Question 1

When computing gross domestic product,government services are valued at the

Accepted Answer

A)  price consumers pay for them. 
B)  value of the resources used to produce them. 
C)  value of comparable outputs from the private sector. 
D)  value of taxes collected from consumers. 
A)  price consumers pay for them. 
B)  value of the resources used to produce them. 
C)  value of comparable outputs from the private sector. 
D)  value of taxes collected from consumers.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Aggregate demand is a ____ rather than a ____.

Accepted Answer

A)  fixed number, concept 
B)  schedule, fixed number 
C)  set number, concept 
D)  government aggregate, private aggregate 
A)  fixed number, concept 
B)  schedule, fixed number 
C)  set number, concept 
D)  government aggregate, private aggregate

Question 4

Goods produced that go into inventories are

Accepted Answer

A)  not counted in GDP. 
B)  only counted in GDP when they are ultimately sold. 
C)  counted in GDP even though they are not sold. 
D)  counted if they completely depreciate within the calendar year. 
A)  not counted in GDP. 
B)  only counted in GDP when they are ultimately sold. 
C)  counted in GDP even though they are not sold. 
D)  counted if they completely depreciate within the calendar year.

Question 5

Which of the following is not part of the investment component of GDP?

Accepted Answer

A)  residential construction 
B)  plant, equipment, and software 
C)  net imports 
D)  business structures 
A)  residential construction 
B)  plant, equipment, and software 
C)  net imports 
D)  business structures

Question 6

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

Accepted Answer

A)  downward movement along the consumption function. 
B)  downward shift of the consumption function. 
C)  upward movement along the consumption function. 
D)  upward shift of the consumption function. 
A)  downward movement along the consumption function. 
B)  downward shift of the consumption function. 
C)  upward movement along the consumption function. 
D)  upward shift of the consumption function.

Question 7

Which of the following would be counted as investment in the national income accounts?

Accepted Answer

A)  the purchase of a newly issued stock 
B)  the purchase of a newly built apartment house 
C)  the purchase of a newly minted coin 
D)  the payment of tuition at a private college 
A)  the purchase of a newly issued stock 
B)  the purchase of a newly built apartment house 
C)  the purchase of a newly minted coin 
D)  the payment of tuition at a private college

Question 8

We should expect the consumption function to shift downward if

Accepted Answer

A)  real interest rates rise. 
B)  price levels fall. 
C)  consumers become more optimistic about future incomes. 
D)  consumers become more pessimistic about future incomes. 
A)  real interest rates rise. 
B)  price levels fall. 
C)  consumers become more optimistic about future incomes. 
D)  consumers become more pessimistic about future incomes.

Question 9

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 10

Consumption functions would shift downward if

Accepted Answer

A)  disposable incomes fall. 
B)  disposable incomes rise. 
C)  price levels fall. 
D)  price levels rise. 
A)  disposable incomes fall. 
B)  disposable incomes rise. 
C)  price levels fall. 
D)  price levels rise.

Question 11

Explain why national income and domestic product must be equal.

Accepted Answer

When a firm produces goods and sells the

Question 12

The slope of the scatter diagram representing the relationship between consumption and disposable income in the United States is approximately

Accepted Answer

A) 1.10. 
B) 0.30 
C) 0.50 
D) 0.90 
A) 1.10. 
B) 0.30 
C) 0.50 
D) 0.90

Question 13

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

Accepted Answer

A) 900. 
B) 950. 
C) 955. 
D) 960. 
A) 900. 
B) 950. 
C) 955. 
D) 960.

Question 14

The most volatile component of aggregate demand is

Accepted Answer

A)  consumption spending. 
B)  government spending. 
C)  investment spending. 
D)  net exports. 
A)  consumption spending. 
B)  government spending. 
C)  investment spending. 
D)  net exports.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Residential construction (new houses and apartments)are included in which component of GDP?

Accepted Answer

A)  government purchases 
B)  retail spending 
C)  investment spending 
D)  net exports 
A)  government purchases 
B)  retail spending 
C)  investment spending 
D)  net exports

Question 17

Define the following terms and explain their importance in the study of macroeconomics:
a.consumer expenditures
b.investment spending
c.national income
d.transfer payments

Accepted Answer

a.Consumer expenditures are the total am

Question 18

If real disposable income is $300 billion and real consumer expenditures are $250 billion,it can be assumed that

Accepted Answer

A)  the government is spending the difference. 
B)  the difference is being invested. 
C)  households are saving the difference. 
D)  transfer payments make up the difference. 
A)  the government is spending the difference. 
B)  the difference is being invested. 
C)  households are saving the difference. 
D)  transfer payments make up the difference.

Question 19

The nation's disposable income increases by $400 billion and,as a result,consumer spending increases by $320 billion.Therefore,the MPC equals

Accepted Answer

A) 0.16. 
B) 0.20. 
C) 0.60. 
D) 0.80. 
E) 0.96. 
A) 0.16. 
B) 0.20. 
C) 0.60. 
D) 0.80. 
E) 0.96.

Question 20

The purchase of stocks and bonds is included in which component of GDP?

Accepted Answer

A)  saving 
B)  investment 
C)  consumer spending 
D)  They are not included in GDP. 
A)  saving 
B)  investment 
C)  consumer spending 
D)  They are not included in GDP.

When computing gross domestic product,government services are valued at the

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

Aggregate demand is a rather than a .

Goods produced that go into inventories are

Which of the following is not part of the investment component of GDP?

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

Which of the following would be counted as investment in the national income accounts?

We should expect the consumption function to shift downward if

In calculating the nation's total output,net exports

Consumption functions would shift downward if

Explain why national income and domestic product must be equal.

The slope of the scatter diagram representing the relationship between consumption and disposable income in the United States is approximately

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

The most volatile component of aggregate demand is

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

Residential construction (new houses and apartments)are included in which component of GDP?

Define the following terms and explain their importance in the study of macroeconomics: a.consumer expenditures b.investment spending c.national income d.transfer payments

If real disposable income is $300 billion and real consumer expenditures are $250 billion,it can be assumed that

The nation's disposable income increases by $400 billion and,as a result,consumer spending increases by $320 billion.Therefore,the MPC equals

The purchase of stocks and bonds is included in which component of GDP?

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

When computing gross domestic product,government services are valued at the

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

Aggregate demand is a ____ rather than a ____.

Goods produced that go into inventories are

Which of the following is not part of the investment component of GDP?

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

Which of the following would be counted as investment in the national income accounts?

We should expect the consumption function to shift downward if

In calculating the nation's total output,net exports

Consumption functions would shift downward if

Explain why national income and domestic product must be equal.

The slope of the scatter diagram representing the relationship between consumption and disposable income in the United States is approximately

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

The most volatile component of aggregate demand is

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

Residential construction (new houses and apartments)are included in which component of GDP?

Define the following terms and explain their importance in the study of macroeconomics: a.consumer expenditures b.investment spending c.national income d.transfer payments

If real disposable income is $300 billion and real consumer expenditures are $250 billion,it can be assumed that

The nation's disposable income increases by $400 billion and,as a result,consumer spending increases by $320 billion.Therefore,the MPC equals

The purchase of stocks and bonds is included in which component of GDP?

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

Aggregate demand is a rather than a .