Question 1

If the Japanese economy is currently suffering from a recession we should expect U.S.exports to Japan to

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  increase only if the Japanese Yen depreciates. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  increase only if the Japanese Yen depreciates. A

Question 2

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. B

Question 3

A decrease in disposable income will

Accepted Answer

A)  lead to an upward movement along the consumption function. 
B)  lead to a downward movement along the consumption function. 
C)  shift the consumption function upward. 
D)  shift the consumption function downward. 
A)  lead to an upward movement along the consumption function. 
B)  lead to a downward movement along the consumption function. 
C)  shift the consumption function upward. 
D)  shift the consumption function downward. B

Question 4

What is aggregate demand? What are its major components?

Accepted Answer

Aggregate demand is the total amount tha

Question 5

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

Accepted Answer

Investment is an asset or item that is p

Question 6

In calculating the nation's total output, net exports

Accepted Answer

A)  represent exports of goods and services minus imports of goods and services. 
B)  have been a negative number in the last several years. 
C)  would include purchases of U.S.-made automobiles by foreigners minus purchase of foreign-made automobiles by U.S.residents. 
D)  All of the above are correct. 
A)  represent exports of goods and services minus imports of goods and services. 
B)  have been a negative number in the last several years. 
C)  would include purchases of U.S.-made automobiles by foreigners minus purchase of foreign-made automobiles by U.S.residents. 
D)  All of the above are correct.

Question 7

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 8

Which of the following will most likely cause a shift in the consumption function?

Accepted Answer

A)  a change in consumer confidence 
B)  a change in national output 
C)  a change in real GDP 
D)  a change in disposable income 
A)  a change in consumer confidence 
B)  a change in national output 
C)  a change in real GDP 
D)  a change in disposable income

Question 9

Assume that consumption in the United States is $9,000 billion in 2009.If the MPC is 0.8 and disposable income increases by $1,000 billion in 2010, then the level of consumption in 2010 will be

Accepted Answer

A)  $10,000 billion. 
B)  $9,800 billion. 
C)  $9,000 billion. 
D)  $7,200 billion. 
A)  $10,000 billion. 
B)  $9,800 billion. 
C)  $9,000 billion. 
D)  $7,200 billion.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

GDP can be calculated as the final demand for goods and services by consumers, businesses,

Accepted Answer

A)  and governments. 
B)  and foreigners. 
C)  governments, and foreigners. 
D)  governments, and financial institutions. 
A)  and governments. 
B)  and foreigners. 
C)  governments, and foreigners. 
D)  governments, and financial institutions.

Question 12

Capital goods are counted the same as consumer goods in the national product accounts.

Accepted Answer

A) True 
 B)False

Question 13

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. 
A)  C + I + G + (X - IM). 
B)  C + I + X. 
C)  C + I + X - IM. 
D)  C + I + G.

Question 14

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 15

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 16

Households can finance their consumer spending from current

Accepted Answer

A)  income. 
B)  wealth. 
C)  debt. 
D)  income and current wealth. 
A)  income. 
B)  wealth. 
C)  debt. 
D)  income and current wealth.

Question 17

Aggregate demand is the total demand for

Accepted Answer

A)  all intermediate and final goods. 
B)  all monetary investments. 
C)  real and financial investments. 
D)  all final goods and services. 
A)  all intermediate and final goods. 
B)  all monetary investments. 
C)  real and financial investments. 
D)  all final goods and services.

Question 18

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 19

The numerical value of the MPC is typically

Accepted Answer

A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  unpredictable. 
A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  unpredictable.

Question 20

Which of the following should be subtracted while calculating aggregate demand of the U.S.?

Accepted Answer

A)  Pakistan's purchase of F-16s from the U.S. 
B)  Computers imported by China from the U.S. 
C)  Memorabilia purchases in the U.S.by a foreign tourist. 
D)  A U.S.firm's purchase of German machinery. 
A)  Pakistan's purchase of F-16s from the U.S. 
B)  Computers imported by China from the U.S. 
C)  Memorabilia purchases in the U.S.by a foreign tourist. 
D)  A U.S.firm's purchase of German machinery.

Exam 25: Aggregate Demand and the Powerful Consumer

If the Japanese economy is currently suffering from a recession we should expect U.S.exports to Japan to

The marginal propensity to consume is

A decrease in disposable income will

What is aggregate demand? What are its major components?

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

In calculating the nation's total output, net exports

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

Which of the following will most likely cause a shift in the consumption function?

Assume that consumption in the United States is $9,000 billion in 2009.If the MPC is 0.8 and disposable income increases by $1,000 billion in 2010, then the level of consumption in 2010 will be

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

GDP can be calculated as the final demand for goods and services by consumers, businesses,

Capital goods are counted the same as consumer goods in the national product accounts.

Aggregate demand is the sum of

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

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

Households can finance their consumer spending from current

Aggregate demand is the total demand for

Aggregate demand is defined as the total spending

The numerical value of the MPC is typically

Which of the following should be subtracted while calculating aggregate demand of the U.S.?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

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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