demand for

When aggregate demand decreases rapidly,the economy is likely to experience

Aggregate demand is defined as the total spending

Scatter diagrams are a useful way to depict the relationship between two variables.

Assume that consumption in the United States is $9,000 billion in 2009.If the MPC is 0.8 and disposable income increases by $1,000 billion in 2010,then the level of consumption in 2010 will be

The value of both exports and imports are added to the value of national product.

In the circular flow model,which of the following is an injection?

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by a decrease in the price level?

Residential construction (new houses and apartments)are included in which component of GDP?

Which of the following will most likely cause a shift in the consumption function?

Government spending is an injection in the sense that it

Which of the following would be counted as investment in the national income accounts?

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