Chapter 16 Flashcards Quizlet PDF

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it is some of testbank question on ch 16 on macroeconomics ...

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1/17/2019

Chapter 16 Flashcards | Quizlet

Chapter 16

13 terms

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Terms in this set (13) E

6) Consumption is most likely to respond one-f changes in current income when A) the change in current income results from a bonus B) people believe the change in their current in temporary. C) people are able to borrow as much as they long as they pay it back. D) the change in current income is caused by t cycle. E) none of the above

C

7) Which of the following is evidence that cons depends on total wealth, and not just on curren A) people save very little for their retirement. B) the pre-announced phased-in tax cuts of 198 caused little change in consumption in 1981. C) a drop in consumer confidence, with unchan income, often causes total consumption spend D) all of the above E) none of the above

D

8) Which of the following is a reason that consumption

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depends on current income, and not just on total wealth? A) banks will not always lend money to those who want to consume more than their income. B) the anticipation of future financial distress makes some people reluctant to borrow. C) low income people may prefer to postpone some consumption until later years, when their incomes are higher. D) all of the above E) none of the above B

9) Which of the following people-none of whom has any financial or housing wealth-is most likely to be spending all of their current income? A) a low income person expecting continued low income throughout life B) a low income person expecting a dramatic rise in income in the future C) a high income person expecting continued high income throughout life D) a high income person expecting a dramatic drop in income in the future E) a high income person expecting to retire soon, and live for a long time afterward

B

17) A painting is currently worth $100,000, and is expected to maintain its real value for three years. The real interest rate is expected to remain constant at 10%. What is the present value of the painting's expected price at the end of the third year? A) $75,131 B) $88,899 C) $96,153 D) $100,000 E) $70,000

E

18) The data for the U.S. show that investment and profits A) have a strong negative relationship. B) are positively related during recessions, and negatively

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related during expansions C) move independently. D) are positively related during expansions, and negatively related during recessions. E) none of the above E

19) A change in which of the following variables would affect the cash flow for a firm? A) changes in the nominal interest rate B) expected future profit C) changes in the real interest rate D) changes in expected inflation E) none of the above

D

22) An increase in which of the following variables should cause an increase in profit per unit of capital? A) total wages and salaries B) total sales C) the capital stock D) the ratio of total sales to the capital stock E) the ratio of total sales to total wages and salaries

E

25) Suppose current sales increase by $100 million. Investment theory suggests that current investment must A) decrease exactly by $100 million. B) increase by exactly $100 million. C) increase by less than $100 million. D) decrease, but by less than $100 million. E) none of the above

A

26) Which of the following individuals is responsible for developing the permanent income theory of consumption? A) Friedman B) Modigliani C) Keynes D) Lucas

B

28) Suppose you are given a rare antique by a long-lost relative. The value of this rare antique would be included in

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which of the following types of wealth? A) financial wealth B) housing wealth C) human wealth D) none of the above A

42) Which of the following events would likely cause the largest reduction in current consumption? A) a permanent reduction in annual salary of $2000 B) a one-time tax increase of $4000 C) a one-time reduction in income (e.g. a bonus) of $4000 D) both B and C

A

54) Investment accounts for ________ of US GDP. A) 15% B) 20% C) 50% D) 70%

YO U M I G HT AL SO L I K E. . .

25 terms

47 terms

Lesson 2 Main Ideas

chapter 6-11

37 terms

42 terms

Macro Test Two

Macro Chapter 15

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