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7 Cards in this Set
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The difference between the MPC and the APC is that the MPC is the A) total income divided by total consumption, whereas the APC is the change in income divided by change in consumption. B) change in income divided by change in consumption, whereas the APC is total income divided by total consumption. C) change in consumption divided by change in income, whereas the APC is total consumption divided by total income. D) total consumption divided by total income, whereas the APC is the change in consumption divided by change in income. |
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The sum of MPC and the MPS must equal 1 because a) total income must be spent or saved. b) these are determined by macro policy makers. c) when they equal one the economy is in equilibrium. d) all additional income must be spent or saved. |
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A downshift of the consumption schedule typically involves an equal upshift of the saving schedule except when there is a.) an increase in personal taxes; then they both shift downward. b) a decrease in personal taxes; then consumption shifts upwards and the saving schedule shifts downward. c) an increase in personal taxes; then they both shift upward. d) a decrease in personal taxes; then they both shift downward. |
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A reduction in the real interest rate will increase investment spending, other things equal, because firms will make an investment purchase if the expected return is a) equal to the real interest rate at which it can lend. b) greater than or equal to real interest rate at which it can borrow. c) equal to or less than the real interest rate at which it can borrow. d) growing at the same rate as inflation. |
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The multiplier is a) larger, the smaller the MPC is and the larger the MPS is. b) larger, the larger the MPC is and the smaller the MPS is. c) smaller, the smaller the MPC is and the smaller the MPS is. d) smaller, the larger the MPC is and the smaller the MPS is. |
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The multiplier effect a) intensifies the effect of a spending change, whether it is an increase or decrease. b) intensifies the effect of a decrease in spending but not an increase. c) diminishes the effect of a spending change, whether it is an increase or decrease. d) intensifies the effect of an increase in spending but not a decrease. |
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a. Consumption schedule: The variable on the vertical (y) axis is _______ saving disposable income consumption dissaving and the variable on the horizontal (x) axis is consumptionsavingdisposable incomedissaving. These variables are (Click to select)inverselydirectly related. |
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