Exam 25: Aggregate Demand and the Powerful Consumer

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

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?

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

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

Consumption functions would shift downward if

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

Both President Bush and President Obama wanted tax cuts to stimulate consumer spending during the 2007-2009 recession.

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

The difference between national income and disposable income is

In the national income accounts, the symbol G represents the

A savings account is an example of consumer income.

The government component (G) of total output includes goods and services purchased by

Which of the following would lead you to predict an upward shift in the consumption function?

In 1975, Congress passed a tax rebate to spur consumer spending.Consumers:

National income can be calculated by subtracting

The most volatile component of aggregate demand is

One difficulty of computing the value of GDP is that there are no market prices for

A decrease in disposable income causes a shift in the consumption function.

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