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Exam 10: Basic Macroeconomic Relationships

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Question 41

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$\begin{array} { | c | c | } \hline \text { Disposable Income } & \text { Consumption } \\\hline \$ 300 & \$ 310 \\\hline 350 & 340 \\\hline 400 & 370 \\\hline 450 & 400 \\\hline 500 & 430 \\\hline\end{array}$ The table shows a consumption schedule. If disposable income is $550, we would expect consumption to be

A) $430.
B) $450.
C) $460.
D) $470.

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Question 42

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Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. At an income level of $40 billion, the Average propensity to consume

A) is highest in economy (1) .
B) is highest in economy (2) .
C) is highest in economy (3) .
D) cannot be determined from the data given.

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Question 43

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Refer to the given diagram. At income level F, the volume of saving is

As disposable income increases, consumption

(Advanced analysis) Assume the following consumption schedule: C = 20 + 0.9Y, where C is consumption and Y is disposable income. At an $800 level of disposable income, the level of saving is

At the point where the consumption schedule intersects the 45-degree line,

Which of the following statements about consuming in excess of one's disposable income is not true?

Refer to the given figure. If the relevant saving schedule were constructed,

The multiplier is

The MPC can be defined as the

$\begin{array} { | c | c | } \hline \text { Disposable Income } & \text { Saving } \\\hline \$ 0 & - \$ 10 \\\hline 50 & 0 \\\hline 100 & 10 \\\hline 150 & 20 \\\hline 200 & 30 \\\hline\end{array}$ Refer to the given data for a hypothetical economy. If plotted on a graph, the slope of the saving schedule would be

$\begin{array} { | c | c | } \hline \text { Disposable Income } & \text { Consumption } \\\hline \$ 200 & \$ 205 \\\hline 225 & 225 \\\hline 250 & 245 \\\hline 275 & 265 \\\hline 300 & 285 \\\hline\end{array}$ Refer to the given data. The marginal propensity to consume is

$\begin{array} { | l | c | c | c | } \hline & \text { Change in Income } & \begin{array} { c } \text { Change in } \\\text { Consumption }\end{array} & \text { Change in Saving } \\\hline \text { Assumed Increase in Investment } & \$ 20 & \$ & \$ 4.00 \\\hline \text { Second Round } & \$ & \$ 12.80 & \$ \\\hline \text { All Other Rounds } & \$ & \$ 51.20 & \$ \\\hline \text { Totals } & \$ & \$ & \$ 20.00 \\\hline\end{array}$ Refer to the given table, which illustrates the multiplier process. The marginal propensity to save is

$\begin{array} { | c | r | } \hline \text { Disposable Income } & \text { Saving } \\\hline \$ 0 & - \$ 10 \\\hline 50 & 0 \\\hline 100 & 10 \\\hline 150 & 20 \\\hline 200 & 30 \\\hline\end{array}$ Refer to the given data for a hypothetical economy. The marginal propensity to consume is

The practical significance of the multiplier is that it

The multiplier can be calculated as

The fraction, or percentage, of total income which is consumed is called the

Given the expected rate of return on all possible investment opportunities in the economy,

If the real interest rate in the economy is i and the expected rate of return on additional investment is r, then, other things equal,

$\begin{array} { | l | c | c | c | } \hline & \text { Change in Income } & \begin{array} { c } \text { Change in } \\\text { Consumption }\end{array} & \text { Change in Saving } \\\hline \text { Assumed Increase in Investment } & \$ 20 & \$ & \$ 4.00 \\\hline \text { Second Round } & \$ & \$ 12.80 & \$ \\\hline \text { All Other Rounds } & \$ & \$ 51.20 & \$ \\\hline \text { Totals } & \$ & \$ & \$ 20.00 \\\hline\end{array}$ Refer to the given table, which illustrates the multiplier process. The total change in consumption resulting from the initial change in investment will be