Question 1
What is meant by apc?
A.
Average propensity to consume. B.
Rising asset prices increase spending. C.
Income after direct taxes and benefits. D.
Optimism affects willingness to spend.
Question 2
If MPC = 0.75, MPS equals:
A.
0.75 B.
1.75 C.
0 D.
0.25
Question 3
What is meant by life-cycle hypothesis?
A.
Rising asset prices increase spending. B.
Smooth consumption over lifetime; borrow young, save later. C.
Income after direct taxes and benefits. D.
Marginal propensity to consume — fraction of extra income spent.
Question 4
Disposable income is:
A.
Government spending B.
GDP only C.
Exports minus imports D.
Income after direct taxes
Question 5
What is meant by mpc?
A.
Marginal propensity to consume — fraction of extra income spent. B.
Average propensity to consume. C.
Spending based on expected long-run income. D.
Marginal propensity to save.
Question 6
What is meant by disposable income?
A.
Income after essential bills. B.
Total planned household spending on goods and services. C.
Income after direct taxes and benefits. D.
Marginal propensity to save.
Question 7
What is meant by wealth effect?
A.
Income after essential bills. B.
Rising asset prices increase spending. C.
Optimism affects willingness to spend. D.
Marginal propensity to consume — fraction of extra income spent.
Question 8
Higher consumer confidence tends to:
A.
Shift SRAS left B.
Shift AD right C.
Reduce LRAS D.
Eliminate trade deficit
Question 9
What is meant by mps?
A.
Marginal propensity to save. B.
Smooth consumption over lifetime; borrow young, save later. C.
Spending based on expected long-run income. D.
Optimism affects willingness to spend.
Question 10
A rise in house prices may increase consumption through:
A.
Lower AD B.
The multiplier only C.
Higher imports D.
The wealth effect
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