#1
Which of the following is an example of consumption expenditure?
Buying stocks
Paying off a mortgage
Saving money in a bank account
Purchasing a new car
#2
What is the formula for the marginal propensity to consume (MPC)?
Change in consumption / Change in income
Total consumption / Total income
Change in income / Change in consumption
Total income / Total consumption
#3
According to the life-cycle hypothesis of consumption, how do individuals plan their consumption over the course of their lifetime?
Consuming more in their early years and less in their later years.
Maintaining a consistent level of consumption throughout their life.
Consuming less in their early years and more in their later years.
Relying solely on government assistance for consumption needs.
#4
What is the formula for the average propensity to consume (APC) in economics?
Consumption / Income
Income / Consumption
Change in consumption / Change in income
Change in income / Change in consumption
#5
What is the concept of 'disposable income' in the context of consumption and saving?
Income that can be easily disposed of or wasted.
Income after taxes and other mandatory deductions, available for spending or saving.
Income that is reserved for specific purposes, such as bills and rent.
Income before any deductions, including taxes.
#6
In the context of economics, what does GDP stand for?
Gross Domestic Product
General Development Plan
Global Demand and Production
Government Debt Percentage
#7
According to the permanent income hypothesis, how do individuals determine their consumption levels?
Based on their current income
Based on their permanent income
Randomly
Based on government regulations
#8
In the context of the Keynesian consumption function, what does 'autonomous consumption' refer to?
Consumption that depends on income
Consumption that is independent of income
Government-driven consumption
Consumption by businesses
#9
What is the paradox of thrift in economics?
The idea that saving more can lead to a decrease in aggregate demand and overall economic output.
The belief that thriftiness always leads to economic prosperity.
The concept that high levels of consumption lead to economic recession.
The notion that saving and investment are always in perfect equilibrium.
#10
What is the formula for the marginal propensity to save (MPS)?
Change in saving / Change in income
Total saving / Total income
Change in income / Change in saving
Total income / Total saving
#11
In the context of the permanent income hypothesis, how do individuals determine their consumption levels?
Based on their current income
Based on their expected future income
Randomly
Based on government regulations
#12
Which of the following is an example of a regressive tax?
Income tax
Sales tax
Property tax
Corporate tax
#13
What is the key difference between saving and investment in economics?
Saving involves spending money, while investment involves saving money.
Saving is the act of putting money aside, while investment is using money to generate income or profit.
Saving and investment are interchangeable terms in economics.
Saving and investment both refer to spending money on goods and services.
#14
What is the concept of time preference in the context of saving and consumption?
The idea that people prefer to save for long-term goals rather than short-term needs.
The preference for immediate consumption over delayed consumption.
The tendency to delay savings for future needs.
The belief that time has no influence on consumption decisions.
#15
In macroeconomics, what does the term 'liquidity trap' refer to?
A situation where interest rates are high, leading to reduced consumption and investment.
A scenario where monetary policy becomes ineffective because interest rates are very low, and people hoard money instead of spending.
A condition where inflation is rampant, leading to decreased purchasing power.
A state where government spending is excessive, causing economic instability.
#16
What is the Ricardian Equivalence proposition in economics?
The idea that government debt has no effect on aggregate demand because individuals adjust their saving to offset changes in government spending.
The belief that government debt always leads to economic growth.
The concept that government spending is always more effective than tax cuts in stimulating the economy.
The notion that government debt should always be reduced to zero.
#17
In economic terms, what is the role of expectations in influencing consumption and saving behavior?
Expectations have no impact on consumption and saving decisions.
Expectations can influence how individuals allocate their income between consumption and saving.
Expectations only affect investment decisions, not consumption and saving.
Expectations primarily influence government spending, not individual behavior.