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quiz 8ma - between a consumption and disposable income b...

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QUIZ FOR CHAPTER 8 1. Which item is not a component of aggregate demand a. government purchases b. net exports c. taxes minus transfers d. consumption spending 2. According to the conventions of national income accounting, illustrated in the circular-flow diagram, one of the following equalities hold, except for a few technical complications. a. government spending equals tax revenue b. exports equal imports c. household saving equals industrial investment d. national income equals domestic product 3. Which statement about consumption is true? a. when disposable income increases, consumption increase by a larger amount b. when disposable income increases, consumption increases by a smaller amount c. consumption is strongly affected by interest rates d. consumption is usually somewhat less than investment 4. The consumption function represents the relationship
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Unformatted text preview: between: a. consumption and disposable income b. consumption and tax revenue c. consumption and aggregate demand d. consumption and investment 5. The marginal propensity to consume falls when: a. people save less from an increase in income b. people save more from an increase in income c. people’s disposable income rises d. people’s disposable income falls 6. What will lead to a shift in the consumption function? a. a reduction in personal income taxes b. an increase in government spending c. an increase in the price level d. an increase in GDP 7. The effect of a temporary tax cut on personal consumption: a. is greater than the effect of a permanent tax cut b. is the same as the effect of a permanent tax cut c. is less than the effect of a permanent tax cut d. is negative...
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