economy quiz 30

Assume the economy's consumption and saving schedules simultaneously shift downward. This must be the result of a. an increase in personal taxes. b. an increase in disposable income. c. an increase in household wealth. d. the expectation of a recession.

a

The most important determinant of consumer spending is a. the level of income. b. the stock of wealth. c. the level of household borrowing. d. consumer expectations.

a

During the Great Recession of 2007-2009, the investment demand curve shifted a. right because of reductions in tax rates. b. left because of declines in expected returns. c. right because of very low interest rates. d. left because of very low interest rates.

b

The investment demand curve will shift to the right as the result of a. the availability of excess production capacity. b. businesses becoming more optimistic about future business conditions. c. an increase in the real interest rate. d. an increase in business taxes.

b

The investment demand curve will shift to the left as the result of a. limited available productive capacity. b. an increase in the interest rate. c. business pessimism about future economic conditions. d. a decrease in business taxes.

c

Which of the following will not tend to shift the consumption schedule upward? a. the expectation of future shortages of essential consumer goods b. a currently small stock of durable goods in the possession of consumers c. the expectation of a future decline in the consumer price index d. a currently low level of household debt

c

A lower real interest rate typically induces consumers to a. save more. b. buy fewer imported goods. c. purchase fewer goods that are bought without using credit. d. purchase more goods that are bought using credit.

d

If for some reason households become increasingly thrifty, we could show this by a. a downshift of the saving schedule. b. a movement down along a stable consumption function. c. an upward shift of the consumption schedule. d. an upward shift of the saving schedule.

d

The purchase of capital goods, like ____ consumer goods, can be postponed; it tends to contribute to _____ in investment spending. a. nondurable; stability b. nondurable; instability c. durable; stability d. durable; instability

d

Which of the following would shift the consumption schedule downward? a. a decrease in real interest rates b. a decrease in disposable income c. an increase in the value of financial assets d. an increase in the probability of a recession

d