Question 1

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

Accepted Answer

A) 800. 
B) 805. 
C) 955. 
D) 1055. 
A) 800. 
B) 805. 
C) 955. 
D) 1055.

Question 2

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. 
A)  consumption rises, disposable income falls. 
B)  disposable income rises, consumption rises. 
C)  disposable income rises, consumption falls. 
D)  disposable income rises, saving falls.

Question 3

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 4

In the national income accounts,the symbol G represents the

Accepted Answer

A)  government production of goods and services. 
B)  volume of goods and services purchased by the federal government. 
C)  value of goods and services purchased by the federal government. 
D)  value of goods and services purchased by all levels of government. 
A)  government production of goods and services. 
B)  volume of goods and services purchased by the federal government. 
C)  value of goods and services purchased by the federal government. 
D)  value of goods and services purchased by all levels of government.

Question 5

Historical data depicted on a scatter diagram show that consumer spending and disposable income

Accepted Answer

A)  converge as income grows. 
B)  generally move together. 
C)  diverge as income grows. 
D)  show no clear relationship. 
A)  converge as income grows. 
B)  generally move together. 
C)  diverge as income grows. 
D)  show no clear relationship.

Question 6

The difference between Gross National Product and Net National Product is the

Accepted Answer

A)  rate of inflation. 
B)  statistical discrepancy encountered in calculating GDP. 
C)  difference between real versus nominal GDP. 
D)  depreciation of the economy's capital stock. 
A)  rate of inflation. 
B)  statistical discrepancy encountered in calculating GDP. 
C)  difference between real versus nominal GDP. 
D)  depreciation of the economy's capital stock.

Question 7

On a graph with consumption on the vertical axis and disposable income on the horizontal axis,the slope of the line is

Accepted Answer

A)  greater than one. 
B)  equal to one. 
C)  less than one. 
D)  undefined. 
A)  greater than one. 
B)  equal to one. 
C)  less than one. 
D)  undefined.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Adding depreciation to net national product yields

Accepted Answer

A)  disposable income (DI). 
B)  personal income (PI). 
C)  net national product (NNP). 
D)  gross domestic product (GDP). 
A)  disposable income (DI). 
B)  personal income (PI). 
C)  net national product (NNP). 
D)  gross domestic product (GDP).

Question 10

Most statistical studies on the relationship between real interest rates and saving conclude that higher real interest rates

Accepted Answer

A)  increase saving. 
B)  tend to decrease saving. 
C)  tend to decrease both consumption and saving. 
D)  have no effect on saving. 
A)  increase saving. 
B)  tend to decrease saving. 
C)  tend to decrease both consumption and saving. 
D)  have no effect on saving.

Question 11

Why is investment spending a highly volatile component?

Accepted Answer

Several factors influence how much busin

Question 12

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. 
A)  increase in disposable income. 
B)  decrease in disposable income. 
C)  decrease in the price level. 
D)  increase in the price level.

Question 13

If you produce a graph with consumption spending on the vertical axis and disposable income on the horizontal axis,the relation between consumption and income will

Accepted Answer

A)  be inverse. 
B)  be transcendental. 
C)  shift unpredictably. 
D)  be direct. 
A)  be inverse. 
B)  be transcendental. 
C)  shift unpredictably. 
D)  be direct.

Question 14

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.

Question 15

The value of intermediate goods is not included in the calculation of GDP to avoid the problem of

Accepted Answer

A)  depreciation. 
B)  inflation. 
C)  double counting. 
D)  transfer payments. 
A)  depreciation. 
B)  inflation. 
C)  double counting. 
D)  transfer payments.

Question 16

The typical value for the MPC is less than 1.0.

Accepted Answer

A) True 
 B)False

Question 17

The difference between disposable income and consumption spending is

Accepted Answer

A)  transfer payments. 
B)  personal taxes. 
C)  net exports. 
D)  personal investment. 
E)  personal saving. 
A)  transfer payments. 
B)  personal taxes. 
C)  net exports. 
D)  personal investment. 
E)  personal saving.

Question 18

Which of the following is not a factor that influences investment spending?

Accepted Answer

A)  transfer payment policy 
B)  business confidence 
C)  business expectations 
D)  technical change 
A)  transfer payment policy 
B)  business confidence 
C)  business expectations 
D)  technical change

Question 19

The Marginal Propensity to Consume (MPC)is defined as the change in

Accepted Answer

A)  C over the change in DI. 
B)  income over the change in disposable income. 
C)  DI over the change in C. 
D)  total income over the change in net income. 
A)  C over the change in DI. 
B)  income over the change in disposable income. 
C)  DI over the change in C. 
D)  total income over the change in net income.

Question 20

If the MPC increases in value,what will happen to the slope of the consumption function?

Accepted Answer

A)  The slope will decrease and the consumption function will become flatter. 
B)  The slope will decrease and the consumption function will become steeper. 
C)  The slope will increase and the consumption function will become steeper. 
D)  The slope will increase and the consumption function will become flatter. 
A)  The slope will decrease and the consumption function will become flatter. 
B)  The slope will decrease and the consumption function will become steeper. 
C)  The slope will increase and the consumption function will become steeper. 
D)  The slope will increase and the consumption function will become flatter.

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

The relationship between consumption and disposable income is such that as

Aggregate demand is the total demand for

In the national income accounts,the symbol G represents the

Historical data depicted on a scatter diagram show that consumer spending and disposable income

The difference between Gross National Product and Net National Product is the

On a graph with consumption on the vertical axis and disposable income on the horizontal axis,the slope of the line is

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

Adding depreciation to net national product yields

Most statistical studies on the relationship between real interest rates and saving conclude that higher real interest rates

Why is investment spending a highly volatile component?

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

If you produce a graph with consumption spending on the vertical axis and disposable income on the horizontal axis,the relation between consumption and income will

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

The value of intermediate goods is not included in the calculation of GDP to avoid the problem of

The typical value for the MPC is less than 1.0.

The difference between disposable income and consumption spending is

Which of the following is not a factor that influences investment spending?

The Marginal Propensity to Consume (MPC)is defined as the change in

If the MPC increases in value,what will happen to the slope of the consumption function?

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

Exam 8: Aggregate Demand and the Powerful Consumer

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

The relationship between consumption and disposable income is such that as

Aggregate demand is the total demand for

In the national income accounts,the symbol G represents the

Historical data depicted on a scatter diagram show that consumer spending and disposable income

The difference between Gross National Product and Net National Product is the

On a graph with consumption on the vertical axis and disposable income on the horizontal axis,the slope of the line is

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

Adding depreciation to net national product yields

Most statistical studies on the relationship between real interest rates and saving conclude that higher real interest rates

Why is investment spending a highly volatile component?

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

If you produce a graph with consumption spending on the vertical axis and disposable income on the horizontal axis,the relation between consumption and income will

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

The value of intermediate goods is not included in the calculation of GDP to avoid the problem of

The typical value for the MPC is less than 1.0.

The difference between disposable income and consumption spending is

Which of the following is not a factor that influences investment spending?

The Marginal Propensity to Consume (MPC)is defined as the change in

If the MPC increases in value,what will happen to the slope of the consumption function?

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