Question 1

The government component (G) of total output includes goods and services purchased by

Accepted Answer

A) the federal government plus transfer payments. 
B) all government institutions plus transfer payments. 
C) all government institutions. 
D) all government institutions plus tax revenues. 
A) the federal government plus transfer payments. 
B) all government institutions plus transfer payments. 
C) all government institutions. 
D) all government institutions plus tax revenues.

Question 2

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 3

Disposable income does not influence the amount of consumer expenditures.

Accepted Answer

A) True 
 B)False

Question 4

The difference between disposable income and consumption spending is

Accepted Answer

A) transfer payments. 
B) personal taxes. 
C) net exports. 
D) personal investment. 
E) personal saving. 
A) transfer payments. 
B) personal taxes. 
C) net exports. 
D) personal investment. 
E) personal saving.

Question 5

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 6

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 7

Government spending is a leakage out of the circular flow of income and spending.

Accepted Answer

A) True 
 B)False

Question 8

The sum of wages and salaries, interest, rent, and profits equals

Accepted Answer

A) net national product. 
B) national interest. 
C) gross national product. 
D) national income. 
A) net national product. 
B) national interest. 
C) gross national product. 
D) national income.

Question 9

Figure 8-2
​  
-Every Christmas, you buy yourself a lottery ticket.This year, you win the $500 million Powerball.This would most likely cause your consumption function to

Accepted Answer

A) shift downward temporarily. 
B) shift upward permanently. 
C) shift downward permanently. 
D) shift upward temporarily. 
A) shift downward temporarily. 
B) shift upward permanently. 
C) shift downward permanently. 
D) shift upward temporarily.

Question 10

We should expect the consumption function to shift downward if

Accepted Answer

A) real interest rates rise. 
B) price levels fall. 
C) consumers become more optimistic about future incomes. 
D) consumers become more pessimistic about future incomes. 
A) real interest rates rise. 
B) price levels fall. 
C) consumers become more optimistic about future incomes. 
D) consumers become more pessimistic about future incomes.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

"Men are disposed, as a rule, and on the average, to increase their consumption as their income increases, but not by as much as the increase in their incomes." Which of the following is consistent with this statement by J.M.Keynes?

Accepted Answer

A) The slope of the consumption function is positive and less than 1. 
B) The slope of the consumption function is greater than that of the 45-degree line. 
C) The slope of the consumption function is negative. 
D) The slope of the consumption function is equal to 1. 
A) The slope of the consumption function is positive and less than 1. 
B) The slope of the consumption function is greater than that of the 45-degree line. 
C) The slope of the consumption function is negative. 
D) The slope of the consumption function is equal to 1.

Question 13

Government purchases are included in national product.

Accepted Answer

A) True 
 B)False

Question 14

A decrease in disposable income causes a shift in the consumption function.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Figure 8-2
​  
-In Figure 8-2, which of the following moves can be explained by a decrease in the prices of stock on the NASDAQ?

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

Exam 24: Aggregate Demand and the Powerful Consumer

The government component (G) of total output includes goods and services purchased by

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

Disposable income does not influence the amount of consumer expenditures.

The difference between disposable income and consumption spending is

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

Aggregate demand is a ____ rather than a ____.

Government spending is a leakage out of the circular flow of income and spending.

The sum of wages and salaries, interest, rent, and profits equals

Figure 8-2 ​ -Every Christmas, you buy yourself a lottery ticket.This year, you win the $500 million Powerball.This would most likely cause your consumption function to

We should expect the consumption function to shift downward if

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

"Men are disposed, as a rule, and on the average, to increase their consumption as their income increases, but not by as much as the increase in their incomes." Which of the following is consistent with this statement by J.M.Keynes?

Government purchases are included in national product.

A decrease in disposable income causes a shift in the consumption function.

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

Figure 8-2 ​ -In Figure 8-2, which of the following moves can be explained by a decrease in the prices of stock on the NASDAQ?

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 a decrease in disposable income?

Aggregate demand is a rather than a .

Figure 8-2 -Every Christmas, you buy yourself a lottery ticket.This year, you win the $500 million Powerball.This would most likely cause your consumption function to

Figure 8-2 -In Figure 8-2, which of the following moves can be explained by a decrease in the prices of stock on the NASDAQ?