Exam 24: Aggregate Demand and the Powerful Consumer

If an individual's income increases by $100, then their spending will increase by less than $100.

Which of the following is the best example of an intermediate good?

Capital goods are counted the same as consumer goods in the national product accounts.

Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts?

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

Data from the World War II era showed that

Fixed-money assets, like stocks and bonds, are included in which of the following components of GDP?

The change in consumption divided by the change in disposable income is called the

The slope of the consumption function is equal to the marginal propensity to save.

In the circular flow model, savings is considered a leakage because

Disposable income does not influence the amount of consumer expenditures.

If an economist wants to make a prediction about the effects of a change in disposable income on the change in consumption spending based on historical data, she must assume that

The temporary tax cuts of 2008 and 2009 were ineffective to boost the economy out of a recession.

The "investment" component of aggregate demand will include all of the following except

U.S. imports are most likely to increase when

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

The MPC for a country will likely be measured as less than 1.0.

Whirlpool Corporation buys steel in sheets to manufacture refrigerators. Whirlpool also buys a new factory and a metal press to mold the steel. Which purchases are included in GDP?

If the MPC is 0.80, then a change in disposable income of $60 billion will lead to an initial change in consumption of

The accounting identity for the economy's factor payments can be written as ____.