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

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