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

A scatter diagram is a way to show the relationship between disposable income and consumer expenditures.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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

Accepted Answer

A) True 
 B)False

Question 5

The __________ shows a direct relationship between consumption spending and disposable income.

Accepted Answer

A)  consumption function 
B)  aggregate demand curve 
C)  investment demand curve 
D)  supply of income curve 
A)  consumption function 
B)  aggregate demand curve 
C)  investment demand curve 
D)  supply of income curve

Question 6

When saving leaks out of the circular flow of income and spending,

Accepted Answer

A)  total income necessarily falls. 
B)  it leaks out of the financial system. 
C)  it flows to borrowers. 
D)  it increases the size of the spending flow. 
A)  total income necessarily falls. 
B)  it leaks out of the financial system. 
C)  it flows to borrowers. 
D)  it increases the size of the spending flow.

Question 7

Which of the following would is included as Investment Spending in aggregate demand?

Accepted Answer

A)  Sandra finances her business from the sale of $200,000 of treasury securities. 
B)  Marco buys a new building off the Santa Monica coast for his startup. 
C)  Maria purchases $100,000 of foreign bonds. 
D)  Allen sells the old truck he used for transporting goods. 
A)  Sandra finances her business from the sale of $200,000 of treasury securities. 
B)  Marco buys a new building off the Santa Monica coast for his startup. 
C)  Maria purchases $100,000 of foreign bonds. 
D)  Allen sells the old truck he used for transporting goods.

Question 8

If a U.S. citizen buys a car produced in Germany, this transaction will add to

Accepted Answer

A)  U.S. aggregate demand. 
B)  U.S. aggregate supply. 
C)  German aggregate demand. 
D)  German imports. 
A)  U.S. aggregate demand. 
B)  U.S. aggregate supply. 
C)  German aggregate demand. 
D)  German imports.

Question 9

Figure 8-1
 
 
Based on the scatter diagram in Figure 8-1, if real disposable income is $800 billion, the consumption spending would be approximately

Accepted Answer

A)  $800 billion. 
B)  $650 billion. 
C)  $540 billion. 
D)  $420 billion. 
A)  $800 billion. 
B)  $650 billion. 
C)  $540 billion. 
D)  $420 billion.

Question 10

Historical data depicted on a scatter diagram show that consumer spending and disposable income

Accepted Answer

A)  converge as income grows. 
B)  generally move together. 
C)  diverge as income grows. 
D)  show no clear relationship. 
A)  converge as income grows. 
B)  generally move together. 
C)  diverge as income grows. 
D)  show no clear relationship.

Question 11

Changes in the price level will shift the consumption function, since it is an indicator of household wealth and not household income.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Explain why national income and domestic product must be equal.

Accepted Answer

When a firm produces goods and sells the

Question 14

In which of the following years was a tax cut ineffective in stimulating aggregate demand?

Accepted Answer

A)  1964 
B)  1975 
C)  1981 
D)  1999 
A)  1964 
B)  1975 
C)  1981 
D)  1999

Question 15

For each of the following, how would they be included in the national income accounts? 
a. The University of California buys a new computer. 
b. Charles buys a new MP3 player. 
c. Marian buys a new mountain cabin. 
d. Vikki buys an old mansion with hopes of restoring it. 
e. Farmer Brown buys a used combine harvester.

Accepted Answer

a. Government purchases. Purchased by a

Question 16

Inventories are goods that can be considered as "purchased" by

Accepted Answer

A)  the firms that produce them. 
B)  the consumers that ultimately buy them. 
C)  the government since they are tax deductible. 
D)  no one since they are not counted as part of GDP. 
A)  the firms that produce them. 
B)  the consumers that ultimately buy them. 
C)  the government since they are tax deductible. 
D)  no one since they are not counted as part of GDP.

Question 17

Which of the following would be most likely to shift the consumption function downward?

Accepted Answer

A)  A stock market crash 
B)  A price level decrease 
C)  Increased corporate profits 
D)  A stock market boom 
A)  A stock market crash 
B)  A price level decrease 
C)  Increased corporate profits 
D)  A stock market boom

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would be removed from the U.S. aggregate demand measurement?

Accepted Answer

A)  Japan's purchase of General Electric combines from the United States 
B)  China's purchase of soybeans from U.S. farmers 
C)  A foreign tourist's purchase of New York City Statue of Liberty keychains 
D)  An American professor's purchase of a vintage manuscript from Rome, Italy 
A)  Japan's purchase of General Electric combines from the United States 
B)  China's purchase of soybeans from U.S. farmers 
C)  A foreign tourist's purchase of New York City Statue of Liberty keychains 
D)  An American professor's purchase of a vintage manuscript from Rome, Italy

Question 20

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

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

A scatter diagram is a way to show the relationship between disposable income and consumer expenditures.

If personal taxes are cut temporarily, the resulting

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

The __________ shows a direct relationship between consumption spending and disposable income.

When saving leaks out of the circular flow of income and spending,

Which of the following would is included as Investment Spending in aggregate demand?

If a U.S. citizen buys a car produced in Germany, this transaction will add to

Figure 8-1 Based on the scatter diagram in Figure 8-1, if real disposable income is $800 billion, the consumption spending would be approximately

Historical data depicted on a scatter diagram show that consumer spending and disposable income

Changes in the price level will shift the consumption function, since it is an indicator of household wealth and not household income.

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

Explain why national income and domestic product must be equal.

In which of the following years was a tax cut ineffective in stimulating aggregate demand?

Inventories are goods that can be considered as "purchased" by

Which of the following would be most likely to shift the consumption function downward?

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

Which of the following would be removed from the U.S. aggregate demand measurement?

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

Contemporary Issues in the Us Economy

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Exam 24: Aggregate Demand and the Powerful Consumer

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

A scatter diagram is a way to show the relationship between disposable income and consumer expenditures.

If personal taxes are cut temporarily, the resulting

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

The __________ shows a direct relationship between consumption spending and disposable income.

When saving leaks out of the circular flow of income and spending,

Which of the following would is included as Investment Spending in aggregate demand?

If a U.S. citizen buys a car produced in Germany, this transaction will add to

Figure 8-1 Based on the scatter diagram in Figure 8-1, if real disposable income is $800 billion, the consumption spending would be approximately

Historical data depicted on a scatter diagram show that consumer spending and disposable income

Changes in the price level will shift the consumption function, since it is an indicator of household wealth and not household income.

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

Explain why national income and domestic product must be equal.

In which of the following years was a tax cut ineffective in stimulating aggregate demand?

Inventories are goods that can be considered as "purchased" by

Which of the following would be most likely to shift the consumption function downward?

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

Which of the following would be removed from the U.S. aggregate demand measurement?

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

Contemporary Issues in the Us Economy

Filters