Question 1

Gross private domestic investment in the United States consists of three components:

Accepted Answer

A)  stocks,bonds,and mutual funds. 
B)  automobiles,trucks,and houses. 
C)  plant,equipment,& software,houses,and inventories. 
D)  plant,equipment,& software,houses,and net exports. 
A)  stocks,bonds,and mutual funds. 
B)  automobiles,trucks,and houses. 
C)  plant,equipment,& software,houses,and inventories. 
D)  plant,equipment,& software,houses,and net exports.

Question 2

Changes in the price level affect household wealth more than household income.

Accepted Answer

A) True 
 B)False

Question 3

Consumption functions would shift downward if

Accepted Answer

A)  disposable incomes fall. 
B)  disposable incomes rise. 
C)  price levels fall. 
D)  price levels rise. 
A)  disposable incomes fall. 
B)  disposable incomes rise. 
C)  price levels fall. 
D)  price levels rise.

Question 4

The U.S.experience with tax cuts and tax increases since 1975 suggests that

Accepted Answer

A)  tax cuts always stimulate consumption spending. 
B)  tax changes have a stable and predictable effect on consumption spending. 
C)  temporary tax changes are less effective than permanent changes. 
D)  tax changes have no effect on consumption spending. 
A)  tax cuts always stimulate consumption spending. 
B)  tax changes have a stable and predictable effect on consumption spending. 
C)  temporary tax changes are less effective than permanent changes. 
D)  tax changes have no effect on consumption spending.

Question 5

Most statistical studies on the relationship between real interest rates and saving conclude that higher real interest rates

Accepted Answer

A)  increase saving. 
B)  tend to decrease saving. 
C)  tend to decrease both consumption and saving. 
D)  have no effect on saving. 
A)  increase saving. 
B)  tend to decrease saving. 
C)  tend to decrease both consumption and saving. 
D)  have no effect on saving.

Question 6

If inflation rises more quickly in the United States than in France,U.S.exports to France should rise.

Accepted Answer

A) True 
 B)False

Question 7

Governments can affect the level of aggregate demand in a direct way by changing

Accepted Answer

A)  government spending. 
B)  exports. 
C)  taxes. 
D)  transfer payments. 
A)  government spending. 
B)  exports. 
C)  taxes. 
D)  transfer payments.

Question 8

If personal taxes are cut temporarily,the resulting

Accepted Answer

A)  increase in personal saving would be larger than if they were cut permanently. 
B)  decrease in personal saving would be larger than if they were cut permanently. 
C)  decrease in personal saving would be smaller than if they were cut permanently. 
D)  increase in personal saving would be smaller than if they were cut permanently. 
A)  increase in personal saving would be larger than if they were cut permanently. 
B)  decrease in personal saving would be larger than if they were cut permanently. 
C)  decrease in personal saving would be smaller than if they were cut permanently. 
D)  increase in personal saving would be smaller than if they were cut permanently.

Question 9

Government-produced goods are added to GDP at

Accepted Answer

A)  their market value. 
B)  the value they have to their users. 
C)  the value of the inputs used to produce them. 
D)  the value Congress places on them. 
A)  their market value. 
B)  the value they have to their users. 
C)  the value of the inputs used to produce them. 
D)  the value Congress places on them.

Question 10

Define the following terms and explain their importance in the study of macroeconomics:
a.
consumer expenditures
b.
investment spending
c.
national income
d.
transfer payments

Accepted Answer

a. Consumer expenditures are the total a

Question 11

Why does an increase in the price level tend to cause the consumption function to shift downward?

Accepted Answer

A)  An increase in the price level decreases disposable income. 
B)  An increase in the price level increases the demand for fixed money assets. 
C)  An increase in the price level decreases the value of fixed money assets. 
D)  An increase in the price level decreases saving and increases debt. 
A)  An increase in the price level decreases disposable income. 
B)  An increase in the price level increases the demand for fixed money assets. 
C)  An increase in the price level decreases the value of fixed money assets. 
D)  An increase in the price level decreases saving and increases debt.

Question 12

Imports are a leakage in the sense that

Accepted Answer

A)  the international financial system is unstable. 
B)  consumers buy foreign output of goods and services. 
C)  foreigners earn less than U.S.workers. 
D)  a trade deficit increases aggregate demand. 
A)  the international financial system is unstable. 
B)  consumers buy foreign output of goods and services. 
C)  foreigners earn less than U.S.workers. 
D)  a trade deficit increases aggregate demand.

Question 13

Which of the following is considered to be an investment in economists' point of view?

Accepted Answer

A)  Serena buys bonds issued by Citibank. 
B)  John purchases a new house. 
C)  Venus invests hundred thousand dollars in Bear Stearns stock. 
D)  Allen sells the old truck he used for transporting goods. 
A)  Serena buys bonds issued by Citibank. 
B)  John purchases a new house. 
C)  Venus invests hundred thousand dollars in Bear Stearns stock. 
D)  Allen sells the old truck he used for transporting goods.

Question 14

Suppose the federal government wants to encourage businesses to increase investment spending.Which policy may be the most effective?

Accepted Answer

A)  an increase in corporate income taxes 
B)  an increase in real interest rates 
C)  an increase in warnings of a coming recession 
D)  an increase in tax deductions for investment spending 
A)  an increase in corporate income taxes 
B)  an increase in real interest rates 
C)  an increase in warnings of a coming recession 
D)  an increase in tax deductions for investment spending

Question 15

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

Accepted Answer

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

Question 16

If consumers receive an increase in income of $1,000,their spending will increase by a smaller amount.

Accepted Answer

A) True 
 B)False

Question 17

The most volatile component of aggregate demand is:

Accepted Answer

A)  ​consumer spending 
B)  ​government purchases 
C)  ​net exports 
D)  ​investment spending 
A)  ​consumer spending 
B)  ​government purchases 
C)  ​net exports 
D)  ​investment spending

Question 18

Disposable income can be defined as national product

Accepted Answer

A)  minus federal and state taxes. 
B)  minus taxes plus transfers. 
C)  minus indirect taxes. 
D)  plus taxes plus transfers. 
A)  minus federal and state taxes. 
B)  minus taxes plus transfers. 
C)  minus indirect taxes. 
D)  plus taxes plus transfers.

Question 19

One difficulty of computing the value of GDP is that there are no market prices for

Accepted Answer

A)  exports and imports. 
B)  business investments. 
C)  government goods and services. 
D)  resource values. 
A)  exports and imports. 
B)  business investments. 
C)  government goods and services. 
D)  resource values.

Question 20

In economic analysis,which of the following is considered an injection?

Accepted Answer

A)  saving 
B)  taxes 
C)  imports 
D)  exports 
A)  saving 
B)  taxes 
C)  imports 
D)  exports

Gross private domestic investment in the United States consists of three components:

Changes in the price level affect household wealth more than household income.

Consumption functions would shift downward if

The U.S.experience with tax cuts and tax increases since 1975 suggests that

Most statistical studies on the relationship between real interest rates and saving conclude that higher real interest rates

If inflation rises more quickly in the United States than in France,U.S.exports to France should rise.

Governments can affect the level of aggregate demand in a direct way by changing

If personal taxes are cut temporarily,the resulting

Government-produced goods are added to GDP at

Define the following terms and explain their importance in the study of macroeconomics: a. consumer expenditures b. investment spending c. national income d. transfer payments

Why does an increase in the price level tend to cause the consumption function to shift downward?

Imports are a leakage in the sense that

Which of the following is considered to be an investment in economists' point of view?

Suppose the federal government wants to encourage businesses to increase investment spending.Which policy may be the most effective?

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

If consumers receive an increase in income of $1,000,their spending will increase by a smaller amount.

The most volatile component of aggregate demand is:

Disposable income can be defined as national product

One difficulty of computing the value of GDP is that there are no market prices for

In economic analysis,which of the following is considered an injection?

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

Gross private domestic investment in the United States consists of three components:

Changes in the price level affect household wealth more than household income.

Consumption functions would shift downward if

The U.S.experience with tax cuts and tax increases since 1975 suggests that

Most statistical studies on the relationship between real interest rates and saving conclude that higher real interest rates

If inflation rises more quickly in the United States than in France,U.S.exports to France should rise.

Governments can affect the level of aggregate demand in a direct way by changing

If personal taxes are cut temporarily,the resulting

Government-produced goods are added to GDP at

Define the following terms and explain their importance in the study of macroeconomics: a. consumer expenditures b. investment spending c. national income d. transfer payments

Why does an increase in the price level tend to cause the consumption function to shift downward?

Imports are a leakage in the sense that

Which of the following is considered to be an investment in economists' point of view?

Suppose the federal government wants to encourage businesses to increase investment spending.Which policy may be the most effective?

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

If consumers receive an increase in income of $1,000,their spending will increase by a smaller amount.

The most volatile component of aggregate demand is:

Disposable income can be defined as national product

One difficulty of computing the value of GDP is that there are no market prices for

In economic analysis,which of the following is considered an injection?

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