Macroeconomics Chapter 10 example #75197

most important determinant of consumer spending is

The most important determinant of consumption and saving is the

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 Mps = change in savings/change in y = s2-s1/y2-y1 =200/500 = 2/5= 4/10 MPC = 1-MPS = 1-2/5= 3/5

With a marginal propensity to save of 0.4, the marginal propensity to consume will be

The MPC can be defined as that fraction of a:

The MPC can be defined as that fraction of a:

all the points at which consumption and income are equal

average propensity to consume falls

the amounts households intend to consume at various possible levels of aggregate income.

consumption to the level of disposable income.

A decline in disposable income

The APC is calculated as

The consumption schedule shows

The APC can be defined as the fraction of a

Refer to the figure. The consumption schedule indicates that

The consumption schedule is drawn on the assumption that as income increases, consumption will

Which of the following is correct?

The consumption schedule is such that

The consumption and saving schedules reveal that the

The size of the MPC is assumed to be

As disposable income increases, consumption

The relationship between consumption and disposable income is such that

If the MPC is 0.8 and disposable income is $200, then

The MPC for an economy is

In contrast to investment, consumption is

(Advanced analysis) Assume the following consumption schedule: C = 20 + 0.9Y, where C is consumption and Y is disposable income. The MPC is

(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

Which one of the following will cause a movement down along an economy's consumption schedule?

Refer to the given diagram, which shows consumption schedules for economies A and B. We can say that the

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

Tessa's break-even income is $10,000, and her MPC is 0.75. If her actual disposable income is $16,000, her level of

If Trent's MPC is 0.80, this means that he will

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

(Advanced analysis) If the equation for the consumption schedule is C = 20 + 0.8Y, where C is consumption and Y is disposable income, then the average propensity to consume is 1 when disposable income is A.

(Advanced analysis) The equation C = 35 + 0.75Y, where C is consumption and Y is disposable income, shows that

(Advanced analysis) If the equation C = 20 + 0.6Y, where C is consumption and Y is disposable income, were graphed,

One can determine the amount of any level of total income that is consumed by

Which of the following is correct?

Dissaving means

Dissaving occurs where

Which of the following relations is not correct?

The saving schedule is drawn on the assumption that as income increases,

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

The saving schedule is such that as aggregate income increases by a certain amount, saving

If the consumption schedule is linear, then the

Given the consumption schedule, it is possible to graph the relevant saving schedule by

If the marginal propensity to consume is 0.9, then the marginal propensity to save must be

The greater is the marginal propensity to consume, the

If the saving schedule is a straight line, the

Which one of the following will cause a movement up along an economy's saving schedule?

In the late 1990s, the U.S. stock market boomed, causing U.S. consumption to rise. Economists refer to this outcome as the

The wealth effect is shown graphically as a

Refer to the given graph. A movement from b to a along C1 might be caused by a(n)

Refer to the given graph. A shift of the consumption schedule from C1 to C2 might be caused by a(n)

Refer to the given graph. A movement from a to b along C1 might be caused by a(n)

Refer to the given graph. A shift of the consumption schedule from C2 to C1 might be caused by a(n)

An upward shift of the saving schedule suggests

Which of the following will not tend to shift the consumption schedule upward?

If the consumption schedule shifts upward and the shift was not caused by a tax change, the saving schedule

Which of the following will not cause the consumption schedule to shift?

When consumption and saving are graphed relative to real GDP, an increase in personal taxes will shift

If for some reason households become increasingly thrifty, we could show this by

Suppose the economy's saving schedule shifts from S1 to S2, as shown in the given diagram. We can say that its

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

Suppose an economy's consumption schedule shifts from C1 to C2, as shown in the diagram. We can say that its

Refer to the given data. The marginal propensity to consume is

Refer to the given data. At the $200 level of disposable income,

Refer to the given data. If disposable income was $325, we would expect consumption to be

Refer to the given diagram. The marginal propensity to consume is equal to

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

Refer to the given diagram. Consumption will be equal to income at

Refer to the given diagram. The economy is dissaving

Refer to the given diagram. The marginal propensity to save is

The given figure suggests that

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

Refer to the given data for a hypothetical economy. The marginal propensity to consume is

Refer to the given data for a hypothetical economy. At the $100 level of income, the average propensity to save is

Refer to the given data for a hypothetical economy. If plotted on a graph, the slope of the saving schedule would be

Refer to the given diagram. The marginal propensity to save is equal to

Refer to the diagram. At disposable income level D, the average propensity to save is equal to

Refer to the diagram. At disposable income level D, consumption is equal to

Refer to the diagram. Consumption equals disposable income when

The saving schedule shown in the diagram would shift downward if, all else equal,

Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. The marginal propensity to consume in economy (1) is

Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. The marginal propensity to consume

Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. The marginal propensity to save

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

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 $400 billion, the average propensity to save in economy (2) is

(Advanced analysis) Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. When plotted on a graph, the vertical intercept of the consumption schedule in economy (3) is and the slope is .

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

Refer to the given consumption schedules. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. A $2 billion increase in consumption at each level of DI could be caused by

Refer to the given diagram. The marginal propensity to consume is

(Advanced analysis) The equation for the given saving schedule is

Refer to the diagram. The average propensity to consume

Refer to the diagram. The break-even level of income is

Refer to the diagram. The marginal propensity to consume is

(Advanced analysis) Refer to the diagram. The equation for the consumption schedule is

(Advanced analysis) Which of the following equations correctly represents the given data?

(Advanced analysis) Which of the following equations represents the saving schedule implicit in the given data?

The investment demand curve portrays an inverse (negative) relationship between

The investment demand slopes downward and to the right because lower real interest rates

Other things equal, a decrease in the real interest rate will

Suppose that a new machine tool having a useful life of only one year costs $80,000. Suppose, also, that the net additional revenue resulting from buying this tool is expected to be $96,000. The expected rate of return on this tool is

Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. The expected rate of return on this machine is

Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. If the firm finds it can borrow funds at an interest rate of 10 percent, the firm should

The relationship between the real interest rate and investment is shown by the

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

A decline in the real interest rate will

The immediate determinants of investment spending are the

The investment demand curve suggests that

Assume there are no prospective investment projects (I) that will yield an expected rate of return (r) of 25 percent or more, but there are $5 billion of investment opportunities with an expected rate of return between 20 and 25 percent, an additional $5 billion between 15 and 20 percent, and so on. If the real interest rate is 15 percent in this economy, the aggregate amount of investment will be

If business taxes are reduced and the real interest rate increases,

Other things equal, a 10 percent decrease in corporate income taxes will

The investment demand curve will shift to the right as the result of

The investment schedule in the given table indicates that if the real interest rate is 8 percent, then

Other things equal, if the real interest rate falls and business taxes rise,

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

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

If the real interest rate in the economy is i and the expected rate of return from additional investment is r, then more investment will be forthcoming when

A rightward shift of the investment demand curve might be caused by

The real interest rate is

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

If the nominal interest rate is 18 percent and the real interest rate is 6 percent, the inflation rate is

If the inflation rate is 10 percent and the real interest rate is 12 percent, the nominal interest rate is

A high rate of inflation is likely to cause a

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,

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,

Refer to the diagram. Assume that for the entire business sector of a private closed economy there is $0 worth of investment projects that will yield an expected rate of return of 25 percent or more. But there are $15 worth of investments that will yield an expected rate of return of 20-25 percent; another $15 with an expected rate of return of 15-20 percent; and an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range. Which of the lines on the diagram represents these data?

Assume that for the entire business sector of a private closed economy, there are $0 worth of investment projects that will yield an expected rate of return of 25 percent or more. But there are $15 worth of investments that will yield an expected rate of return of 20-25 percent, another $15 with an expected rate of return of 15-20 percent, and an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range. If the real interest rate is 15 percent, what amount of investment will be undertaken?

Assume that for the entire business sector of a private closed economy, there are $0 worth of investment projects that will yield an expected rate of return of 25 percent or more. But there are $15 worth of investments that will yield an expected rate of return of 20-25 percent, another $15 with an expected rate of return of 15-20 percent, and an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range. If the real interest rate is 5 percent, what amount of investment will be undertaken?

Assume that for the entire business sector of a private closed economy, there are $0 worth of investment projects that will yield an expected rate of return of 25 percent or more. But there are $15 worth of investments that will yield an expected rate of return of 20-25 percent, another $15 with an expected rate of return of 15-20 percent, and an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range. The expected rate of return curve

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

Refer to the diagram. Which of the following would shift the investment demand curve from ID1 to ID3?

Refer to the diagram. Which of the following would increase investment while leaving an existing investment demand curve, say, ID2, in place?

In annual percentage terms, investment spending in the United States is

Investment spending in the United States tends to be unstable because

Investment spending in the United States tends to be unstable because

The purchase of capital goods, like consumer goods, can be postponed; it tends to contribute to in investment spending.

The multiplier effect means that

The multiplier is

The multiplier is useful in determining the

The multiplier is defined as

The figure shows the saving schedules for economies 1, 2, 3, and 4. Which economy has the highest marginal propensity to consume?

The figure shows the saving schedules for economies 1, 2, 3, and 4. Which economy has the largest multiplier?

If 100 percent of any change in income is spent, the multiplier will be

The multiplier can be calculated as

The size of the multiplier is equal to the

If the MPS is only half as large as the MPC, the multiplier is

If the MPC is 0.70 and investment increases by $3 billion, the equilibrium GDP will

The numerical value of the multiplier will be smaller the

The practical significance of the multiplier is that it

If the MPC is 0.6, the multiplier will be

Assume the MPC is 2/3. If investment spending increases by $2 billion, the level of GDP will increase by

The multiplier applies to

The multiplier effect indicates that

Refer to the given table, which illustrates the multiplier process. The marginal propensity to consume is

Refer to the given table, which illustrates the multiplier process. The marginal propensity to save is

Refer to the given table, which illustrates the multiplier process. The change in income in round two will be

Refer to the given table, which illustrates the multiplier process. The total change in income resulting from the initial change in investment will be

Refer to the given table, which illustrates the multiplier process. The total change in consumption resulting from the initial change in investment will be

Refer to the given table, which illustrates the multiplier process. The multiplier in this economy is

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round, the multiplier in the economy is

If a $50 billion decrease in investment spending causes income to decline by $50 billion in the first round of the multiplier process and by $25 in the second round, the multiplier in the economy is

If a $100 billion decrease in investment spending causes income to decline by $100 billion in the first round of the multiplier process and by $75 billion in the second round, income will eventually decline by

If a $500 billion increase in investment spending increases income by $500 billion in the first round of the multiplier process and by $450 in the second round, income will eventually increase by

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

A $1 billion increase in investment will cause a

The actual multiplier effect in the U.S. economy is less than the multiplier effect in the text examples because

(Consider This) During the Great Recession of 2007-2009, both real interest rates and investment spending declined. This suggests that

(Consider This) During the Great Recession of 2007-2009,

(Last Word) Art Buchwald's article "Squaring the Economic Circle" is a humorous description of

(Last Word) Art Buchwald's article "Squaring the Economic Circle" humorously describes how

True/False: If DI is $275 billion and the APC is 0.8, we can conclude that saving is $55 billion.

174. If the MPC is constant at various levels of income, then the APC must also be constant at all of those income levels.

The average propensity to consume is defined as income divided by consumption.

1 ? MPC = MPS.

If the Hennige family's marginal propensity to consume is 0.70, then it will necessarily consume seven-tenths of its total income.

1 + MPS = MPC.

The slope of the consumption schedule is measured by the MPC.

A decline in the real interest rate will shift the investment demand curve to the right.

A specific investment will be undertaken if the expected rate of return, r, exceeds the interest rate, i.

Investment is highly stable; it increases over time at a very steady rate.

The greater the MPC, the greater the multiplier.

The multiplier is equal to the reciprocal of the MPC.

The multiplier shows the relationship between changes in a component of spending, say, investment, and the consequent changes in real income and output.

Economists widely agree that the value of the real-world multiplier is 2.5.

If the MPC is 0.9 and investment spending increases by $20 billion, real GDP will increase by $200 billion.