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.   disposable income rises, saving falls.
C.   disposable income rises, consumption rises.
D.   consumption rises, disposable income falls.
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.   consumption rises faster than disposable income during recessions.
D.   U.S. citizens increased saving during World War II.
Question #3
Aggregate demand is defined as the total spending
A.   by all consumers, business firms, government agencies, and foreigners in the United States.
B.   of all consumers, business firms, government agencies, and foreigners on final goods and services produced in the United States.
C.   of consumers, businesses, and government agencies on final output.
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.   tax changes have a stable and predictable effect on consumption spending.
B.   tax changes have no 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 work to supplement their retirement income.
B.   They receive government transfer payments.
C.   They withdraw funds from accumulated wealth.
D.   They borrow and increase their debt levels.
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.   cannot be determined
B.   $9,800 billion.
C.   $10,000 billion.
D.   $9,000 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.   national income.
B.   net domestic product.
C.   disposable income.
D.   gross domestic product.
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.   federal sales taxes.
B.   corporate income taxes.
C.   personal income tax rates.
D.   unemployment insurance benefits.

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