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

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