Question 1

Why is it t that domestic product and national income must be equal?

Accepted Answer

A)  The IRS national accounting system assures that taxes equal total income. 
B)  The total amount of spending must equal total national sales. 
C)  The value of final product must equal the sum of resource income that produced it. 
D)  The total amount of income earned is eventually spent. 
A)  The IRS national accounting system assures that taxes equal total income. 
B)  The total amount of spending must equal total national sales. 
C)  The value of final product must equal the sum of resource income that produced it. 
D)  The total amount of income earned is eventually spent.

Question 2

Lower real interest rates

Accepted Answer

A)  tend to shift the consumption function upward. 
B)  have no significant effect on consumption. 
C)  tend to shift the consumption function downward. 
D)  tend to move the consumer upward along the consumption function. 
A)  tend to shift the consumption function upward. 
B)  have no significant effect on consumption. 
C)  tend to shift the consumption function downward. 
D)  tend to move the consumer upward along the consumption function.

Question 3

A movement from one point to an another point on the same consumption function could be caused due to

Accepted Answer

A)  changes in wealth. 
B)  an increase in the general price level. 
C)  decrease in the real interest rates. 
D)  changes in disposable income. 
A)  changes in wealth. 
B)  an increase in the general price level. 
C)  decrease in the real interest rates. 
D)  changes in disposable income.

Question 4

Which of the following is an example of wealth?

Accepted Answer

A)  a yearly salary of $40,000 
B)  a mutual fund balance of $1,000 
C)  rental payments of $3,000 per month 
D)  stock dividends of $500 per quarter 
A)  a yearly salary of $40,000 
B)  a mutual fund balance of $1,000 
C)  rental payments of $3,000 per month 
D)  stock dividends of $500 per quarter

Question 5

The marginal propensity to consume is

Accepted Answer

A)  disposable income divided by consumption. 
B)  the change in consumption divided by the change in disposable income. 
C)  consumption divided by disposable income. 
D)  the change in disposable income divided by the change in consumption. 
A)  disposable income divided by consumption. 
B)  the change in consumption divided by the change in disposable income. 
C)  consumption divided by disposable income. 
D)  the change in disposable income divided by the change in consumption.

Question 6

Most people base their current consumption spending at least partially on

Accepted Answer

A)  short-run debt. 
B)  long-run debt. 
C)  long-run real interest rates. 
D)  long-run income. 
A)  short-run debt. 
B)  long-run debt. 
C)  long-run real interest rates. 
D)  long-run income.

Question 7

A $500 government bond is a money-fixed asset.

Accepted Answer

A) True 
 B)False

Question 8

A savings account is an example of consumer income.

Accepted Answer

A) True 
 B)False

Question 9

Aggregate demand is defined as the total spending

Accepted Answer

A)  of all consumers, business firms, government agencies, and foreigners on final goods and services produced in the United States. 
B)  by all consumers, business firms, government agencies, and foreigners in the United States. 
C)  consumers, businesses, government agencies, and foreigners wish to make in one year. 
D)  of consumers, businesses, and government agencies on final output. 
A)  of all consumers, business firms, government agencies, and foreigners on final goods and services produced in the United States. 
B)  by all consumers, business firms, government agencies, and foreigners in the United States. 
C)  consumers, businesses, government agencies, and foreigners wish to make in one year. 
D)  of consumers, businesses, and government agencies on final output.

Question 10

The relationship between consumption and disposable income is very unreliable and unpredictable.

Accepted Answer

A) True 
 B)False

Question 11

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Disposable income is obtained by

Accepted Answer

A)  subtracting personal income taxes from personal income. 
B)  subtracting personal income taxes from national income. 
C)  adding transfer payments to national income. 
D)  adding transfer payments to personal income. 
A)  subtracting personal income taxes from personal income. 
B)  subtracting personal income taxes from national income. 
C)  adding transfer payments to national income. 
D)  adding transfer payments to personal income.

Question 14

The difference between national income and disposable income is

Accepted Answer

A)  residential investment. 
B)  federal deficits. 
C)  net exports. 
D)  financial investment. 
E)  the amount of taxes collected. 
A)  residential investment. 
B)  federal deficits. 
C)  net exports. 
D)  financial investment. 
E)  the amount of taxes collected.

Question 15

Consumer spending represents about what fraction of total spending in the economy?

Accepted Answer

A)  one-fifth 
B)  two-thirds 
C)  one-third 
D)  two-fifths 
E)  three-fourths 
A)  one-fifth 
B)  two-thirds 
C)  one-third 
D)  two-fifths 
E)  three-fourths

Question 16

Saving is a leakage in the sense that

Accepted Answer

A)  saving is lost to the economy and ultimately leads to stagnation. 
B)  the financial system often makes negative profits. 
C)  it often accompanies a trade deficit. 
D)  consumers spend less than their total income. 
A)  saving is lost to the economy and ultimately leads to stagnation. 
B)  the financial system often makes negative profits. 
C)  it often accompanies a trade deficit. 
D)  consumers spend less than their total income.

Question 17

Most older persons regularly spend more than their current disposable income.How is this possible?

Accepted Answer

A)  They receive government transfer payments. 
B)  They work to supplement their retirement income. 
C)  They borrow and increase their debt levels. 
D)  They withdraw funds from accumulated wealth. 
A)  They receive government transfer payments. 
B)  They work to supplement their retirement income. 
C)  They borrow and increase their debt levels. 
D)  They withdraw funds from accumulated wealth.

Question 18

Imports are a leakage in the sense that

Accepted Answer

A)  the international financial system is unstable. 
B)  consumers buy foreign output of goods and services. 
C)  foreigners earn less than U.S. workers. 
D)  a trade deficit increases aggregate demand. 
A)  the international financial system is unstable. 
B)  consumers buy foreign output of goods and services. 
C)  foreigners earn less than U.S. workers. 
D)  a trade deficit increases aggregate demand.

Question 19

A once-and-for-all jump in the price level would initially cause a(n)

Accepted Answer

A)  upward shift in the consumption function. 
B)  upward movement along the consumption function. 
C)  downward shift in the consumption function. 
D)  downward movement along the consumption function. 
A)  upward shift in the consumption function. 
B)  upward movement along the consumption function. 
C)  downward shift in the consumption function. 
D)  downward movement along the consumption function.

Question 20

The largest component of aggregate demand is

Accepted Answer

A)  investment spending. 
B)  consumer spending. 
C)  government spending. 
D)  total imports. 
A)  investment spending. 
B)  consumer spending. 
C)  government spending. 
D)  total imports.

Why is it t that domestic product and national income must be equal?

Lower real interest rates

A movement from one point to an another point on the same consumption function could be caused due to

Which of the following is an example of wealth?

The marginal propensity to consume is

Most people base their current consumption spending at least partially on

A $500 government bond is a money-fixed asset.

A savings account is an example of consumer income.

Aggregate demand is defined as the total spending

The relationship between consumption and disposable income is very unreliable and unpredictable.

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

Disposable income is obtained by

The difference between national income and disposable income is

Consumer spending represents about what fraction of total spending in the economy?

Saving is a leakage in the sense that

Most older persons regularly spend more than their current disposable income.How is this possible?

Imports are a leakage in the sense that

A once-and-for-all jump in the price level would initially cause a(n)

The largest component of aggregate demand is

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

Why is it t that domestic product and national income must be equal?

Lower real interest rates

A movement from one point to an another point on the same consumption function could be caused due to

Which of the following is an example of wealth?

The marginal propensity to consume is

Most people base their current consumption spending at least partially on

A $500 government bond is a money-fixed asset.

A savings account is an example of consumer income.

Aggregate demand is defined as the total spending

The relationship between consumption and disposable income is very unreliable and unpredictable.

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

Disposable income is obtained by

The difference between national income and disposable income is

Consumer spending represents about what fraction of total spending in the economy?

Saving is a leakage in the sense that

Most older persons regularly spend more than their current disposable income.How is this possible?

Imports are a leakage in the sense that

A once-and-for-all jump in the price level would initially cause a(n)

The largest component of aggregate demand is

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