Which one of the following factors would most likely cause an increase in consum

Question

Which one of the following factors would most likely cause an increase in consumption (i.e., an increase in the amount of current income used for consumption) by the U.S. household?
    A.  Their expectation that consumer prices would increase more rapidly in the future
    B.  An increase in income taxes
    C.  A decrease in stock prices
    D.  A redistribution of income from younger workers to retired workers.

If a recessionary gap exists
    A.  equilibrium GDP is equal to full employment (potential) GDP.
    B.  equilibrium GDP is greater than full employment (potential) GDP
    C.  aggregate expenditures are less than full employment (potential) aggregate supply.
    D.  aggregate expenditures are greater than full employment (potential) aggregate supply.
    E.  aggregate expenditures are equal to full employment (potential) aggregate supply

Which of the following is a basic principle of Classical (pre-Keynesian) economic theory?
    A.  Saving is always greater than investment.
    B.  The market economy will automatically eliminate inflation and excessive unemployment.
    C.  Unemployment may exist for a prolonged period in the market economy.
    D.  Inflation will occur when excessive demand exists in the economy.
    E.  Prices and wages are

Explanation / Answer

1) D

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