EC 101 DFL SEMESTER 1 2016 TUTORIAL EXERCISE 6 - EC 101 DFL SEMESTER 1 2016 Tutorial Exercise 6 Text Book Chapter 25(7th ed Study Guide Unit 8 Multiple

EC 101 DFL SEMESTER 1 2016 TUTORIAL EXERCISE 6 - EC 101 DFL...

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EC 101 DFL SEMESTER 1, 2016 Tutorial Exercise 6 – Text Book Chapter 25 (7 th ed) – Study Guide Unit 8 Multiple Choices 1. According to Keynesian theory, the primary determinant of the level of consumption and savings in the economy is the: A. level of investment B. level of income C. level of prices D. interest rate. 2. The Keynesian model of income determination explains the observed cyclical fluctuations inincome through: 3. Dissaving occurs when A. income is greater than saving B. saving is greater than consumption 4. If Paea’s disposable income increases from $4000 to $4500 and her level of saving increases from $200 to $325, it may be concluded that her marginal propensity to: 5. If a family’s MPC is 0.7 it is: A. spending 70 percent of its income on consumer goods B. necessarily dissaving C. spending seven-tenths of any increment to its income D. operating at thebreak- even point 6. The relationship between the MPS and the MPC is such that: A. MPC – MPS = 1 B.

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