Econ 102 - Principles of Macroeconomics » Spring 2023 » Aggregate Demand (AD) Quiz

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Question #1
The relationship between consumption and disposable income is such that as
A.   disposable income rises, saving falls.
B.   consumption rises, disposable income falls.
C.   disposable income rises, consumption rises.
D.   disposable income rises, consumption falls.
Question #2
Historical data representing consumption and disposable income reveals that
A.   there is no systematic relationship between the two.
B.   U.S. citizens increased saving during World War II.
C.   during the 1930s, U.S. saving was at a high level.
D.   consumption rises faster than disposable income during recessions.
Question #3
Aggregate demand is defined as the total spending
A.   of all consumers, business firms, government agencies, and foreigners on final goods and services produced in the United States.
B.   of consumers, businesses, and government agencies on final output.
C.   by all consumers, business firms, government agencies, and foreigners in the United States.
D.   consumers, businesses, government agencies, and foreigners wish to make in one year.
Question #4
The U.S. experience with tax cuts and tax increases since 1964 suggests that
A.   temporary tax changes are less effective than permanent changes.
B.   tax changes have no effect on consumption spending.
C.   tax cuts always stimulate consumption spending.
D.   tax changes have a stable and predictable effect on consumption spending.
Question #5
Most older persons regularly spend more than their current disposable income. How is this possible?
A.   They withdraw funds from accumulated wealth.
B.   They work to supplement their retirement income.
C.   They borrow and increase their debt levels.
D.   They receive government transfer payments.
Question #6
Assume that consumption in the United States is $9,000 billion in 2007. If the MPC is 0.8 and the disposable income increases by $1,000 billion in 2008, then the level of consumption in 2008 will be
A.   $9,000 billion.
B.   cannot be determined
C.   $9,800 billion.
D.   $10,000 billion.
Question #7
Which of the following is NOT a factor that influences investment spending?
A.   transfer payment policy
B.   business confidence
C.   business expectations
D.   technical change
Question #8
The sum of all factor payments in the economy yields
A.   disposable income.
B.   net domestic product.
C.   gross domestic product.
D.   national income.
Question #9
Among the following, which would NOT be considered part of the investment component of GDP?
A.   manufacturers' equipment
B.   buying corporate stock
C.   business structures
D.   new houses
Question #10
The federal government's principle tool in altering consumer spending is changing
A.   unemployment insurance benefits.
B.   federal sales taxes.
C.   personal income tax rates.
D.   corporate income taxes.

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