The consumption forecast shows:
A. a direct relationship between aggregate consumption and accumulated wealth.
B. a direct relationship between aggregate consumption and aggregate income.
C. an inverse relationship between aggregate consumption and accumulated financial wealth.
D. an inverse relationship between aggregate consumption and the price level.
Answer: B. a direct relationship between aggregate consumption and aggregate income.
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Over time:
A. all three measures of money have increased, in general. B. hard money spiked up dramatically in 2008 in response to the financial crisis. C. M2 sped up its rate of increase starting around 1995. D. All of these are true.
What is the main factor that explains why government spending typically exceeds government purchases?
a. Imports exceed exports b. Transfer payments c. The federal debt d. Government budget deficits e. Construction of schools
What can we conclude about our future after reading Chapter 1?
a. We will use up more resources faster and scarcity will become increasingly more severe. b. We will eventually run out of "things we want" causing scarcity to moderate. c. We will eventually run out of "things we want" causing scarcity to disappear. d. Resources will remain scarce and our wants unlimited so that scarcity will remain a fact of life. e. Technology will fully substitute for scarce resources so that even though our wants are unlimited, we will eventually eliminate scarcity.
Which of the following would reduce the money supply?
A. Commercial banks use excess reserves to buy government bonds from the public. B. Commercial banks loan out excess reserves. C. Commercial banks sell government bonds to the public. D. A check clears from Bank A to Bank B.