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80) Volkswagen opened a large plant in Chattanooga, TN, in 2011. Within a few years,
Volkswagen spurred more than 12,400 direct and indirect jobs in the area. The carmaker
generates income of over $600 million in Chattanooga annually and boosts state and local tax
revenues by over $50 million a year. A huge expansion was announced in 2016 that would
nearly double its operations in Tennessee. This example best illustrates ________ change that
has impacted the people and businesses of Chattanooga.
A) a social
B) a regulatory
C) a competitive
D) an economic
E) a technological
81) All of the following are economic indicators except which?
A) inflation
B) barriers to entry
C) unemployment
D) GDP
E) deflation
82) In ________ economy, the cost to produce and buy products and services escalates as prices
increase.
A) an inflationary
B) an expansionary
C) a deflationary
D) a recessionary
E) a depressive
83) In ________ economy, if prices rise faster than consumer incomes, the number of items
consumers can buy decreases.
A) a deflationary
B) an expansionary
C) a recessionary
D) an inflationary
E) a depressive
84) In an inflationary economy, the cost to produce and buy products and services ________ as
prices ________.
A) increases; increase
B) increases; decrease
C) decreases; increase
D) decreases; decrease
E) does not change; increase
85) The College Board reports that since 2000, college tuition and fees have increased by 160
percent while the share of family income required to pay for tuition at public four-year colleges
has risen from 5 percent in 2000 to 17 percent today. This is an example of ________ condition.
A) a deflationary
B) a recessionary
C) a repressive
D) an inflationary
E) a depressive
86) A time of declining economic activity when businesses decrease production, unemployment
rises, and many consumers have less money to spend is referred to as
A) deflation.
B) inflation.
C) prosperity.
D) a recession.
E) a depression.
87) The most recent economic recession occurred when?
A) 1981–1982
B) 1990–1991
C) 1998–1999
D) 2007–2009
E) 2010–2013
88) Components of a consumer's income consist of
A) inflationary, recessionary, and depressive economies.
B) salaries, taxes, and assets.
C) gross, disposable, and discretionary components.
D) sales taxes, income taxes, and property taxes.
E) assets, liabilities, and equities.
89) The total amount of money made in one year by a person, household, or family unit is
referred to as ________ income.
A) government
B) discretionary
C) disposable
D) gross
E) summative
90) Gross income refers to
A) the money that remains after paying for taxes and necessities.
B) the money deducted from a person's paycheck to pay for federal, state, and local taxes.
C) the money a consumer has left after paying taxes to use for necessities such as food, shelter,
clothing, and transportation.
D) the total amount of money made by a single individual during his or her lifetime.
E) the total amount of money made in one year by a person, household, or family unit.
91) At the U.S. Census Bureau, gross income is referred to as
A) buying power.
B) cash inflow.
C) fiscal power.
D) money income.
E) household income.
92) In 1970, the typical U.S. household earned about $8,700. In 2016, the typical U.S. household
earned about $59,039. If adjusted for inflation, the gross income of the typical U.S. household in
2016 relative to 1970 has
A) increased dramatically.
B) fluctuated intensely.
C) remained relatively stable.
D) decreased somewhat.
E) decreased dramatically.
93) Approximately what percentage of U.S. households has an annual income between $25,000
and $99,999?
A) 13
B) 28
C) 37
D) 42
E) 51
94) The money a consumer has left after paying taxes to use for necessities such as food, shelter,
clothing, and transportation is referred to as
A) net income.
B) disposable income.
C) discretionary income.
D) household income.
E) gross income.
95) Disposable income refers to
A) the money that remains before paying for taxes and necessities.
B) the money deducted from a person's paycheck to pay for federal, state, and local taxes.
C) the total amount of money made by a single individual during his or her lifetime.
D) the money a consumer has left after paying taxes to use for necessities such as food, shelter,
clothing, and transportation.
E) the money that is spent for necessities or charitable causes that is exempt from taxation.
96) If taxes rise at a faster rate than incomes, consumers will
A) have less disposable income and try to economize.
B) feel more confident in the government and therefore spend more money.
C) use cash for purchases such as a vacation.
D) recognize that it is the perfect opportunity to buy a car or other expensive products on credit.
E) react by voting for all incumbent members of Congress.
97) A decline in ________ affects discretionary income and often leads consumers to adjust their
spending upwards in other categories.
A) entertainment prices
B) gasoline prices
C) interest rates
D) consumer confidence
E) property values
98) Changes in ________ have a psychological impact on consumers who tend to spend more
when they feel their net worth is rising and postpone purchases when it declines.
A) automobile prices
B) fuel prices
C) the number of people competing for jobs
D) consumer confidence
E) home values
99) During a recessionary period, which of the following economic behavior would be expected?
A) Consumer spending would increase.
B) The use of credit would decline.
C) Taxes would increase nationally.
D) Property values would jump dramatically.
E) Consumers would use the majority of their discretionary income on entertainment.
100) During a recessionary period, which of the following economic behavior would be
expected?
A) Consumer would switch from premium brands to lower-priced ones.
B) Consumer use of credit would increase.
C) Taxes would increase nationally.
D) Property values would jump dramatically.
E) Consumers would use the majority of their discretionary income on groceries.
101) Leah had an excellent year as a salesperson in 2015, earning $98,000. She paid $38,000 for
necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled
$24,000. What was her disposable income?
A) $36,000
B) $74,000
C) $60,000
D) There is not enough data provided to calculate her discretionary income.
102) The portion of one's income that remains after paying for taxes and necessities is referred to
as
A) net income.
B) discretionary income.
C) disposable income.
D) household income.
E) gross income.
103) Discretionary income refers to
A) the money deducted from a person's paycheck to pay for federal, state, and local taxes.
B) the total amount of money made by a single individual during his or her lifetime.
C) the money a consumer has left after paying taxes to use for necessities such as food, shelter,
clothing, and transportation.
D) the money that is spent for necessities or charitable causes that is exempt from taxation.
E) the money that remains after paying for taxes and necessities.
104) Income used to buy luxury items, such as a voyage aboard Cunard's Queen Mary 2, is
referred to as
A) gross income.
B) disposable income.
C) surplus income.
D) wealth income.
E) discretionary income.
105) The Department of Labor monitors consumer expenditures through its annual
A) Consumer Price Index.
B) Consumer Confidence Index.
C) Consumer Expenditure Survey.
D) Index of Consumer Sentiment.
E) National Consumer Spending Assessment.
106) The Department of Labor monitors consumer expenditures through its annual Consumer
Expenditure Survey. In the most recent report, consumers spent the largest proportion of their
income on which of these?
A) education
B) housing
C) vacations
D) entertainment
E) investments
107) Spending on which of the following would be considered discretionary?
A) health care
B) housing
C) furniture
D) clothing
E) transportation
108) Increases in discretionary income can occur as a result of all of the following except which?
A) an increase in gross income.
B) a decrease in taxes.
C) an increase in disposable income.
D) a decrease in housing costs.
E) an increase in interest rates.
109) After paying high taxes and covering the costs of high expenses for necessities, if a
consumer's ________ is still high, she may be able to take advantage of the luxurious vacation
travel opportunities like staying at the Ritz Carlton in New York City's Central Park.
A) savings rate
B) gross income
C) taxes
D) discretionary income
E) disposable income
110) Miela had an excellent year as a junior auditor in 2018, earning $97,000. She paid $37,000
for necessities such as mortgage, food, and clothing. Her state and federal income taxes totaled
$24,000. What was her discretionary income?
A) $36,000
B) $60,000
C) $73,000
D) $97,000
E) Not enough information is provided to calculate her discretionary income.
111) A local pet supplies boutique had a good year with rising revenues and reduced operating
costs resulting in personal income for the owner of nearly $150,000. One-third of that went to
local, state, and federal income taxes and another third went to pay for a home mortgage, car
payments, food, clothing, and other necessities. What is the remaining third called?
A) gross income
B) bonus income
C) discretionary income
D) disposable income
E) profit
112) Leigh and Rob prepared a household budget in an attempt to manage their money better.
They prepared the following list: Monthly income (after taxes) = $4,500; Monthly expenses
(necessities), which include rent, $550; auto loan, $250; student loan, $200; savings, $500; food,
$200 = $1,700; Amount left over = $2,800 (income less necessary expenses). The remaining
$2,800 is their
A) gross income.
B) personal income.
C) disposable income.
D) discretionary income.
E) profit.
113) Recently, the number of people who attended music concerts, plays, and other live
entertainment increased because they had the ________ to enjoy these activities.
A) gross income
B) bonus income
C) profit
D) disposable income
E) discretionary income
114) This year the Shafer family has dined at nice restaurants almost four times a week. Between
raises received by Mr. and Mrs. Shafer, their family income rose 11 percent, while the cost of
living rose by 4 percent and property taxes went up 5 percent in their community. As a result, the
family eats outside the home more often now, compared to dining out only a few times a month a
few years ago. This reflects
A) an increase in the number of fine restaurants during times of economic upswing.
B) a reaction to an increase of discretionary income.
C) a significant drop in disposable income since there was a negative gain in income.
D) a rise in deflation.
E) a shift from investing to spending.
115) Recent data on consumer expenditures indicate that the savings rate of U.S. consumers has
A) declined to 13 percent.
B) remained flat at 0.5 percent.
C) fluctuated minimally around 2 percent.
D) risen to 5.5 percent.
E) exploded to nearly 10 percent.
116) Inventions or innovations from applied science or engineering research are referred to as
A) scientific discoveries.
B) theoretical development.
C) technology.
D) patents.
E) dynamic engineering.
117) Technology is defined as
A) any device or process based on scientific discoveries that are less than one year old.
B) any mechanical device used in the production or distribution of a product.
C) scientific findings that are used now or are able to generate a profit.
D) ideas or concepts that will one day be translated into usable devices, mechanisms, or
processes.
E) the inventions or innovations from applied science or engineering research.
118) Technological advances can replace or substitute for existing products in a relatively short
period. IBM's Watson is a likely replacement or substitute for
A) TV broadcasts.
B) digital video recorders.
C) a customer service representative.
D) printed publications.
E) plastic credit cards.
119) Technological advances can sometimes replace or substitute for existing products in a
relatively short period. Apple Pay for iPads and iPhones is most likely to replace or substitute for
A) financial market trades.
B) digital video recorders.
C) credit cards and cash.
D) printed catalogs.
E) online banking.
