Deck 5: The Household Consumption Sector

Question 1

Today,people spend more than _____ of their incomes on services.

A)one-third
B)one-half
C)two-thirds
D)three-quarters

Answer 1

C

Question 2

Which of these relations is correct?

A)APC - APS = 1
B)MPC + MPS = 1
C)APC + MPC = 1
D)1 + MPC = MPS

Answer 2

B

Question 3

The consumption function is associated with

A)John Maynard Keynes.
B)Karl Marx.
C)Milton Friedman.
D)Adam Smith.
E)Thorstein Veblen.

Answer 3

A

Question 4

Compared to 1955,we spend ______ of every consumer dollar on services.

A)slightly less
B)substantially less
C)slightly more
D)substantially more

Question 5

At very low income levels,saving is

A)a high percentage of income.
B)a low percentage of income.
C)zero.
D)negative.

Question 6

At very low levels of disposable income,

A)consumption is greater than disposable income.
B)disposable income is greater than consumption.
C)people save most of their incomes.
D)consumption is negative.

Question 7

At very low levels of disposable income

A)saving is negative.
B)saving is very high.
C)consumption is negative.
D)consumption is a very small part of income.

Question 8

Each of these is a category of C except

A)durables.
B)nondurables.
C)residential construction.
D)services.

Question 9

Who holds this view: "....We are consuming more than we are producing,borrowing more than we are saving and spending more than we are earning."

A)Murray Weidenbaum
B)Thorstein Veblen
C)Benjamin Franklin
D)Adam Smith
E)Karl Marx

Question 10

Which of these relations is correct?

A)APC - APS = 1
B)MPC + APS = 1
C)MPC + MPS = 1
D)1 + MPC = MPS
E)None of these is correct

Question 11

Which statement is true?

A)At high levels of disposable income,induced consumption is zero.
B)At low levels of disposable income,induced consumption will be greater than autonomous consumption.
C)Autonomous consumption will generally equal induced consumption.
D)None of these statements is true.

Question 12

Americans spend over _______ of their income on consumption.

A)one-third
B)one-half
C)two-thirds
D)nine-tenths

Question 13

At the point where C line crosses the 45-degree line,saving is

A)positive.
B)negative.
C)zero.
D)there is not enough information to know this.

Question 14

In 2009,C was closest to,but under

A)$20 billion
B)$4 trillion
C)$6 trillion
D)$80 billion
E)over $10 trillion

Question 15

The APC in the United States is

A)-.1 to 0
B)0 to .4
C).4 to .8
D).94 to .99

Question 16

The APS in the United States is

A)below .01
B)between .01 and .07.
C)between .15 and .25.
D)between .7 and .75.

Question 17

Which statement is false?

A)Over the last two decades Americans have never saved over 11 percent of their disposable incomes.
B)A low savings rate leads to a low rate of productivity growth.
C)There has been a marked upward trend in our savings rate since the mid-1980s.
D)None of these statements are false.

Question 18

People tend to spend more money the ______ the amount of credit available and the ____ the stock of liquid assets in the hands of consumers.

A)higher,higher
B)lower,lower
C)higher,lower
D)lower,higher

Question 19

Autonomous consumption is always

A)positive.
B)zero.
C)negative.

Question 20

According to ______________,if you suddenly won the lottery,you would spend only a small part of your winnings right away.

A)the paradox of thrift
B)the permanent income hypothesis
C)Thorstein Veblen's Theory of the Leisure Class
D)the theory of the multiplier

Question 21

For a family with disposal income less than autonomous consumption

A)the APC is greater than 1
B)induced consumption is positive
C)the APS is very small but positive
D)in the long run credit cards are used to make up difference

Question 22

Which statement is true?

A)Autonomous C can never be zero.
B)Induced C can never be zero.
C)Neither autonomous C nor induced C can be zero.
D)None is true.

Question 23

Autonomous consumption is

A)0.
B)1000.
C)2000.
D)3000.
E)4000.

Question 24

When disposable income is 6,000 savings is

A)-2100.
B)0.
C)2100.
D)3900.
E)6000.

Question 25

As disposable income grows,

A)both autonomous C and induced C rise.
B)both autonomous C and induced C fall.
C)autonomous C rises and induced C falls.
D)autonomous C falls and induced C rises.
E)autonomous C stays the same and induced C rises.

Question 26

If disposable income were to fall from 6,000 to 5,000,

A)induced consumption would fall.
B)induced consumption would stay the same.
C)induced consumption would rise.
D)there is not enough information to determine whether induced consumption would rise,fall or remain the same.

Question 27

The consumption function

A)is a relationship between annual consumption and annual disposable income in an economy.
B)will shift upward if aggregate household wealth declines.
C)implies that annual consumption in an economy will be zero if disposable income is zero.
D)is a flat line with zero slope.

Question 28

Which has grown the fastest since 1955?

A)Durable goods consumption
B)Nondurable goods consumption
C)Consumption of services

Question 29

A major critic of our very high consumer spending has been

A)John Maynard Keynes.
B)Karl Marx.
C)Milton Friedman.
D)Murray Weidenbaum.

Question 30

If disposable income were to rise from 4,000 to 5,000

A)induced consumption would fall.
B)induced consumption would stay the same.
C)induced consumption would rise.
D)there is not enough information to determine whether induced consumption would rise,fall or remain the same.

Question 31

When disposable income is zero,the level of induced consumption is

A)negative.
B)zero.
C)positive.
D)indeterminate.

Question 32

When disposable income is 6000,C is

A)0.
B)2100.
C)3900.
D)4500.
E)6000.

Question 33

As a nation we have been

A)Consuming too much and saving too much.
B)Consuming too little and saving too little.
C)Consuming too much and saving too little.
D)Consuming too little and saving too much.

Question 34

When disposable income is 4000,APC is about

A).55.
B).66.
C).77.
D).88.
E).99.

Question 35

At relatively high levels of disposable income

A)both the APC and APS are high.
B)both the APC and APS are low.
C)the APC is high and the APS is low.
D)the APC is low and the APS is high.

Question 36

When there is dissaving

A)both the APC and APS are positive.
B)both the APC and APS are negative.
C)the APC is positive and the APS is negative.
D)the APC is negative and the APS is positive.

Question 37

Which statement is true?

A)The APC and APS may add to a little more than one,but never to less than one.
B)The APC and APS may add to a little less than one,but never to more than one.
C)The APC and APS may add to a little more than one or to a little less than one.
D)APC and APS added together must equal to 1.

Question 38

If the APS fell by 0.01 today,savings would decline by approximately

A)$14 billion.
B)$10 billion.
C)$143 billion.
D)$1 trillion.
E)$10 trillion.

Question 39

Saving is negative below a disposable income of

A)0.
B)2500.
C)3000.
D)3500.
E)4000.

Question 40

An increase in disposable income will

A)decrease autonomous consumption.
B)increase autonomous consumption.
C)decrease total consumption.
D)increase total consumption.

Question 41

When disposable income is 3750,saving is

A)-1000.
B)0.
C)1000.
D)2750.
E)3750.

Question 42

When disposable income is 6500,induced consumption is

A)0.
B)500.
C)750.
D)1000.
E)1500.

Question 43

When disposable income is 3750,the APS is about

A).6.
B).45.
C).35.
D).25.
E).1.

Question 44

When disposable income is 3500,C is

A)1500.
B)2500.
C)3500.
D)4500.
E)5500.

Question 45

Autonomous consumption is

A)0.
B)1000.
C)2000.
D)2500.
E)3000.

Question 46

$$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 200 \text { billion } \\\$ 200 \text { billion } & 300 \text { billion } \\400 \text { billion } & 400 \text { billion } \\600 \text { billion } & 500 \text { billion } \\800 \text { billion } & 600 \text { billion }\end{array}$$

-How much is autonomous consumption when disposable income is $800 billion?

A)0
B)$200 billion
C)$400 billion
D)$600 billion
E)Cannot be determined

Question 47

Saving is negative below a disposable income of

A)0.
B)1500.
C)2000.
D)2500.
E)3000.

Question 48

When disposable income is 2000,saving is

A)-2000.
B)-1250.
C)0.
D)1250.
E)2000.

Question 49

The MPC is

A).1.
B).2.
C).3.
D).4.
E).5.

Question 50

The MPS is

A).9.
B).8.
C).7.
D).6.
E).5.

Question 51

The MPS is about

A).9.
B).85.
C).8.
D).75.
E).7.

Question 52

When disposable income is 4000,APS is about

A).45.
B).34.
C).23.
D).12.
E).01.

Question 53

When disposable income is 3500,induced consumption is

A)-500.
B)0.
C)500.
D)750.
E)1000.

Question 54

The MPC is about

A).1.
B).15.
C).2.
D).25.
E).3.

Question 55

When disposable income is 2000,C is

A)2000.
B)2200.
C)2400.
D)2600.
E)2800.

Question 56

When disposable income is 2500,C is

A)0.
B)1000.
C)2000.
D)2500.
E)3000.

Question 57

When disposable income is 1250,saving is

A)-1000.
B)-500.
C)0.
D)500.
E)1000.

Question 58

When disposable income is 2500,induced consumption is

A)-500.
B)0.
C)500.
D)1000.
E)2500.

Question 59

When disposable income is 3750,induced consumption is

A)-500.
B)0.
C)500.
D)750.
E)1000.

Question 60

When disposable income is 3750,the APC is about

A).3.
B).45.
C).6.
D).75.
E).9.

Question 61

$$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 200 \text { billion } \\\$ 200 \text { billion } & 300 \text { billion } \\400 \text { billion } & 400 \text { billion } \\600 \text { billion } & 500 \text { billion } \\800 \text { billion } & 600 \text { billion }\end{array}$$

-How much is the marginal propensity to save when disposable income rises from $400 billion to $600 billion?

A).25
B).5
C).75
D)1.0
E)Cannot be determined

Question 62

$$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 200 \text { billion } \\\$ 200 \text { billion } & 300 \text { billion } \\400 \text { billion } & 400 \text { billion } \\600 \text { billion } & 500 \text { billion } \\800 \text { billion } & 600 \text { billion }\end{array}$$

-How much is the average propensity to consume when disposable income is $800 billion?

A)0
B).25
C).5
D).75
E)1.00

Question 63

$$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 200 \text { billion } \\\$ 200 \text { billion } & 300 \text { billion } \\400 \text { billion } & 400 \text { billion } \\600 \text { billion } & 500 \text { billion } \\800 \text { billion } & 600 \text { billion }\end{array}$$

-How much is the average propensity to save when disposable income is $400 billion?

A)0
B).25
C).50
D).75
E)1.0

Question 64

$$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 200 \text { billion } \\\$ 200 \text { billion } & 300 \text { billion } \\400 \text { billion } & 400 \text { billion } \\600 \text { billion } & 500 \text { billion } \\800 \text { billion } & 600 \text { billion }\end{array}$$

-How much is the marginal propensity to consume when disposable income rises from $600 billion to $800 billion?

A).5
B).65
C).75
D).85
E)Cannot be determined

Question 65

$$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 200 \text { billion } \\\$ 200 \text { billion } & 300 \text { billion } \\400 \text { billion } & 400 \text { billion } \\600 \text { billion } & 500 \text { billion } \\800 \text { billion } & 600 \text { billion }\end{array}$$

-How much is induced consumption when disposable income is $600 billion?

A)0
B)$200 billion
C)$300 billion
D)$400 billion
E)$600 billion

Question 66

If the APS is .1 and the MPC is .85,the APC is

A).1.
B).15.
C).85.
D).9.
E)Impossible to determine.

Question 67

Which statement is true?

A)If the APC is greater than one,the APS is negative.
B)If the APC is less than one,the APS is negative.
C)The APS can never be negative.
D)None is true.

Question 68

Autonomous consumption is NOT influenced by

A)Aggregate household wealth
B)Expectations of future income and wealth
C)Aggregate household debt
D)Disposable income
E)It is influenced by all of these

Question 69

$$\begin{array}{l}\text { Disposable Income Consumption }\\\begin{array} { c c } 0 & \$ 1 \text { trillion } \\\$ 1 \text { trillion } & 1.5 \text { trillion } \\2 \text { trillion } & 2.0 \text { trillion } \\3 \text { trillion } & 2.5 \text { trillion } \\4 \text { trillion } & 3.0 \text { trillion }\end{array}\end{array}$$

-How much is autonomous consumption when disposable income is $2 trillion?

A)0
B)$1 trillion
C)$1.5 trillion
D)$2 trillion

Question 70

$$\begin{array}{l}\text { Disposable Income Consumption }\\\begin{array} { c c } 0 & \$ 1 \text { trillion } \\\$ 1 \text { trillion } & 1.5 \text { trillion } \\2 \text { trillion } & 2.0 \text { trillion } \\3 \text { trillion } & 2.5 \text { trillion } \\4 \text { trillion } & 3.0 \text { trillion }\end{array}\end{array}$$

-How much is autonomous consumption when disposable income is $4 trillion?

A)0
B)$1 trillion
C)$2 trillion
D)$3 trillion

Question 71

$$\begin{array}{l}\text { Disposable Income Consumption }\\\begin{array} { c c } 0 & \$ 1 \text { trillion } \\\$ 1 \text { trillion } & 1.5 \text { trillion } \\2 \text { trillion } & 2.0 \text { trillion } \\3 \text { trillion } & 2.5 \text { trillion } \\4 \text { trillion } & 3.0 \text { trillion }\end{array}\end{array}$$

-How much is induced consumption when disposable income is $4 trillion?

A)0
B)$1 trillion
C)$2 trillion
D)$2.5 trillion

Question 72

If the MPC is .85 and the APC is .75,the MPS is

A).15.
B).25.
C).75.
D).85.
E)Impossible to determine.

Question 73

For levels of disposable income to the left of the point where consumption intersects the 45-degree line

A)Saving is negative.
B)Disposable income exceeds consumption.
C)Saving equals disposable income.
D)Consumption equals disposable income.
E)Saving equals consumption.

Question 74

$$\begin{array}{l}\text { Disposable Income Consumption }\\\begin{array} { c c } 0 & \$ 1 \text { trillion } \\\$ 1 \text { trillion } & 1.5 \text { trillion } \\2 \text { trillion } & 2.0 \text { trillion } \\3 \text { trillion } & 2.5 \text { trillion } \\4 \text { trillion } & 3.0 \text { trillion }\end{array}\end{array}$$

-How much is the marginal propensity to consume when disposable income rises from 0 to $1 trillion?

A)0
B).25
C).5
D).75
E)1.0

Question 75

$$\begin{array}{l}\text { Disposable Income Consumption }\\\begin{array} { c c } 0 & \$ 1 \text { trillion } \\\$ 1 \text { trillion } & 1.5 \text { trillion } \\2 \text { trillion } & 2.0 \text { trillion } \\3 \text { trillion } & 2.5 \text { trillion } \\4 \text { trillion } & 3.0 \text { trillion }\end{array}\end{array}$$

-How much is induced consumption when disposable income is $3 trillion?

A)0
B)$1 trillion
C)$1.5 trillion
D)$2.5 trillion

Question 76

$$\begin{array}{l}\text { Disposable Income Consumption }\\\begin{array} { c c } 0 & \$ 1 \text { trillion } \\\$ 1 \text { trillion } & 1.5 \text { trillion } \\2 \text { trillion } & 2.0 \text { trillion } \\3 \text { trillion } & 2.5 \text { trillion } \\4 \text { trillion } & 3.0 \text { trillion }\end{array}\end{array}$$

-How much is the average propensity to consume when disposable income is $2 trillion?

A).25
B).5
C).75
D)1.0
E)1.25

Question 77

Which statement is true?

A)Autonomous C stays the same for all levels of disposable income
B)Induced C stays the same for all levels of disposable income
C)Total consumption stays the same for all levels of disposable income
D)None is true

Question 78

$$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 200 \text { billion } \\\$ 200 \text { billion } & 300 \text { billion } \\400 \text { billion } & 400 \text { billion } \\600 \text { billion } & 500 \text { billion } \\800 \text { billion } & 600 \text { billion }\end{array}$$

-How much is induced consumption when disposable income is $400 billion?

A)0
B)$100 billion
C)$200 billion
D)$300 billion
E)Cannot be determined

Question 79

When there is dissaving,the APC is

A)greater than one.
B)equal to one.
C)less than one.

Question 80

$$\begin{array}{l}\text { Disposable Income Consumption }\\\begin{array} { c c } 0 & \$ 1 \text { trillion } \\\$ 1 \text { trillion } & 1.5 \text { trillion } \\2 \text { trillion } & 2.0 \text { trillion } \\3 \text { trillion } & 2.5 \text { trillion } \\4 \text { trillion } & 3.0 \text { trillion }\end{array}\end{array}$$

-How much is the marginal propensity to save when disposable income rises from $3 trillion to $4 trillion?

A)0
B).25
C).5
D).75
E)1.0