Question 1

A decrease in the price level will most likely have what effect on the consumption function?

Accepted Answer

A) It will shift upward. 
B) It will shift downward. 
C) It will cause movement downward along the function. 
D) It will cause movement upward along the function. 
A) It will shift upward. 
B) It will shift downward. 
C) It will cause movement downward along the function. 
D) It will cause movement upward along the function.

Question 2

To economists, investment means buying stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) 900 
B) 950 
C) 955 
D) 960 
A) 900 
B) 950 
C) 955 
D) 960

Question 4

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 5

In calculating the nation's total output, net exports do not

Accepted Answer

A) represent exports of goods and services minus imports of goods and services. 
B) have been a negative number in the last several years. 
C) would include purchases of U.S.-made automobiles by foreigners minus purchase of foreign-made automobiles by U.S.residents. 
D) have been positive since global trade as expanded. 
A) represent exports of goods and services minus imports of goods and services. 
B) have been a negative number in the last several years. 
C) would include purchases of U.S.-made automobiles by foreigners minus purchase of foreign-made automobiles by U.S.residents. 
D) have been positive since global trade as expanded.

Question 6

According to economists, how does an increase in the inflation rate affect the consumption function?

Accepted Answer

A) It shifts the function upward. 
B) It shifts the function downward. 
C) It causes movement upward along the function. 
D) It causes movement downward along the function. 
E) It has no predictable effect on the function. 
A) It shifts the function upward. 
B) It shifts the function downward. 
C) It causes movement upward along the function. 
D) It causes movement downward along the function. 
E) It has no predictable effect on the function.

Question 7

In the national income accounts, the symbol G represents the

Accepted Answer

A) government production of goods and services. 
B) volume of goods and services purchased by the federal government. 
C) value of goods and services purchased by the federal government. 
D) value of goods and services purchased by all levels of government. 
A) government production of goods and services. 
B) volume of goods and services purchased by the federal government. 
C) value of goods and services purchased by the federal government. 
D) value of goods and services purchased by all levels of government.

Question 8

The MPC can be used to predict the effect of a tax increase.

Accepted Answer

A) True 
 B)False

Question 9

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 10

An economic boom in one country usually causes a recession in other countries.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

The circular flow diagram is best described as a(n)

Accepted Answer

A) abstraction of little value in macroeconomics. 
B) exact representation of the cause and effect relationship between spending and employment. 
C) model that clarifies the relationship between spending and income. 
D) model to explain the relationship between the federal deficit and tax revenues. 
A) abstraction of little value in macroeconomics. 
B) exact representation of the cause and effect relationship between spending and employment. 
C) model that clarifies the relationship between spending and income. 
D) model to explain the relationship between the federal deficit and tax revenues.

Question 14

Consumer spending is an injection in the circular flow of income and spending.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of a transfer payment?

Accepted Answer

A) Your grandma buys you a new watch for graduation. 
B) A military contractor pays to move its employee from the East Coast to the West Coast. 
C) The county office gives its low-income residents food stamps. 
D) The government floats bonds for a new highway. 
A) Your grandma buys you a new watch for graduation. 
B) A military contractor pays to move its employee from the East Coast to the West Coast. 
C) The county office gives its low-income residents food stamps. 
D) The government floats bonds for a new highway.

Question 16

The system of measurement for expressing macroeconomic data is called

Accepted Answer

A) national income accounting. 
B) balance of payment accounting. 
C) generally accepted accounting principles. 
D) double entry bookkeeping. 
A) national income accounting. 
B) balance of payment accounting. 
C) generally accepted accounting principles. 
D) double entry bookkeeping.

Question 17

Government spending and income taxes can affect the level of

Accepted Answer

A) aggregate demand. 
B) income taxes. 
C) exports. 
D) investment. 
A) aggregate demand. 
B) income taxes. 
C) exports. 
D) investment.

Question 18

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 19

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 20

On a graph with consumption on the vertical axis and disposable income on the horizontal axis, the slope of the line is

Accepted Answer

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

Exam 24: Aggregate Demand and the Powerful Consumer

A decrease in the price level will most likely have what effect on the consumption function?

To economists, investment means buying stocks and bonds.

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

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

In calculating the nation's total output, net exports do not

According to economists, how does an increase in the inflation rate affect the consumption function?

In the national income accounts, the symbol G represents the

The MPC can be used to predict the effect of a tax increase.

The most volatile component of aggregate demand is

An economic boom in one country usually causes a recession in other countries.

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

U.S.imports are most likely to increase when

The circular flow diagram is best described as a(n)

Consumer spending is an injection in the circular flow of income and spending.

Which of the following is an example of a transfer payment?

The system of measurement for expressing macroeconomic data is called

Government spending and income taxes can affect the level of

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

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

On a graph with consumption on the vertical axis and disposable income on the horizontal axis, the slope of the line is

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

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

Contemporary Issues in the Useconomy

Filters

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