Quiz_11-solutions econ 410

Quiz_11-solutions econ 410 - both countries. A) Decreasing;...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Solutions: Quiz 11 4/26/2011 1 According to the Keynesian consumption function, a higher income would result in: A) A higher marginal propensity to consume. B) A lower marginal propensity to consume. C) A higher average propensity to consume. D) A lower average propensity to consume. Solutions: D) Keynesian consumption function is: C = a + b Y Marginal propensity to consume = b, do not change. Average propensity to consumer = a/Y + b, decreases as income increases. 2 Over the last fifty years, the share of consumption in total GDP is _____ in the US and _______ in Japan while per capita incomes have risen substantially for
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: both countries. A) Decreasing; increasing. B) Increasing; decreasing. C) Increasing; roughly the same. D) Decreasing; roughly the same. Solutions: C) 3. A salary survey (payscale.com) shows that the average starting salary is $48,800 for economics major and $38,600 for the marketing major. According to the intertemporal optimization model, an economics student should ____ than a marketing student while in school. A) work harder B) consume more C) feel better D) save more Solutions: B) Note the answer is NOT D) because a higher income does not necessarily mean a higher saving in the intertemporal optimization problem....
View Full Document

Ask a homework question - tutors are online