Question 1

During a recessionary period, which of the following economic behavior would be expected?

Accepted Answer

During a recession, people tend to tighten their spending and rely less on credit. They may also be more hesitant to take on additional debt.

Note: None of the other options are expected behaviors during a recession. Consumer spending typically decreases, taxes may be adjusted but are not generally increased nationally, property values typically decrease or remain stagnant, and discretionary spending on entertainment is likely to decrease as well.

Question 2

Income used to buy luxury items such as a Cunard cruise is referred to as

Accepted Answer

Discretionary income refers to the income available after necessary expenses such as food, housing, and taxes have been deducted. It is the income left over that can be spent on non-essential or luxury items, such as a Cunard cruise.

Question 3

The recent large decline in __________ has caused consumers to adjust their spending in other categories.

Accepted Answer

The large decline in gasoline prices has a significant impact on consumer behavior as it affects their disposable income. Lower gasoline prices mean that consumers have more money to spend on other categories or can save more, resulting in a shift in spending patterns.

Question 4

In 1970, the typical U.S. household earned about $8,700. In 2013, the typical U.S. household earned about $51,939. If adjusted for inflation, the gross income of the typical U.S. household in 2013 relative to 1970 has

Accepted Answer

When adjusted for inflation, the real income of the typical U.S. household in 2013 is relatively similar to that in 1970, indicating stability in purchasing power over the period.

Question 5

If taxes rise at a faster rate than incomes, consumers will

Accepted Answer

If taxes rise at a faster rate than incomes, consumers will have less disposable income, leading them to try to economize and spend less.

Question 6

A local pet supplies boutique had a good year with rising revenues and reduced operating costs resulting in personal income for the owner of nearly $100,000. One-third of that went to local, state, and federal income taxes and another third went to pay for a home mortgage, car payments, food, clothing, and other necessities. What is the remaining third called?

Accepted Answer

The answer of A local pet supplies boutique had a...

Question 7

The money that remains after paying for taxes and necessities is referred to as

Accepted Answer

Discretionary income refers to the money that remains after paying for taxes and necessities, and is available for discretionary spending or saving. It is the amount of money that a person or household has to spend on non-essential items such as entertainment, vacations, hobbies, and luxury items. Therefore, choice B is the best answer.

Net income refers to income after deductions such as taxes, Medicare, and social security. Disposable income refers to income after deducting taxes. Household income refers to the total income earned by all members of a household. Gross income is the total income earned before any deductions.

Question 8

During a recessionary period, which of the following economic behavior would be expected?

Accepted Answer

During a recession, consumers tend to be more cautious with their spending and less likely to make major purchases, leading to a decrease in consumer spending.

Answer: B 
 During a recession, credit may become more difficult to obtain from traditional sources, causing consumers to turn to alternate forms of credit such as credit cards or personal loans.

Answer: E 
 During a recession, consumers may prioritize essential expenses such as groceries over discretionary expenses like entertainment or luxury goods.

Question 9

Discretionary income refers to

Accepted Answer

Discretionary income is the money that remains after paying for taxes and necessities such as food, shelter, clothing, and transportation. It is the amount of money that a consumer can choose to spend on non-essential goods and services such as entertainment, leisure activities, and luxury items.

Question 10

Disposable income refers to

Accepted Answer

Disposable income refers to the money an individual has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation. It does not include the money deducted from a person's paycheck for taxes, nor does it include money spent on non-essential items or charitable causes.

Question 11

The money a consumer has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation is referred to as

Accepted Answer

Disposable income is the money a consumer has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation.

Question 12

The Department of Labor monitors consumer expenditures through its annual

Accepted Answer

The Department of Labor monitors consumer expenditures through its annual Consumer Expenditure Survey, which collects information on the spending habits of American households. The survey provides valuable data on consumer spending patterns, which can be used to inform economic policy decisions. The Consumer Price Index, Consumer Confidence Index, Index of Consumer Sentiment, and National Consumer Spending Assessment are all tools used to measure consumer behavior, but they are not specifically administered by the Department of Labor to monitor consumer expenditures.

Question 13

Approximately what percentage of U.S. households has an annual income between $25,000 and $99,999?

Accepted Answer

The answer of Approximately what percentage of U.S. households has...

Question 14

Jason and Lucy prepared a household budget in an attempt to manage their money better. They prepared the following list: Monthly income (after taxes) = $4,500; Monthly expenses (necessities), which include rent, $550; auto loan, $250; student loan, $200; savings, $500; food, $200 = $1,700; Amount left over = $2,800 (income less necessary expenses). The $2,800 they had left over is their

Accepted Answer

The $2,800 left over after necessary expenses is their discretionary income, which is the amount of money they have available to spend on non-essential items, such as entertainment, travel, or luxury purchases. Discretionary income is a key factor in determining a household's standard of living and can be used to prioritize financial goals or plan for future expenses.

Question 15

Emily had an excellent year as a salesperson in 2015, earning $97,000. She paid $37,000 for necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled $24,000. What was her discretionary income?

Accepted Answer

Discretionary income is calculated by subtracting necessities and taxes from total income: $97,000 - $37,000 - $24,000 = $36,000.

Question 16

The Department of Labor monitors consumer expenditures through its annual Consumer Expenditure Survey. In the most recent report, consumers spent after taxes about 13 percent of their income on food, 33 percent on __________, 3 percent on clothes, and 24 percent on transportation and health care, with the rest generally considered discretionary.

Accepted Answer

The missing expense category is likely to be housing. The percentages given add up to 73%, leaving 27% of the consumer's income unaccounted for. Since housing expenses (mortgage/rent, utilities, etc.) are typically one of the largest expenditures for consumers, it is reasonable to assume that it makes up the missing category. Therefore, the best choice is B) housing.

Question 17

Increases in discretionary income can occur as a result of all of the following except

Accepted Answer

An increase in interest rates has no direct impact on discretionary income. Discretionary income is the amount of money left over after paying for necessary expenses like rent, taxes, and food. An increase in gross income (A) or a decrease in taxes (B) can increase disposable income and thus discretionary income. An increase in disposable income (C) means there is more money available to spend on non-essential items. A decrease in housing costs (D) can lower necessary expenses, which would increase disposable income and thus discretionary income.

Question 18

Most specifically, if a consumer's __________ increases, he or she is able to take advantage of the luxurious vacation travel opportunities offered on the Queen Mary 2, a cruise liner operated by Cunard.

Accepted Answer

Discretionary income refers to the money a consumer has left over for non-essential purchases after paying for necessary expenses such as housing and food. Luxury vacation travel on the Queen Mary 2 would likely fall into the category of non-essential or discretionary spending, so an increase in discretionary income would make it easier for the consumer to afford such a trip.

Question 19

Emily had an excellent year as a salesperson in 2015, earning $97,000. She paid $37,000 for necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled $24,000. What was her disposable income?

Accepted Answer

Emily's disposable income can be calculated by subtracting her total necessities and taxes from her earnings.

Disposable Income = Earnings - Necessities - Taxes
Disposable Income = $97,000 - $37,000 - $24,000
Disposable Income = $36,000

Therefore, Emily's disposable income was $36,000 in 2015. The correct answer is B, $73,000 is her discretionary income.

Question 20

The changes in __________ has a psychological impact on consumers who tend to spend more when they feel their net worth is rising and postpone purchases when it declines.

Accepted Answer

Changes in home values affect consumers' perceived net worth, influencing their spending behavior.

Quiz 3: Scanning the Marketing Environment

During a recessionary period, which of the following economic behavior would be expected?

Income used to buy luxury items such as a Cunard cruise is referred to as

The recent large decline in __________ has caused consumers to adjust their spending in other categories.

In 1970, the typical U.S. household earned about $8,700. In 2013, the typical U.S. household earned about $51,939. If adjusted for inflation, the gross income of the typical U.S. household in 2013 relative to 1970 has

If taxes rise at a faster rate than incomes, consumers will

The money that remains after paying for taxes and necessities is referred to as

During a recessionary period, which of the following economic behavior would be expected?

Discretionary income refers to

Disposable income refers to

The money a consumer has left after paying taxes to use for necessities such as food, shelter, clothing, and transportation is referred to as

The Department of Labor monitors consumer expenditures through its annual

Approximately what percentage of U.S. households has an annual income between $25,000 and $99,999?

Emily had an excellent year as a salesperson in 2015, earning $97,000. She paid $37,000 for necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled $24,000. What was her discretionary income?

Increases in discretionary income can occur as a result of all of the following except

Most specifically, if a consumer's __________ increases, he or she is able to take advantage of the luxurious vacation travel opportunities offered on the Queen Mary 2, a cruise liner operated by Cunard.

Emily had an excellent year as a salesperson in 2015, earning $97,000. She paid $37,000 for necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled $24,000. What was her disposable income?

The changes in __________ has a psychological impact on consumers who tend to spend more when they feel their net worth is rising and postpone purchases when it declines.