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