Chapt 4 quiz -Aggregate expenditure & equilibrium output - The Keynesian Theory of Consumption 1 The MPC is A the change in consumption divided by

Chapt 4 quiz -Aggregate expenditure & equilibrium output -...

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The Keynesian Theory of Consumption1) The MPC isA) the change in consumption divided by the change in income.B) consumption divided by income.C) the change in consumption divided by the change in saving.D) the change in saving divided by the change in income.Answer: A2) The MPS is3) Saving equals4) If the MPS is .60, MPC5) If you earn additional $500 in disposable income one week for painting your neighbor's house,A) the total of your consumption and saving will increase by more than $500.B) the total of your consumption and saving will increase by $500.C) the total of your consumption and saving will increase by less than $500.D) your consumption will increase by more than $500, even if your MPS is 0.1.Answer: B6) If Logan received a $2,500 bonus and his MPS is 0.20, his consumption rises by $________ and his saving rises by$________.7) Saving is a ________ variable and savings is a ________ variable.8) Uncertainty about the future is likely to9) Higher interest rates are likely toA) have no effect on consumer spending or saving.B) decrease consumer spending and increase consumer saving.C) decrease both consumer spending and consumer saving.D) increase consumer spending and decrease consumer saving.Answer: B
10) Consumption is11) In a closed economy with no government, aggregate expenditure is

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