Exam 25: Aggregate Demand and the Powerful Consumer

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.

Aggregate demand is the total demand for

When the price level falls, consumers may feel wealthier and the consumption function will shift upward.

Aggregate demand is the total demand for the final goods and services produced in an economy.

Suppose the stock market rises, causing a rapid increase in consumers' wealth.This would lead to

If a U.S.citizen buys a car produced in Germany, this transaction will add to

"Men are disposed, as a rule, and on the average, to increase their consumption as their income increases, but not by as much as the increase in their incomes." Which of the following is consistent with this statement by J.M.Keynes?

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

Which of the following observations concerning GDP calculations is true?

Define investment?The meaning of investment is different for economists.Explain.

Financial investments, such as mutual fund purchases, are included in the national income component.

If personal taxes are cut temporarily, the resulting

Which of the following would be most likely to shift the consumption function downward?

Price level changes have their greatest effect on consumers'

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?

Government-produced goods are added to GDP at

An example of investment is the purchase of machinery by a manufacturing company.

Inventories are goods that can be considered as "purchased" by

A sudden decrease in consumers' wealth-resulting, for example, from a stock market crash-would initially cause a(n)

If inflation rises more quickly in the United States than in France, U.S.exports to France should rise.