Question 1

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.E) None of the above
F) All of the above

Question 2

A decrease in the price level will most likely have what effect on the consumption function?

Accepted Answer

A)  It will shift upward.
B)  It will shift downward.
C)  It will cause movement downward along the function.
D)  It will cause movement upward along the function.E) All of the above
F) B) and C)

Question 3

The marginal propensity to consume (MPC)  is calculated by which formula?

Accepted Answer

A)  MPC = change in DI divided by change in C 
B)  MPC = change in GDP divided by change in DI 
C)  MPC = change in C divided by change in DI 
D)  MPC = change in C divided by change in GDPE) A) and B)
F) A) and C)

Question 4

A movement upward along the consumption function can be caused only by a(n)

Accepted Answer

A)  increase in disposable income.
B)  decrease in disposable income.
C)  decrease in the price level.
D)  increase in the price level.E) All of the above
F) A) and B)

Question 5

To get a complete measure of the total spending on U.S.-produced final goods and services, one must adjust aggregate demand by

Accepted Answer

A)  adding imports and subtracting exports.
B)  adding imports that are purchased by U.S.consumers.
C)  adding exports and subtracting imports.
D)  subtracting exports sold to foreigners.E) A) and B)
F) C) and D)

Question 6

The tax cuts of 2008 and 2009 reduced the disposable income of U.S.consumers.

Accepted Answer

A) True 
 B)False

Question 7

The numerical value of the MPC is typically

Accepted Answer

A)  less than 1.
B)  equal to 1.
C)  greater than 1.
D)  unpredictable.E) None of the above
F) A) and D)

Question 8

For each of the following, how would they be included in the national income accounts?
a.The University of California buys a new computer.b.Charles buys a new MP₃ player.c.Marian buys a new mountain cabin.d.Vikki buys an old mansion with hopes of restoring it.e.Farmer Brown buys a used combine harvester.

Accepted Answer

a.Government purchases.Purchased by a st...

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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.E) All of the above
F) A) and C)

Question 11

The most volatile component of aggregate demand is:

Accepted Answer

A)  ​consumer spending 
B)  ​government purchases 
C)  ​net exports 
D)  ​investment spendingE) A) and C)
F) A) and B)

Question 12

Changes in the value of stocks may play a big role in the consumption decisions of individuals.How would changes in the stock market affect the consumption function?

Accepted Answer

Corporate stocks are an increasingly pop...

Question 13

National income is the sum of

Accepted Answer

A)  wages and profits.
B)  wages, interest, profits, and rent.
C)  interest and rent.
D)  wages, transfer payments, and tax revenues.E) C) and D)
F) None of the above

Question 14

Aggregate demand is the sum of total domestic spending by the private sector.

Accepted Answer

A) True 
 B)False

Question 15

The largest income component in the national income accounts is

Accepted Answer

A)  wages.
B)  rents.
C)  corporate profits.
D)  interest.E) A) and B)
F) A) and C)

Question 16

Aggregate demand is the sum of

Accepted Answer

A)  C + I + G + (X − IM) .
B)  C + I + X.
C)  C + I + X − IM.
D)  C + I + G.E) A) and B)
F) All of the above

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The federal government's principal tool in altering consumer spending is changing

Accepted Answer

A)  corporate income taxes.
B)  federal sales taxes.
C)  unemployment insurance benefits.
D)  personal income tax rates.E) C) and D)
F) A) and B)

Question 19

The relationship between consumption and disposable income is such that as

Accepted Answer

A)  consumption rises, disposable income falls.
B)  disposable income rises, consumption rises.
C)  disposable income rises, consumption falls.
D)  disposable income rises, saving falls.E) C) and D)
F) All of the above

Question 20

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.E) B) and D)
F) A) and B)

Exam 25: Aggregate Demand and the Powerful Consumer

The most volatile component of aggregate demand is:

Correct Answer
verified

The relationship between consumption and disposable income is such that as

Correct Answer
verified

The largest income component in the national income accounts is

Correct Answer
verified

The marginal propensity to consume (MPC) is calculated by which formula?

Correct Answer
verified

A movement upward along the consumption function can be caused only by a(n)

Correct Answer
verified

National income is the sum of

Correct Answer
verified

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

Correct Answer
verified

Aggregate demand is the sum of

Correct Answer
verified

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

Correct Answer
verified

Most people base their current consumption spending at least partially on

Correct Answer
verified

The federal government's principal tool in altering consumer spending is changing

Correct Answer
verified

Changes in the value of stocks may play a big role in the consumption decisions of individuals.How would changes in the stock market affect the consumption function?

Correct Answer
verified
Corporate stocks are an increasingly pop...
View Answer

A decrease in the price level will most likely have what effect on the consumption function?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
a.Government purchases.Purchased by a st...
View Answer

Aggregate demand is the sum of total domestic spending by the private sector.

Correct Answer
verified

The tax cuts of 2008 and 2009 reduced the disposable income of U.S.consumers.

Correct Answer
verified

To get a complete measure of the total spending on U.S.-produced final goods and services, one must adjust aggregate demand by

Correct Answer
verified

Aggregate demand is defined as the total spending

Correct Answer
verified

The numerical value of the MPC is typically

Correct Answer
verified

Exam 25: Aggregate Demand and the Powerful Consumer

The most volatile component of aggregate demand is:

Correct AnswerverifiedShow Answer

The relationship between consumption and disposable income is such that as

Correct AnswerverifiedShow Answer

The largest income component in the national income accounts is

Correct AnswerverifiedShow Answer

The marginal propensity to consume (MPC) is calculated by which formula?

Correct AnswerverifiedShow Answer

A movement upward along the consumption function can be caused only by a(n)

Correct AnswerverifiedShow Answer

National income is the sum of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Aggregate demand is the sum of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most people base their current consumption spending at least partially on

Correct AnswerverifiedShow Answer

The federal government's principal tool in altering consumer spending is changing

Correct AnswerverifiedShow Answer

Changes in the value of stocks may play a big role in the consumption decisions of individuals.How would changes in the stock market affect the consumption function?

Correct AnswerverifiedCorporate stocks are an increasingly pop...View AnswerShow Answer

A decrease in the price level will most likely have what effect on the consumption function?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Government purchases.Purchased by a st...View AnswerShow Answer

Aggregate demand is the sum of total domestic spending by the private sector.

Correct AnswerverifiedShow Answer

The tax cuts of 2008 and 2009 reduced the disposable income of U.S.consumers.

Correct AnswerverifiedShow Answer

To get a complete measure of the total spending on U.S.-produced final goods and services, one must adjust aggregate demand by

Correct AnswerverifiedShow Answer

Aggregate demand is defined as the total spending

Correct AnswerverifiedShow Answer

The numerical value of the MPC is typically

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
Corporate stocks are an increasingly pop...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.Government purchases.Purchased by a st...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified