SOLVED

 1) Consumption spending comprises what percentage of total spending? A) 0.7 percent. B) 7 percent. C) 70 percent. D) 700 percent. 2) A theory of saving is necessarily a theory of consumption, because ________. A) by definition, any unit of disposable income that is not a consumption expenditure is a unit of saving B) consumption decisions are made after saving has occurred C) private saving is equal to private investment D) the goal of consumption choices is to achieve the desired level of savings 3) Gross income net of taxes is known as ________. A) Gross Domestic Product, or GDP B) disposable income. C) Gross Domestic Product per capita. D) retained earnings. 4) The after-tax income received by the household sector is known as ________. A) disposable income. B) retained earnings. C) net national product per capita. D) Gross Domestic Product. 5) Disposable income represents ________. A) the income received by firms, e.g. corporations. B) an increase in GDP. C) a decrease in GDP. D) the after-tax income received by the household. 1) An intertemporal budget constraint ________. A) describes how much time an individual consumer has to spend their disposable net national product. B) is independent of the real interest rate and wealth of the household. C) divides consumption spending into three categories: spending on durables, non-durables and services. D) describes how much a person can consume today versus tomorrow. 2) An intertemporal budget constraint is downward sloping due to ________. A) the trade-off between current and future consumption. B) the law of diminishing marginal productivity. C) the law of supply. D) the law of demand. 3) The theory of intertemporal choice was presented by ________. A) Adam Smith in 1776 B) Alfred Marshall in 1871 C) Irving Fisher in 1930 D) John Maynard Keynes in 1936           4) Referring to the table above, if consumption in period one is zero, then consumption in period two cannot be greater than ________. A) $72,800 B) $70,400 C) $71,200 D) $70,800 5) Referring to the table above, if consumption in period one is $20,000, then consumption in period two cannot be greater than ________. A) $52,800 B) $50,400 C) $49,600 D) $50,000 1