Question 1

Investment goods are counted in GDP because they are

Accepted Answer

A)  intermediate goods. 
B)  purchased in their final form. 
C)  usually exported as foreign investment. 
D)  deductible business expenses. 
A)  intermediate goods. 
B)  purchased in their final form. 
C)  usually exported as foreign investment. 
D)  deductible business expenses.

Question 2

In the circular flow model,which of the following is an injection?

Accepted Answer

A)  investment spending 
B)  government taxes 
C)  total exports 
D)  imports 
A)  investment spending 
B)  government taxes 
C)  total exports 
D)  imports

Question 3

If consumers' expectations about future income are very optimistic,then we should expect

Accepted Answer

A)  the consumption function to shift downward. 
B)  consumers to move up along the consumption function. 
C)  the consumption function to shift upward. 
D)  consumers to move down along the consumption function. 
A)  the consumption function to shift downward. 
B)  consumers to move up along the consumption function. 
C)  the consumption function to shift upward. 
D)  consumers to move down along the consumption function.

Question 4

Among the following,which would not be considered part of the investment component of GDP?

Accepted Answer

A)  manufacturers' equipment 
B)  buying corporate stock 
C)  new houses 
D)  business structures 
A)  manufacturers' equipment 
B)  buying corporate stock 
C)  new houses 
D)  business structures

Question 5

When aggregate demand decreases rapidly,the economy is likely to experience

Accepted Answer

A)  inflation. 
B)  an economic boom. 
C)  economic growth. 
D)  recession. 
A)  inflation. 
B)  an economic boom. 
C)  economic growth. 
D)  recession.

Question 6

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

Question 7

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

Accepted Answer

A)  Permanent tax cuts have a greater effect on expected long-run inflation. 
B)  Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective. 
C)  Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function. 
D)  Permanent tax cuts affect expectations of long-run income more than temporary tax cuts. 
A)  Permanent tax cuts have a greater effect on expected long-run inflation. 
B)  Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective. 
C)  Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function. 
D)  Permanent tax cuts affect expectations of long-run income more than temporary tax cuts.

Question 8

If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income,the slope of this line will equal the

Accepted Answer

A)  propensity to consume 
B)  variable propensity to consume. 
C)  marginal propensity to consume. 
D)  average propensity to consume. 
A)  propensity to consume 
B)  variable propensity to consume. 
C)  marginal propensity to consume. 
D)  average propensity to consume.

Question 9

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 10

What is the marginal propensity to consume (MPC)and why is it important in predicting consumer behavior?

Accepted Answer

The marginal propensity to consume is th

Question 11

Figure 8-2
  
-In Figure 8-2,which of the following moves can be explained by a tax cut?

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

A scatter diagram could help a policy maker decide on the size of a tax cut necessary to increase consumer expenditures by a certain amount.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Which of the following observations concerning GDP calculations is t?

Accepted Answer

A)  Goods and services produced by governments are valued at market price. 
B)  Inventories are treated as if they are yet to be sold. 
C)  Goods produced but not sold during the year are counted in that year's GDP. 
D)  Goods that firms add to their inventories do not count in the GDP. 
A)  Goods and services produced by governments are valued at market price. 
B)  Inventories are treated as if they are yet to be sold. 
C)  Goods produced but not sold during the year are counted in that year's GDP. 
D)  Goods that firms add to their inventories do not count in the GDP.

Investment goods are counted in GDP because they are

In the circular flow model,which of the following is an injection?

If consumers' expectations about future income are very optimistic,then we should expect

Among the following,which would not be considered part of the investment component of GDP?

When aggregate demand decreases rapidly,the economy is likely to experience

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?

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

If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income,the slope of this line will equal the

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

What is the marginal propensity to consume (MPC)and why is it important in predicting consumer behavior?

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by a tax cut?

A scatter diagram could help a policy maker decide on the size of a tax cut necessary to increase consumer expenditures by a certain amount.

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

Which of the following observations concerning GDP calculations is t?

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

Investment goods are counted in GDP because they are

In the circular flow model,which of the following is an injection?

If consumers' expectations about future income are very optimistic,then we should expect

Among the following,which would not be considered part of the investment component of GDP?

When aggregate demand decreases rapidly,the economy is likely to experience

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?

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

If you fit a line through a scatter diagram of points that represent coordinates of consumer spending and disposable income,the slope of this line will equal the

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

What is the marginal propensity to consume (MPC)and why is it important in predicting consumer behavior?

Figure 8-2 -In Figure 8-2,which of the following moves can be explained by a tax cut?

A scatter diagram could help a policy maker decide on the size of a tax cut necessary to increase consumer expenditures by a certain amount.

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

Which of the following observations concerning GDP calculations is t?

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