Exam 8: Aggregate Demand and the Powerful Consumer

Gross private domestic investment in the United States consists of three components:

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?

The total amount spent on final goods and services in the U.S.in 2009 was approximately ten trillion dollars.This total spending is referred to as

Figure 8-1 -Based on the scatter diagram in Figure 8-1,approximately how much will consumption increase after a permanent tax cut of $400 billion?

Which of the following is a transfer payment?

If disposable income increases by $400 billion and consumption increases by $300 billion,the MPC equals

The numerical value of the MPC is typically

The marginal propensity to consume is calculated by dividing the change in consumer spending by the change in disposable income.

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

Why does an increase in the price level tend to cause the consumption function to shift downward?

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

Taxes add to and transfers subtract from the flow of income and spending.

In 1963,government economists assumed that the MPC for the United States was approximately 0.90.If taxes were cut by $9 billion,then consumer expenditures would initially be expected to

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

Aggregate demand is the sum of

In the national income accounts,new investment goods are considered

The tax cuts of 2008 and 2009 were effective because consumers believed that they were temporary.

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

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

Government spending is an injection in the sense that it