Ch 8 quiz

Disposable income is obtained by a. subtracting personal income taxes from personal income b. subtracting personal income taxes from national income c. adding transfer payments to national income d. adding transfer payments to personal income

subtracting personal income taxes from personal income

Which of the following will most likely cause movement along the consumption function a. A change in disposable income b. A change in interest rates c. A change in taste d. A change in consumers' expectations

A change in disposable income

Which of the following would be added to US national income? A. An American consumer buying French wine b. An American business selling aircraft to British airways C. A Swedish firm selling mobile phones to Americans d. A French firm buying a Swedish cellular phone

An American business selling aircraft to British airways

The largest component of aggregate demand a. Investment spending b. Consumer spending c. Government spending d. Total imports

Consumer spending

One difficulty of computing the value of GDP is that there are no market prices for a. Exports and imports b. Business investments c. Government goods and services d. Resource values

Government goods and services

Households can finance their consumer spending from current a. Income b. Wealth c. Debt d. Income and current wealth

Income and current wealth

The movement upward along the consumption function can be caused only by a(n) a. Increase in disposable income b. Decrease in disposable income c. Decrease in the price level d. Increase in the price level

Increase in disposable income

Anna enters the work force after being unemployed for a year. How would this be shown on her consumption function? A. Movement down the consumption function b. Shift upward of the function c. Shift downward of the function d. Movement up along the consumption function

Movement up along the consumption function

The sum of all factor payments in the economy yields a. Gross domestic product b. National income c. Disposable income d. Net domestic product

National income

Which of the following is not part of the investment component of GDP? A. Residential construction b. Plant, equipment, and software c. Net imports d. Business structures

Net imports

If real interest rates decrease, we generally expect a. Saving to increase b. Saving to decrease c. Consumption spending to decrease d. No significant change in saving

Saving to decrease

If the MPC increases in value, what will happen to the slope of the consumption function? A. The slope decreases and the consumption function will become flatter b. The slope will decrease and the consumption function will become steeper c. The slope will increase and the consumption function will become steeper d. The slope will increase and the consumption will become flatter

The slope will increase and the consumption function will become steeper

The net exports adjustments in aggregate demand includes a. Capital inflows minus capital outflows b. Capital outflows minus capital inflows C. The sum of exports minus imports d. The sum of imports minus exports

The sum of exports minus imports

The tax cut of 2009 had little significant effect on consumer spending because it a. Was not large enough b. Was perceived as temporary c. Came too early in the year d. Was subtracted from 2008 taxes due

Was perceived as temporary

If the japanese economy is currently suffering from a recession, we should expect US exports to japan to a. decrease b. increase c. remain the same d. increase only if the japanese yen depreciates

decrease

The net export component of aggregate demand is defined as US a. imports minus US exports b. imports plus US exports c. exports minus US imports d. exports minus taxes and custom duties

exports minus US imports

Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts? a. permanent tax cuts have a greater effect on expected long-run inflation b. permanent tax cuts are percieved as minor while temporary tax cuts are larger and more effective c. permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function d. permanent tax cuts affect expectations of long-run income more than temporary tax cuts

permanent tax cuts affect expectations of long-run income more than temporary tax cuts