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Exam 29: Basic Macroeconomic Relationships

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Question 41

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Which of the following relations is not correct?

A) 1 - MPC = MPS.
B) APS + APC = 1.
C) MPS = MPC + 1.
D) MPC + MPS = 1.

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Question 42

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If Carol's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100,her marginal propensity to:

A) save is three-fifths.
B) consume is one-half.
C) consume is three-fifths.
D) consume is two-fifths.

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Question 43

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(Advanced analysis) Answer the question on the basis of the following consumption schedule: C = 20 + .9Y,where C is consumption and Y is disposable income. Refer to the given data.The MPC is:

If Trent's MPC is .80,this means that he will:

The consumption schedule directly relates:

The multiplier applies to:

The greater is the marginal propensity to consume,the:

Answer the question on the basis of the following consumption schedules.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the given data.Suppose that consumption decreased by $2 billion at each level of DI in each of the three countries.We can conclude that the:

Assume the economy's consumption and saving schedules simultaneously shift downward.This must be the result of:

Answer the question on the basis of the following table that illustrates the multiplier process. Refer to the given table.The total change in consumption resulting from the initial change in investment will be:

Answer the question on the basis of the following data for a hypothetical economy. $\begin{array}{cc}\underline{\text { Disposable Income} } &\underline{ \text { Saving } }\\0& \mathbf{- 1 0} \\50 & 0 \\100 & 10 \\150 & 20 \\200 & 30\end{array}$ Refer to the given data.The marginal propensity to consume is:

The MPC can be defined as that fraction of a:

When we draw an investment demand curve,we hold constant all of the following except:

(Advanced analysis) Answer the question on the basis of the following data: $\begin{array} { c c } \text { Disposable Income } \left( \mathrm { Y } _ { \mathrm { d } } \right) & \text { Consumption (C) } \\ \$ 0 & \$ 40 \\100 & 100 \\200 & 160 \\300 & 220 \\400 & 280\end{array}$ Which of the following equations represents the saving schedule implicit in the given data?

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:

The real interest rate is:

Suppose a family's consumption exceeds its disposable income.This means that its:

The investment demand curve will shift to the left as a result of:

If the marginal propensity to save is 0.2 in an economy,a $20 billion rise in investment spending will increase:

The investment demand curve suggests: