Consumption (part of AD)

What represents consumer expenditure in the AD equation?

• I
• G
• X-M
• C

What can lower interest rates lead to?

• Increased taxes
• Decreased AD
• Increased consumption
• Lower wages

What is a significant effect of consumer confidence on consumption?

• Decreases saving
• Decreases AD
• Increases consumption
• None

How does consumer wealth affect consumption?

• No effect
• Wealth effect
• Direct tax effect
• Indirect effect

What policy can directly increase disposable income and consumption?

• Fiscal policy
• Monetary policy
• Trade policy
• Environmental policy

What can cause a shift in the AD curve?

• Constant interest rates
• Decreased consumer confidence
• Increased consumption
• Unchanged taxes

What percentage of AD does consumer expenditure typically account for?

• 0.33
• 0.5
• 0.66
• 0.75

What can higher interest rates lead to?

• Increased consumption
• Decreased borrowing and spending
• Increased investment
• Higher exports

Which factor is likely to decrease consumption?

• Increased consumer confidence
• Lower interest rates
• Higher taxes
• Lower prices

How does a recession in a major trade partner affect domestic consumption?

• Increases consumption
• Decreases exports
• No effect
• Increases AD