Habit formation in consumption implies that
A. the amount of current consumption spending is not related to the amount of past real consumption spending.
B. the amount of current consumption spending is negatively related to the amount of past real consumption spending.
C. consumption spending changes in a random manner over time.
D. the amount of current consumption spending is directly related to the amount of past real consumption spending.
Answer: D
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How do we allocate statistical discrepancy among the current, capital, and financial accounts?
A) We have no way of knowing exactly how to allocate this discrepancy. B) Depend on the degree of certainty by which we attribute to these accounts. C) Divide it evenly amongst the three accounts. D) Depend on the convention adopted by the specific financial institution. E) Statistical discrepancy signals human errors made when dealing with financial accounts.
The following would cause an upward shift in the C + I + G + X curve EXCEPT
A) an increase in disposable income. B) an increase in export spending. C) a decrease in import spending D) an increase in household wealth.