Chapter 10 example #35677

1. Personal saving is equal to:

2. The amount of consumption in an economy correlates:

3. The consumption schedule shows the relationship of household consumption to the level of:

4. When a consumption schedule is plotted as a straight line, the slope of the consumption line is:

5. When the consumption schedule is plotted on a graph:

6. As disposable income decreases, consumption:

7. Refer to the consumption schedule above. At income level 3, the amount of saving is represented by the line segment:

8. Refer to the consumption schedule above. At income level 3, the amount of consumption is represented by the line segment:

9. Refer to the consumption schedule above. At income level 1, the amount of saving is:

10. Refer to the consumption schedule above. Disposable income equals consumption at point:

11. Refer to the consumption schedule above. The break-even level of income would be at income level:

12. Refer to the consumption schedule above. As income rises from level 1 to level 2, the amount of:

13. Refer to the consumption schedule above. As income falls from level 3 to level 2, the amount of:

14. An increase in disposable income:

15. The slope of the consumption schedule between two points on the schedule is:

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

17. As disposable income decreases, the:

18. If consumption increases while income remains the same, the average propensity to consume will:

19. If there is a decrease in disposable income in an economy, then:

20. If disposable income is $900 billion when the average propensity to consume is 0.9, it can be concluded that:

21. The MPC can be defined as the:

22. If a family's MPC is .7, it means that the family is:

23. If you know that an increase in a household's disposable income from $35,000 to $45,000 leads to an increase in consumption from $30,000 to $38,000, then you can conclude that the:

24. Assume that an increase in a household's disposable income from $40,000 to $48,000 leads to an increase in consumption from $35,000 to $41,000, then the:

25. If Sara Thomas' disposable income increases from $4,000 to $4,500 and her level of saving increases from $200 to $325, it may be concluded that her marginal propensity to:

26. If the consumption schedule is a straight line, it can be concluded that the:

27. What would be the slope of the consumption schedule or consumption line for a given economy?

28. If disposable income increases from $912 to $927 billion and MPC = 0.6, then consumption will increase by:

29. If disposable income decreases from $1800 to $1500 and MPC = 0.75, then saving will:

30. If the slope of a linear consumption schedule increases in a private, closed economy, then it can be concluded that the:

31. The relationship between the MPS and the MPC is such that:

32. The saving schedule shows the relationship of saving of households to the level of:

33. If households consume less at each level of disposable income, they are:

34. All of the following statements about consuming in excess of one's disposable income are true, except:

35. Dissaving occurs when:

36. Refer to the saving schedule above. Dissaving occurs when disposable income is:

37. Refer to the saving schedule above. The break-even income would be level:

38. Refer to the saving schedule above. As income falls from level 3 to level 2, the amount of:

39. The fraction, or percentage, of total income which is saved is called the:

40. If the slope of the consumption schedule is .75, then the slope of the saving schedule is:

41. In an economy, for every $10 million increase in disposable income, saving increases by $2 million. It can be concluded that the:

42. In an economy, for every $1600 decrease in income, spending falls by $1200. It can be concluded that the:

43. When the marginal propensity to consume is less than 1, the:

44. With an MPS of .3, the MPC will be:

45. In a private closed economy, national income is $4.5 trillion and savings equals $6.4 billion. Based on this data, the marginal propensity to consume:

46. Which of the following may shift the consumption schedule upward?

47. If the consumption schedule shifts downward, and the shift was not caused by a tax change, then the saving schedule:

48. Which of the following would shift the consumption schedule downward?

49. An increase in household wealth that creates a wealth effect shifts the:

50. The so-called wealth effect will result in households:

51. When consumers decide to increase household debt, this action will:

52. Which of the following would shift the saving schedule upward?

53. The saving schedule would be shifted upward by:

54. If consumers expect prices to rise and shortages to occur in the future, then it will shift:

55. As the consumption and saving schedules relate to real GDP, an increase in taxes will shift:

56. What is the likely effect of a rise in real interest rates on consumption and saving in the best of circumstances?

57. A lower real interest rate typically induces consumers to:

58. A change in the amount saved due to a change in income is represented by a:

The table shows a consumption schedule. 59. Refer to the above data. At the $300 level of disposable income:

60. Refer to the above data. The marginal propensity to consume is:

61. Refer to the above data. If disposable income is $550, we would expect consumption to be:

62. Refer to the above data. If plotted on a graph, the slope of the consumption schedule would be:

64. Refer to the above data. At the $320 billion level of disposable income, the average propensity to save is:

63. Refer to the above data. The marginal propensity to save in this economy is:

65. Refer to the above data. If consumption increases by $10 billion at each level of disposable income, the marginal propensity to consume will:

66. The graph above shows the relationship between consumption and income. Which of the following statements is correct?

67. Refer to the consumption schedule above. The marginal propensity to consume is represented by:

68. Refer to the consumption schedule above. The average

69. Refer to the consumption schedule above. If disposable income is $42,000, then saving is:

70. Refer to the consumption schedule above. The marginal propensity to consume is:

71. Refer to the consumption schedule above. If disposable income were $34,000, then the average propensity to save

72. Refer to the above figures with consumption schedules in figure (A) and saving schedules in figure (B), which correspond to each other across different levels of disposable income. If, in figure (A), line A2 shifts to A3 because of the so-called wealth effect, then in figure (B), line:

73. Refer to the above figures with consumption schedules in figure (A) and saving schedules in figure (B), which correspond to each other across different levels of disposable income. If, in figure (A), consumption increases along line A2 then in figure (B) there would be:

74. The Great Recession of 2007-2009 altered the prior behavior of consumers in the economy by:

75. The so-called Paradox of Thrift that became quite obvious in the Great Recession of 2007-2009 refers to all of the following, except:

76. Two basic determinants of investment spending are:

77. An investment demand curve shows the varying amounts of investment that would be undertaken at various levels of:

78. Given the expected rate of return on all possible investment opportunities in the economy, a(n):

79. If the real interest rate increases:

80. Suppose that new computer software for accounting and analysis at a business has a useful life of only one year and costs $200,000 before it needs to be upgraded to a new version. The revenue generated by this software is expected to be $250,000. The expected rate of return from this new computer software is:

81. Assume there are no investment projects that will produce an expected rate of return of 8 percent or more. There are, however, $2 billion worth of investment projects with an expected rate of return at 7 percent, an additional $2 billion for every drop of the interest rate by 1 percent. If the real interest rate is 3 percent in this economy, the cumulative amount of investment at the 3 percent or higher rate of return is:

82. A firm invests in a new machine that costs $2,000 a year but which is expected to produce an increase in total revenue of $2,200 a year. The current real rate of interest is 8 percent. The firm should:

83. A firm invests in a new machine that costs $5,000 a year but which is expected to produce an increase in total revenue of $5,200 a year. The current real rate of interest is 7 percent. The firm should:

84. The nominal rate of interest is 8.5 percent and the real rate is 5 percent. The expected rate of return on an investment is 8 percent. The firm should:

85. According to the cumulative investment table above:

86. According to the cumulative investment table above, if the real interest rate is 20%, then:

87. The investment demand curve is drawn with the amount of investment on the:

88. Refer to the above graph. Which of the following would shift the investment demand curve from ID2 to ID1?

89. Refer to the above graph. Which of the following would shift the investment demand curve from ID2 to ID3?

90. Refer to the above graph. Which of the following would shift the investment demand curve from ID2 to ID1?

91. Refer to the above graph. Which of the following would shift the investment demand curve from ID2 to ID3?

92. Which of the following factors would decrease investment demand?

93. If businesses feel more optimistic about the state of the economy, then this change is likely to:

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

95. The following factors help explain the instability of investment, except:

96. The variability of business profits:

97. Which factor explains the variability of investment?

98. During the Great Recession of 2007-2009, the investment demand curve shifted:

99. The multiplier effect relates:

100. The multiplier can be calculated by dividing:

101. The simple multiplier formula assumes the following, except:

102. Generally speaking, the greater the MPS, the:

103. If the MPC is .75, the multiplier will be:

104. In a closed, private economy, income is $50 billion and consumption is $40 billion. When income rises by 10 percent, consumption rises by 9 percent. The MPS over the relevant income range is:

105. If, in an economy, a $200 billion increase in consumption spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the marginal propensity to consume and the multiplier are, respectively:

106. Assume the marginal propensity to consume is 0.8. If consumer spending increases by $20 billion, then real GDP will:

107. Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by:

108. Refer to the above table. The marginal propensity to consume is:

109. Refer to the above table. The change in income in round two will be:

110. Refer to the above table. The total change in income resulting from the initial change in investment will be:

111. Refer to the above table. The total change in consumption resulting from the initial change in investment will be:

112. Refer to the above table. The multiplier in this economy is:

113. In general, the steeper the consumption schedule the:

114. An increase in spending of $25 billion increases real GDP from $600 billion to $700 billion. The marginal propensity to consume must be:

115. The value of the multiplier is likely to fall if there is a fall in:

116. If the MPC is 0.8, what change in investment spending is required to reduce total income by $60 billion?

117. An $18 billion increase in spending creates $18 billion of new income in the first round of the multiplier process and $13.5 billion in the second round. The multiplier in the economy is:

118. Which statement about the multiplier is correct?

119. If households in the economy save more of any extra income that they earn, then the multiplier effect will:

120. The change in real GDP resulting from an initial change in spending can be calculated by:

122. Art Buchwald's article in the Last Word section of the chapter, "Squaring the Economic Circle," is a humorous description of:

123. Art Buchwald's article, "Squaring the Economic Circle," is a humorous description of what happens to total income if: