52) If disposable income falls by $50 billion and consumption falls by $40 billion, then the slope of theconsumption function isA) 1.20.B) 0.80.C) 0.70.D) 0.10.Answer: B52)Diff: 2Page Ref: 757/351Topic: The Consumption FunctionLearning Outcome: Macro 8: Investigate the relationship between income and expendituresAACSB: Analytic Skills53) Disposable income is defined as53)Diff: 1Page Ref: 758/352Topic: Consumption and National IncomeLearning Outcome: Macro 8: Investigate the relationship between income and expendituresAACSB: Reflective Thinking12

Table 23-2Consumption(dollars)Disposable Income(dollars)$1,200$3,0002,1004,0003,0005,00054)Refer to Table 23-2.Given the consumption schedule in the table above, the marginal propensityto consume is54)Diff: 2Page Ref: 760-761/354-355Topic: The Consumption FunctionLearning Outcome: Macro 8: Investigate the relationship between income and expendituresAACSB: Analytic Skills55)Refer to Table 23-2.Given the consumption schedule in the table above, the marginal propensityto save is55)Diff: 2Page Ref: 760-761/354-355Topic: The Marginal Propensity to SaveLearning Outcome: Macro 8: Investigate the relationship between income and expendituresAACSB: Analytic Skills56) If theMPCis 0.5, then a $10 million increase in disposable income will increase consumption byA) $50 million.B) $2 million.C) $15 millionD) $5 million.Answer: D56)Diff: 2Page Ref: 758/352Topic: Consumption and National IncomeLearning Outcome: Macro 8: Investigate the relationship between income and expendituresAACSB: Analytic Skills57) If national income increases by $20 million and consumption increases by $5 million, the marginalpropensity to consume is57)Diff: 2Page Ref: 758/352Topic: Consumption and National IncomeLearning Outcome: Macro 8: Investigate the relationship between income and expendituresAACSB: Analytic Skills

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