Quiz on Income & Spending

Quiz on Income & Spending

12th Grade

38 Qs

quiz-placeholder

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Quiz on Income & Spending

Quiz on Income & Spending

Assessment

Quiz

Other

12th Grade

Medium

Created by

Talia Kambe

Used 1+ times

FREE Resource

38 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does Aggregate Demand (AD) represent?

Total government spending

Total amount consumers wish to spend on goods and services

Total income earned by individuals

Total exports minus imports

Answer explanation

Aggregate Demand (AD) represents the total amount consumers wish to spend on goods and services in an economy. It reflects overall demand and is a key component in understanding economic activity.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT a component of Aggregate Demand?

Net Savings (NS)

Government Spending (G)

Investment Spending (I)

Consumer Expenditure (C)

Answer explanation

Net Savings (NS) is not a component of Aggregate Demand. The components include Government Spending (G), Investment Spending (I), and Consumer Expenditure (C), which together represent total demand in the economy.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does the Marginal Propensity to Consume (MPC) indicate?

The level of government spending

The total income of the economy

The fraction of additional income spent on consumption

The total savings of consumers

Answer explanation

The Marginal Propensity to Consume (MPC) measures the fraction of additional income that households spend on consumption. Thus, the correct choice is 'The fraction of additional income spent on consumption'.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the formula for calculating Disposable Income (DI)?

DI = National Income - Taxes

DI = National Income + Transfers

DI = National Income - (Taxes + Transfers)

DI = National Income + Taxes

Answer explanation

Disposable Income (DI) is calculated by subtracting both taxes and transfers from national income. Thus, the correct formula is DI = National Income - (Taxes + Transfers). This reflects the income available for spending or saving.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which method is NOT used to measure GDP?

Consumption Method

Expenditure Method

Income Method

Output Method

Answer explanation

The Consumption Method is not a recognized approach for measuring GDP. The correct methods are the Expenditure Method, Income Method, and Output Method, which focus on different aspects of economic activity.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does the term 'Injections' refer to in the Circular Flow of Income?

Imports and exports

Savings and taxes

Government transfer payments

Expenditures on domestic goods from outside the household sector

Answer explanation

In the Circular Flow of Income, 'Injections' refer to expenditures on domestic goods from outside the household sector, such as investments, government spending, and exports, which stimulate economic activity.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the relationship between Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS)?

MPC + MPS = 2

MPC + MPS = 1

MPC * MPS = 1

MPC - MPS = 1

Answer explanation

The Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS) represent the portions of additional income that are consumed and saved, respectively. Since all income must be either consumed or saved, MPC + MPS = 1.

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