2020_300pschpt8

# 2020_300pschpt8 - Problem set chpt 8 Student 1 The most...

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Problem set chpt 8 Student: ___________________________________________________________________________ 1. The most important determinant of consumption and saving is the: A. level of bank credit. B. level of income. C. interest rate. D. price level. 2. The MPC can be defined as that fraction of a: A. change in income that is not spent. B. change in income that is spent. C. given total income that is not consumed. D. given total income that is consumed. 3. The consumption schedule is drawn on the assumption that as income increases consumption will: A. be unaffected. B. increase absolutely, but remain constant as a percentage of income. C. increase absolutely, but decline as a percentage of income. D. increase both absolutely and as a percentage of income.

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4. The above diagram shows consumption schedules for economies A and B. We can say that the: A. MPC is greater in B than in A. B. APC at any given income level is greater in B than in A. C. MPS is smaller in B than in A. D. MPC is greater in A than in B. 5. (Advanced analysis) The equation C = 35 + .75 Y , where C is consumption and Y is disposable income, shows that: A. households will consume three-fourths of whatever level of disposable income they receive. B. households will consume \$35 if their disposable income is zero and will consume three-fourths of any increase in disposable income they receive. C. there is an inverse relationship between disposable income and consumption. D. households will save \$35 if their disposable income is zero and will consume three-fourths of any increase in
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## This note was uploaded on 03/29/2010 for the course EDUCATION 111 taught by Professor Jones during the Spring '10 term at Bowling Green.

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2020_300pschpt8 - Problem set chpt 8 Student 1 The most...

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