Upgrade to remove ads
Only $2.99/month

ECON201-Ch10

Terms in this set (19)

Saving equals
A) investment plus consumption
B) investment minus consumption
C) disposable income minus consumption
D) disposable income plus consumption
C) disposable income minus consumption
As disposable income decreases, ceteris paribus,
A) both consumption and saving increase
B) consumption increases and saving decreases
C) consumption decreases and saving increases
D) both consumption and saving decrease
D) both consumption and saving decrease
Households tend to spend a larger portion of
A) a small disposable income than a large disposable income
B) a large disposable income than a small disposable income
C) their disposable income on saving when the rate of return is high
D) their saving than their disposable income when the rate of return is low
A) a small disposable income than a large disposable income
If consumption spending increases from $358 to $367 billion when disposable income increases from $412 to $427 billion, it can be concluded that the marginal propensity to consume is
A) 0.4
B) 0.6
C) 0.8
D) 0.9
B) 0.6
If disposable income is $375 billion when the average propensity to consume is 0.8, it can be concluded that
A) the marginal propensity to consume is also 0.8
B) the marginal propensity to save is 0.2
C) consumption is $325 billion
D) saving is $75 billion
D) saving is $75 billion
As the disposable income of the economy increases,
A) both the APC and the APS rise
B) the APC rises and the APS falls
C) the APC falls and the APS rises
D) both the APC and the APS fall
C) the APC falls and the APS rises
If the slope of a linear saving schedule decreases, then it can be concluded that the
A) MPS has decreased
B) MPC has decreased
C) income has decreased
D) income has increased
A) MPS has decreased
An increase in wealth shifts the consumption schedule
A) downward and the saving schedule upward
B) upward and the saving schedule downward
C) downward and the saving schedule downward
D) upward and the saving schedule upward
B) upward and the saving schedule downward
Expectations of a recession are likely to lead households to
A) increase consumption and saving
B) decrease consumption and saving
C) decrease consumption and increase saving
D) increase consumption and decrease saving
C) decrease consumption and increase saving
Higher real interest rates are likely to
A) increase consumption and saving
B) decrease consumption and saving
C) decrease consumption and increase saving
D) increase consumption and decrease saving
C) decrease consumption and increase saving
An increase in taxes shifts the consumption schedule
A) downward and the saving schedule upward
B) upward and the saving schedule downward
C) downward and the saving schedule downward
D) upward and the saving schedule upward
C) downward and the saving schedule downward
Which relationship is an inverse one?
A) consumption and disposable income
B) investment spending and the rate of interest
C) saving and disposable income
D) investment spending and GDP
B) investment spending and the rate of interest
A decrease in investment demand would be a consequence of a decline in
A) the rate of interest
B) the level of wages paid
C) business taxes
D) expected future sales
D) expected future sales
Which would increase investment demand?
A) an increase in business taxes
B) an increase in planned inventories
C) a decrease in the rate of technological change
D) an increase in the cost of acquiring capital goods
B) an increase in planned inventories
Which best explains the variability of investment?
A) the predictable useful life of capital goods
B) constancy or regularities in business innovations
C) instabilities in the level of profits
D) business pessimism about the future
C) instabilities in the level of profits
If there was a change in investment spending of $10 and the marginal propensity to save was .25, then real GDP would increase by
A) $10
B) $20
C) $25
D) $40
D) $40
If the marginal propensity to consume is 0.6 and real GDP falls by $25, this is caused by a decrease in initial spending of
A) $10.00
B) $15.00
C) $16.67
D) $20.00
A) $10.00
If the marginal propensity to consume is 0.67 and initial spending increases by $25, real GDP will
A) increase by $75
B) decrease by $75
C) increase by $25
D) decrease by $25
C) increase by $25
If in an economy a $150 billion increase in investment spending creates $150 billion of new income in the first round of the multiplier process and $105 billion in the second round, the multiplier and the marginal propensity to consume will be, respectively,
A) 5.00 and 0.80
B) 4.00 and 0.75
C) 3.33 and 0.70
D) 2.50 and 0.40
C) 3.33 and 0.70
THIS SET IS OFTEN IN FOLDERS WITH...