As disposable income increases, _____.
a. consumption and saving both increase
b. consumption increases and saving decreases
c. consumption and saving both decrease
d. consumption decreases but saving increases
e. saving increases, but we cannot predict what happens to consumption
QUESTION 2The M1 money supply consists primarily of:
a. savings deposits.
b. certificates of deposit.
c. miscellaneous near-monies.
d. checkable deposits.
e. money market mutual fund accounts.
QUESTION 3IBM and Sara Lee are two of the biggest firms in the United States, but they produce different products. Could they legally merge, or would their merger be struck down by the courts?
QUESTION 4The difference between consumption spending and disposable income _____.
a. decreases as income increases
b. stays proportionally the same as income increases
c. decreases if the interest rate increases
d. equals the amount of taxes paid
e. equals saving
QUESTION 5Which of the following is included in the narrow definition of the money supply?
a. Cash in bank vaults
b. Savings deposits
c. Money market mutual fund accounts
d. Negotiable certificates of deposit
e. Checkable deposits
QUESTION 6The Department of Justice has challenged the merger of two firms, and the case has ended up in the Supreme Court. The two firms argue that they will not use their monopoly power to raise prices or to cut output. Under what judicial standard would their merger be allowed, and under what judicial standard would their merger be disallowed?
QUESTION 7Which of the following is true of disposable income?
a. It excludes transfer payments.
b. It is the portion of income that is used solely for consumption.
c. It is that part of total earned income that is paid to the government in the form of taxes.
d. It is the difference between income and saving.
e. It equals consumption expenditures plus saving.
QUESTION 8The M1 money supply consists of:
a. only coins and currency held by the nonbank public.
b. certificates of deposit only.
c. coins and currency held by the nonbank public, checkable deposits, and traveler's checks.
d. money market mutual fund accounts, savings accounts, and other miscellaneous near-monies.
e. only paper currency.
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