Question 1

Table 8-1
  
-According to the data in Table 8-1,the value of NNP is

Accepted Answer

A) 900. 
B) 805. 
C) 750. 
D) 705. 
A) 900. 
B) 805. 
C) 750. 
D) 705.

Question 2

The consumption function shows an indirect relationship between consumer spending and disposable income.

Accepted Answer

A) True 
 B)False

Question 3

If the MPC is .80,then a change in disposable income of $60 billion will lead to an initial change in consumption of

Accepted Answer

A)  $30 billion. 
B)  $42 billion. 
C)  $48 billion. 
D)  $60 billion. 
E)  $70 billion. 
A)  $30 billion. 
B)  $42 billion. 
C)  $48 billion. 
D)  $60 billion. 
E)  $70 billion.

Question 4

Explain why it makes a difference if consumers consider a tax cut temporary rather than permanent.What does this explanation tell us about the importance of government credibility? Put this in the context of the 2008 and 2009 tax cuts favored by President Bush and President Obama.

Accepted Answer

Consumers tend to base their spending de

Question 5

Which of the following is the injection into the circular flow model?

Accepted Answer

A)  Money deposited in a savings account. 
B)  Income earned through exports. 
C)  Goods imported from abroad. 
D)  Taxes paid by the individuals. 
A)  Money deposited in a savings account. 
B)  Income earned through exports. 
C)  Goods imported from abroad. 
D)  Taxes paid by the individuals.

Question 6

Which of the following will most likely have the greatest effect on an individual's consumption function?

Accepted Answer

A)  winning a small amount in the lottery 
B)  a one-time tuition grant 
C)  a week of high overtime pay 
D)  an inheritance paying a modest annual dividend 
A)  winning a small amount in the lottery 
B)  a one-time tuition grant 
C)  a week of high overtime pay 
D)  an inheritance paying a modest annual dividend

Question 7

Government transfer payments are income earned by individuals who work for the federal government.

Accepted Answer

A) True 
 B)False

Question 8

One of the effects of a change in disposable income could not be a(n)

Accepted Answer

A)  movement up along the consumption function. 
B)  movement down along the consumption function. 
C)  change in the amount of consumption expenditures. 
D)  upward shift of the consumption function. 
A)  movement up along the consumption function. 
B)  movement down along the consumption function. 
C)  change in the amount of consumption expenditures. 
D)  upward shift of the consumption function.

Question 9

The value of both exports and imports are added to the value of national product.

Accepted Answer

A) True 
 B)False

Question 10

Because of recent corporate downsizing,Chuck loses his job.The most likely effect on his consumption function is a(n)

Accepted Answer

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

Question 11

What is aggregate demand? What are its major components?

Accepted Answer

Aggregate demand is the total amount tha

Question 12

U.S.imports rise when income in the United States increases.

Accepted Answer

A) True 
 B)False

Question 13

The tax cut of 2009 had little significant effect on consumer spending because it

Accepted Answer

A)  was not large enough. 
B)  was perceived as temporary. 
C)  came too early in the year. 
D)  was subtracted from 2008 taxes due. 
A)  was not large enough. 
B)  was perceived as temporary. 
C)  came too early in the year. 
D)  was subtracted from 2008 taxes due.

Question 14

GDP can be calculated by the value-added approach,which

Accepted Answer

A)  is useful in avoiding double counting. 
B)  includes only the value-added portion from the sale of goods and services. 
C)  includes the revenue a firm receives from selling a product minus the amount paid for goods purchased from other firms. 
D)  All of the above correct. 
A)  is useful in avoiding double counting. 
B)  includes only the value-added portion from the sale of goods and services. 
C)  includes the revenue a firm receives from selling a product minus the amount paid for goods purchased from other firms. 
D)  All of the above correct.

Question 15

The net export component of aggregate demand is defined as U.S.

Accepted Answer

A)  imports minus U.S. exports. 
B)  imports plus U.S. exports. 
C)  exports minus U.S. imports. 
D)  exports minus taxes and customs duties. 
A)  imports minus U.S. exports. 
B)  imports plus U.S. exports. 
C)  exports minus U.S. imports. 
D)  exports minus taxes and customs duties.

Question 16

After years of hard work in the field of macroeconomics,you win the Nobel Prize in economics (currently about $1.5 million).What is the most likely effect of this prize on your consumption function?

Accepted Answer

A)  It will shift downward temporarily. 
B)  It will shift upward temporarily. 
C)  It will shift downward permanently. 
D)  It will shift upward permanently. 
E)  none of the above 
A)  It will shift downward temporarily. 
B)  It will shift upward temporarily. 
C)  It will shift downward permanently. 
D)  It will shift upward permanently. 
E)  none of the above

Question 17

If the price level increases,we would expect consumers to

Accepted Answer

A)  raise their consumption functions. 
B)  move downward along their consumption functions. 
C)  lower their consumption functions. 
D)  move upward along their consumption functions. 
A)  raise their consumption functions. 
B)  move downward along their consumption functions. 
C)  lower their consumption functions. 
D)  move upward along their consumption functions.

Question 18

Consumer spending is an injection in the circular flow of income and spending.

Accepted Answer

A) True 
 B)False

Question 19

To predict the effects of a tax cut on consumption spending,economists must have some estimate of the

Accepted Answer

A)  income effect. 
B)  substitution effect. 
C)  relative price effect. 
D)  marginal propensity to consume. 
A)  income effect. 
B)  substitution effect. 
C)  relative price effect. 
D)  marginal propensity to consume.

Question 20

If DI falls by $100 billion,and C falls by $90 billion,the slope of the consumption is

Accepted Answer

A) -0.45. 
B) 0.45. 
C) -0.90. 
D) 0.90. 
E) 0.50. 
A) -0.45. 
B) 0.45. 
C) -0.90. 
D) 0.90. 
E) 0.50.

Table 8-1 -According to the data in Table 8-1,the value of NNP is

The consumption function shows an indirect relationship between consumer spending and disposable income.

If the MPC is .80,then a change in disposable income of $60 billion will lead to an initial change in consumption of

Explain why it makes a difference if consumers consider a tax cut temporary rather than permanent.What does this explanation tell us about the importance of government credibility? Put this in the context of the 2008 and 2009 tax cuts favored by President Bush and President Obama.

Which of the following is the injection into the circular flow model?

Which of the following will most likely have the greatest effect on an individual's consumption function?

Government transfer payments are income earned by individuals who work for the federal government.

One of the effects of a change in disposable income could not be a(n)

The value of both exports and imports are added to the value of national product.

Because of recent corporate downsizing,Chuck loses his job.The most likely effect on his consumption function is a(n)

What is aggregate demand? What are its major components?

U.S.imports rise when income in the United States increases.

The tax cut of 2009 had little significant effect on consumer spending because it

GDP can be calculated by the value-added approach,which

The net export component of aggregate demand is defined as U.S.

After years of hard work in the field of macroeconomics,you win the Nobel Prize in economics (currently about $1.5 million).What is the most likely effect of this prize on your consumption function?

If the price level increases,we would expect consumers to

Consumer spending is an injection in the circular flow of income and spending.

To predict the effects of a tax cut on consumption spending,economists must have some estimate of the

If DI falls by $100 billion,and C falls by $90 billion,the slope of the consumption 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

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Exam 8: Aggregate Demand and the Powerful Consumer

Table 8-1 -According to the data in Table 8-1,the value of NNP is

The consumption function shows an indirect relationship between consumer spending and disposable income.

If the MPC is .80,then a change in disposable income of $60 billion will lead to an initial change in consumption of

Explain why it makes a difference if consumers consider a tax cut temporary rather than permanent.What does this explanation tell us about the importance of government credibility? Put this in the context of the 2008 and 2009 tax cuts favored by President Bush and President Obama.

Which of the following is the injection into the circular flow model?

Which of the following will most likely have the greatest effect on an individual's consumption function?

Government transfer payments are income earned by individuals who work for the federal government.

One of the effects of a change in disposable income could not be a(n)

The value of both exports and imports are added to the value of national product.

Because of recent corporate downsizing,Chuck loses his job.The most likely effect on his consumption function is a(n)

What is aggregate demand? What are its major components?

U.S.imports rise when income in the United States increases.

The tax cut of 2009 had little significant effect on consumer spending because it

GDP can be calculated by the value-added approach,which

The net export component of aggregate demand is defined as U.S.

After years of hard work in the field of macroeconomics,you win the Nobel Prize in economics (currently about $1.5 million).What is the most likely effect of this prize on your consumption function?

If the price level increases,we would expect consumers to

Consumer spending is an injection in the circular flow of income and spending.

To predict the effects of a tax cut on consumption spending,economists must have some estimate of the

If DI falls by $100 billion,and C falls by $90 billion,the slope of the consumption 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