PRACTICE TEST 2

PRACTICE TEST 2 - PRACTICE TEST 2 1. When John earned...

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PRACTICE TEST 2 1. When John earned $42,500 in disposable income last year, his consumption spending was $35,500. This year his disposable income increased to $50,700 and his consumption increased to $40,600. What is John's marginal propensity to consume? a. less than 60% *b. 60% to less than 65% c. 65% to less than 70% d. 70% to less than 75% e. 75% or higher 2. Suppose the consumption function is C = 2500 + .70 Yd, where Yd is disposable income. Suppose Yd = 32,600. Saving is equal to a. less than $5,000 b. between $5,000 and $5,999 c. between $6,000 and $6,999 *d. between $7,000 and $7,999 e. $8,000 or higher 3. Assume there are no taxes in an economy. If the MPC is .68, then the multiplier is a. less than 2.00 b. between 2.00 and 2.99 *c. between 3.00 and 3.99 d. between 4.00 and 4.99 e. 5.00 or higher 4. Suppose the CPI in Year 0 was 164.4. In Year 1, it rose to 171.2. The inflation rate during the year was: a. Less than 3.00 percent b. between 3.00% and 3.99% *c. between 4.00% and 4.99% d. between 5.00% and 5.99% e. 6.00% or higher 5. Bob has disposable income of $25,000 and consumption of $27,000. Suppose his disposable
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This note was uploaded on 04/15/2008 for the course ECON 0110 taught by Professor Kenkel during the Fall '08 term at Pittsburgh.

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PRACTICE TEST 2 - PRACTICE TEST 2 1. When John earned...

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