Chapter 3

The Goods Market

64 questions · 19 topics · 3 free · not started

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1 · Recall · Easy · Composition of GDP

In the United States, which component constitutes the largest share of gross domestic product (GDP)?

Tap an answer. The explanation will appear here, including why each wrong option is wrong.

Not quite. A is correct.

Personal consumption expenditures (C) is by far the largest component of aggregate demand, making up approximately 68% of U.S. GDP.

A: why it's wrongConsumption typically accounts for roughly two-thirds (65–70%) of U.S. GDP, making it the single largest component.

B: why it's wrongInvestment typically accounts for approximately 15–18% of U.S. GDP, far less than consumption.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Personal consumption expenditures (C) is by far the largest component of aggregate demand, making up approximately 68% of U.S. GDP.

A: why it's wrongConsumption typically accounts for roughly two-thirds (65–70%) of U.S. GDP, making it the single largest component.

C: why it's wrongGovernment spending accounts for around 17–20% of U.S. GDP, which is smaller than consumption.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Personal consumption expenditures (C) is by far the largest component of aggregate demand, making up approximately 68% of U.S. GDP.

A: why it's wrongConsumption typically accounts for roughly two-thirds (65–70%) of U.S. GDP, making it the single largest component.

D: why it's wrongExports represent roughly 10–12% of U.S. GDP and are exceeded by imports, resulting in negative net exports.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Personal consumption expenditures (C) is by far the largest component of aggregate demand, making up approximately 68% of U.S. GDP.

B: why it's wrongInvestment typically accounts for approximately 15–18% of U.S. GDP, far less than consumption.

C: why it's wrongGovernment spending accounts for around 17–20% of U.S. GDP, which is smaller than consumption.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Personal consumption expenditures (C) is by far the largest component of aggregate demand, making up approximately 68% of U.S. GDP.

B: why it's wrongInvestment typically accounts for approximately 15–18% of U.S. GDP, far less than consumption.

D: why it's wrongExports represent roughly 10–12% of U.S. GDP and are exceeded by imports, resulting in negative net exports.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Personal consumption expenditures (C) is by far the largest component of aggregate demand, making up approximately 68% of U.S. GDP.

C: why it's wrongGovernment spending accounts for around 17–20% of U.S. GDP, which is smaller than consumption.

D: why it's wrongExports represent roughly 10–12% of U.S. GDP and are exceeded by imports, resulting in negative net exports.

Tap any option to see why it's right or wrong.

2 · Recall · Medium · Goods Market and GDP

In the standard short-run goods market model with autonomous fiscal policy, which of the following is treated as an exogenous variable?

Tap an answer. The explanation will appear here, including why each wrong option is wrong.

Not quite. A is correct.

Government spending G is an exogenous variable taken as given because it is decided by fiscal policymakers rather than determined within the model.

A: why it's wrongGovernment spending is determined outside the model by political and policy decisions, making it exogenous.

B: why it's wrongConsumption depends on disposable income, which depends on total output, making consumption endogenous.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Government spending G is an exogenous variable taken as given because it is decided by fiscal policymakers rather than determined within the model.

A: why it's wrongGovernment spending is determined outside the model by political and policy decisions, making it exogenous.

C: why it's wrongSaving depends on disposable income and consumption, which are endogenous to the model.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Government spending G is an exogenous variable taken as given because it is decided by fiscal policymakers rather than determined within the model.

A: why it's wrongGovernment spending is determined outside the model by political and policy decisions, making it exogenous.

D: why it's wrongDisposable income equals total income minus taxes (Y - T), and total income is determined within the model.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Government spending G is an exogenous variable taken as given because it is decided by fiscal policymakers rather than determined within the model.

B: why it's wrongConsumption depends on disposable income, which depends on total output, making consumption endogenous.

C: why it's wrongSaving depends on disposable income and consumption, which are endogenous to the model.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Government spending G is an exogenous variable taken as given because it is decided by fiscal policymakers rather than determined within the model.

B: why it's wrongConsumption depends on disposable income, which depends on total output, making consumption endogenous.

D: why it's wrongDisposable income equals total income minus taxes (Y - T), and total income is determined within the model.

Tap any option to see why it's right or wrong.

Not quite. A is correct.

Government spending G is an exogenous variable taken as given because it is decided by fiscal policymakers rather than determined within the model.

C: why it's wrongSaving depends on disposable income and consumption, which are endogenous to the model.

D: why it's wrongDisposable income equals total income minus taxes (Y - T), and total income is determined within the model.

Tap any option to see why it's right or wrong.

3 · Recall · Easy · Consumption and Disposable Income

Disposable income can be defined as

Tap an answer. The explanation will appear here, including why each wrong option is wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

A: why it's wrongThis confuses total income with disposable income; subtracting saving from total income does not account for taxes.

B: why it's wrongSubtracting both saving and taxes from income leaves consumption, not disposable income.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

A: why it's wrongThis confuses total income with disposable income; subtracting saving from total income does not account for taxes.

C: why it's wrongTaxes are subtracted from total income to find disposable income, not subtracted from consumption.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

A: why it's wrongThis confuses total income with disposable income; subtracting saving from total income does not account for taxes.

D: why it's wrongBy identity, disposable income is divided entirely between consumption and saving: Y_{D} = C + S.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

A: why it's wrongThis confuses total income with disposable income; subtracting saving from total income does not account for taxes.

undefined: why it's wrongThis conflates aggregate demand components with the household budget constraint.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

B: why it's wrongSubtracting both saving and taxes from income leaves consumption, not disposable income.

C: why it's wrongTaxes are subtracted from total income to find disposable income, not subtracted from consumption.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

B: why it's wrongSubtracting both saving and taxes from income leaves consumption, not disposable income.

D: why it's wrongBy identity, disposable income is divided entirely between consumption and saving: Y_{D} = C + S.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

B: why it's wrongSubtracting both saving and taxes from income leaves consumption, not disposable income.

undefined: why it's wrongThis conflates aggregate demand components with the household budget constraint.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

C: why it's wrongTaxes are subtracted from total income to find disposable income, not subtracted from consumption.

D: why it's wrongBy identity, disposable income is divided entirely between consumption and saving: Y_{D} = C + S.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

C: why it's wrongTaxes are subtracted from total income to find disposable income, not subtracted from consumption.

undefined: why it's wrongThis conflates aggregate demand components with the household budget constraint.

Tap any option to see why it's right or wrong.

Not quite. D is correct.

By definition, households allocate their disposable income either to current consumption or to saving, so Y_{D} = C + S.

D: why it's wrongBy identity, disposable income is divided entirely between consumption and saving: Y_{D} = C + S.

undefined: why it's wrongThis conflates aggregate demand components with the household budget constraint.

Tap any option to see why it's right or wrong.

61 more questions in this chapter

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What is covered

Goods Market Equilibrium30
The Multiplier7
Composition of GDP4
Consumption and Saving3
Goods Market and GDP3
Paradox of Saving3
Consumption Function2
Components of Demand1
Components of GDP1
Consumption and Disposable Income1
Consumption Behavior1
Fiscal Policy and Equilibrium1
Fiscal Policy Limitations1
Fiscal Policy Multipliers1
IS Relation1
Macroeconomic Variables and Models1
Saving and Investment1
The Multiplier and Goods Market1
The Paradox of Saving1

Question mix

Recall 29 Application 15 Analysis 20