The consumption function is a line that intersects the vertical axis at:A.the level of autonomous consumption spending.B.y.C.by.D.0.4 points QUESTION 2Which of the following causes a decrease in aggregate demand?A.an increase in the money supplyB.a decrease in government spendingC.a rise in wagesD.an increase in prices4 points QUESTION 3The relationship between consumer spending and income is known as the ________.A.consumption functionB.rate of incomeC.inflation rateD.rate of individual wealth4 points QUESTION 4Contractionary policies are policies designed toA.increase the level of real GDP.B.reduce the level of real GDP.C.increase government spending.D.increase the federal deficit.4 points QUESTION 5What is the largest single component of federal revenue?A.taxes from state revenuesB.import taxesC.corporate taxesD.individual income tax4 points QUESTION 6In a rapidly growing economy, the government will collect more taxes because ________.A.national income has increasedB.it can tax more importsC.excise taxes can be imposedD.unemployment doesn’t increase4 points QUESTION 7Which of the following is an example of an automatic stabilizer?A.More unemployment benefits are paid during a recession.B.Welfare payments decrease during a recession.C.Congress authorizes spending increases during a recession.D.Congress increases the tax rate during an expansion.4 points QUESTION 8A mutual fund is a financial intermediary that:A.eliminates the risks of investing in the stock market through its high degree of diversification.B.invests in only a few categories of stocks.C.does not invest in stocks.D.invests in a broad range of stocks.4 points QUESTION 9An increase in the level of exports ________ the demand for goods and service produced in the U.S.A.increasesB.decreasesC.increases or decreasesD.does not affect4 points QUESTION 10Policies aimed to reduce the level of GDP are called:A.stabilization policies.B.policies with inside lags.C.contractionary policies.D.expansionary policies.
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