Econ 231 Exam 2 Chapters 8 & 9 Practice
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Problems exam with verified answer
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Which |of |the |following |changes |results |from |a |decrease |in |an |economy's |disposable |income?
A |rightward |shift |of |the |consumption |function
An |upward |movement |along |the |consumption |function
A |leftward |shift |of |the |consumption |function
A |downward |movement |along |the |consumption |function |- |✔✔💯A |downward |movement |along |the
|consumption |function
Which |of |the |following |is |considered |a |leakage |in |the |circular |flow |model?
Business |spending
Total |exports
Investment |spending
Household |saving |- |✔✔💯Household |saving
Identify |the |correct |statement |among |the |following |statements.
Total |sales |equal |total |demand.
Total |demand |equals |total |production.
Total |sales |equal |total |income.
Total |production |equals |total |income. |- |✔✔💯Total |production |equals |total |income.
Refer |to |the |figure |below. |A |decrease |in |disposable |income |causes |a |movement |from |point
,P |to |S.
Q |to |T.
T |to |Q.
P |to |Q. |- |✔✔💯T |to |Q.
A |recessionary |gap |can |be |caused |by
high |price |levels.
low |interest |rates.
firms |who |spend |more |than |they |earn.
consumers |who |spend |more |than |they |earn |- |✔✔💯high |price |levels.
Disposable |income |minus |consumer |spending |equals
investment.
household |savings.
transfer |payments.
taxes. |- |✔✔💯household |savings.
Which |of |the |following |results |if |total |spending |in |an |economy |exceeds |its |total |output?
The |price |level |in |the |economy |increases.
The |inventory |levels |in |the |economy |increase.
The |price |level |in |the |economy |remains |constant.
The |inventory |levels |in |the |economy |remain |constant |- |✔✔💯The |price |level |in |the |economy
|increases.
, Refer |to |the |figure |below. |A |decrease |in |the |prices |of |stocks |listed |on |NASDAQ |causes |a |movement
|from |point
P |to |R.
Q |to |T.
T |to |S.
P |to |Q |- |✔✔💯P |to |R.
Which |of |the |following |transactions |would |not |be |included |when |measuring |U.S. |aggregate |demand?
A |new |McDonald's |is |built |in |your |neighborhood.
The |local |Honda |dealership |sells |three |Japanese-made |cars.
Your |neighbor |buys |a |new |boat.
The |government |sells |health |insurance |policies. |- |✔✔💯The |local |Honda |dealership |sells |three
|Japanese-made |cars.
The |multiplier's |effect |can |be |hindered |by
the |marginal |propensity |to |consume.
international |trade.
consumption |and |investment |spending.
government |debt. |- |✔✔💯international |trade.
Refer |to |the |figure |below. |A |decrease |in |price |level |causes |a |movement |from |point
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Problems exam with verified answer
| | | | |
Which |of |the |following |changes |results |from |a |decrease |in |an |economy's |disposable |income?
A |rightward |shift |of |the |consumption |function
An |upward |movement |along |the |consumption |function
A |leftward |shift |of |the |consumption |function
A |downward |movement |along |the |consumption |function |- |✔✔💯A |downward |movement |along |the
|consumption |function
Which |of |the |following |is |considered |a |leakage |in |the |circular |flow |model?
Business |spending
Total |exports
Investment |spending
Household |saving |- |✔✔💯Household |saving
Identify |the |correct |statement |among |the |following |statements.
Total |sales |equal |total |demand.
Total |demand |equals |total |production.
Total |sales |equal |total |income.
Total |production |equals |total |income. |- |✔✔💯Total |production |equals |total |income.
Refer |to |the |figure |below. |A |decrease |in |disposable |income |causes |a |movement |from |point
,P |to |S.
Q |to |T.
T |to |Q.
P |to |Q. |- |✔✔💯T |to |Q.
A |recessionary |gap |can |be |caused |by
high |price |levels.
low |interest |rates.
firms |who |spend |more |than |they |earn.
consumers |who |spend |more |than |they |earn |- |✔✔💯high |price |levels.
Disposable |income |minus |consumer |spending |equals
investment.
household |savings.
transfer |payments.
taxes. |- |✔✔💯household |savings.
Which |of |the |following |results |if |total |spending |in |an |economy |exceeds |its |total |output?
The |price |level |in |the |economy |increases.
The |inventory |levels |in |the |economy |increase.
The |price |level |in |the |economy |remains |constant.
The |inventory |levels |in |the |economy |remain |constant |- |✔✔💯The |price |level |in |the |economy
|increases.
, Refer |to |the |figure |below. |A |decrease |in |the |prices |of |stocks |listed |on |NASDAQ |causes |a |movement
|from |point
P |to |R.
Q |to |T.
T |to |S.
P |to |Q |- |✔✔💯P |to |R.
Which |of |the |following |transactions |would |not |be |included |when |measuring |U.S. |aggregate |demand?
A |new |McDonald's |is |built |in |your |neighborhood.
The |local |Honda |dealership |sells |three |Japanese-made |cars.
Your |neighbor |buys |a |new |boat.
The |government |sells |health |insurance |policies. |- |✔✔💯The |local |Honda |dealership |sells |three
|Japanese-made |cars.
The |multiplier's |effect |can |be |hindered |by
the |marginal |propensity |to |consume.
international |trade.
consumption |and |investment |spending.
government |debt. |- |✔✔💯international |trade.
Refer |to |the |figure |below. |A |decrease |in |price |level |causes |a |movement |from |point
