#1
1. In the context of economics, what is Aggregate Consumption?
The total spending on durable goods
The total spending on goods and services by households
The total spending on non-durable goods
The total investment in the stock market
#2
6. What is the relationship between the Marginal Propensity to Consume (MPC) and the Marginal Propensity to Save (MPS)?
MPC + MPS = 0
MPC - MPS = 1
MPC * MPS = 1
MPC / MPS = 0
#3
11. What is the main idea behind the Permanent Income Hypothesis?
Consumption is solely based on current income
Consumption is based on permanent income expectations
Consumption is unrelated to income
Consumption is inversely related to savings
#4
16. According to the Permanent Income Hypothesis, how do individuals adjust their consumption in response to temporary changes in income?
Immediate and full adjustment
No adjustment
Gradual adjustment over time
Adjustment only in extreme circumstances
#5
21. According to the Permanent Income Hypothesis, how does an unexpected increase in income impact consumption?
Immediate and full adjustment
No adjustment
Gradual adjustment over time
Adjustment only in extreme circumstances
#6
2. What is the formula for the Aggregate Savings in an economy?
Aggregate Savings = Income - Consumption
Aggregate Savings = Consumption - Income
Aggregate Savings = Investment - Consumption
Aggregate Savings = Consumption + Investment
#7
3. Which of the following factors is likely to increase Aggregate Consumption?
A decrease in disposable income
A decrease in consumer confidence
An increase in interest rates
An increase in government transfers to households
#8
7. How does an increase in consumer confidence impact Aggregate Consumption?
Increases Aggregate Consumption
Decreases Aggregate Consumption
No impact on Aggregate Consumption
Shifts Aggregate Savings to Aggregate Investment
#9
8. According to the Keynesian consumption function, what is the main determinant of consumption in the short run?
Disposable income
Wealth
Interest rates
Expectations about future income
#10
12. How does an increase in interest rates typically affect Aggregate Consumption?
Increases Aggregate Consumption
Decreases Aggregate Consumption
No impact on Aggregate Consumption
Shifts Aggregate Savings to Aggregate Investment
#11
13. What role does the wealth effect play in influencing consumption decisions?
As wealth increases, consumption decreases
As wealth increases, consumption increases
Wealth has no impact on consumption
Wealth has an inverse relationship with savings
#12
4. What does the Permanent Income Hypothesis suggest about consumption behavior?
Consumption is solely based on current income
Consumption is based on permanent income expectations
Consumption is unrelated to income
Consumption is inversely related to savings
#13
5. According to the Life Cycle Hypothesis, how does an individual's consumption behavior change over the life course?
Increases steadily over the entire life
Decreases steadily over the entire life
Varies with income fluctuations
Peaks during the middle-age years
#14
9. How does the Paradox of Thrift relate to Aggregate Savings and Consumption in an economy?
Increased savings lead to increased consumption
Increased savings lead to decreased consumption
Decreased savings lead to increased consumption
Decreased savings lead to decreased consumption
#15
10. What is the significance of the permanent income concept in explaining long-term consumption behavior?
Consumption is solely influenced by current income
Consumption is influenced by expected future income
Consumption is unrelated to income
Consumption is inversely related to savings
#16
14. According to the Life Cycle Hypothesis, how does an individual's consumption behavior change over the life course?
Increases steadily over the entire life
Decreases steadily over the entire life
Varies with income fluctuations
Peaks during the middle-age years
#17
15. What is the difference between autonomous consumption and induced consumption in the Keynesian consumption function?
Autonomous consumption is independent of income, while induced consumption depends on income
Induced consumption is independent of income, while autonomous consumption depends on income
Both autonomous and induced consumption are independent of income
Both autonomous and induced consumption depend on income