Question

The components of spending are C, I, G and NX. G stands for government purchases which do NOT include transfer payments. Which of the following is NOT a transfer payment.

		government pays the salary of military troops
		social security payments to retirees
		unemployment benefits to workers who have lost their jobs
		payments to low income individuals to support food purchases (colloquially known as food stamps)

Which of the following would increase consumption spending AND shift the aggregate demand curve to the right

		increase in housing prices
		decrease in stock market values
		increase in income
		increase in taxes

Which of the following would increase investment spending and shift the aggregate demand curve to the right

		a decrease in the productivity of capital
		increase in housing prices
		monetary policy action that lowered interest rates
		increase in stock market values

Our largest trading partners are Canada and Mexico. Suppose that the U.S. goes into recession, how would that affect aggregate demand in Mexico and Canada?

		decrease because Mexican and Canadian would import less of U.S. goods
		increase because  U.S. imports of Mexican and Canadian goods would decline
		decrease because U.S. imports of Mexican and Canadian goods would decline
		stay the same because U.S. imports and U.S. exports would change by the same amount

Answer 1