Which of the following options is correct 1 income spending and saving 2 income

Which of the following options is correct 1 income

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Simple economies can be described in terms of three major economic flows. Which of the following options is correct? [1] income, spending and saving [2] income, spending and exports [3] income, saving and production [4] income, consumption and production [5] None of options [1] to [4] is correct. 3.2. In the simplest possible Keynesian macroeconomic model [1] the money market plays an important role. [2] government is an important employer of factors of production. [3] households import products and sell their production on international markets. [4] wages are flexible. [5] production adjusts to changes in spending. 3.3. The consumption function shows [1] that the MPC increases in proportion to the GDP. [2] that households consume more when interest rates are low. [3] that consumption depends primarily on the level of business investment. [4] the amounts households plan or intend to consume at various possible levels of aggregate income. [5] that consumption may be zero if the population is very poor.
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ECS1601/101/3/2017 39 3.4. The consumption function is based on the premise that as income increases, consumption expenditure [1] increases by the same amount. [2] increases by a smaller amount. [3] increases by a larger amount. [4] remains constant since the consumption function does not shift. [5] remains constant unless saving also changes. 3.5. Which of the following statements is correct? [1] Consumption spending is a smaller variable than investment in the simple Keynesian model. [2] Investment spending is smaller but more constant than consumption spending. [3] Investment spending is smaller but less predictable than consumption spending. [4] The investment decision involves only the cost of capital goods. [5] There is a direct relationship between the interest rate and the expected return on investment spending. 3.6. In the aggregate expenditures model, the size of the MPC is assumed to be [1] less than zero. [2] greater than one. [3] greater than zero, but less than one. [4] greater than zero, but less than ten. [5] equal to income. 3.7. The equation C = 35 + .75Y, where C is consumption and Y is income, tells us that [1] households will consume three-fourths of whatever level of disposable income they receive. [2] households will consume R35 if their disposable income is zero and will consume three- fourths of any increase in disposable income they receive. [3] there is an inverse relationship between disposable income and consumption. [4] households will save R35 if their disposable income is zero and will consume three-fourths of any increase in disposable income they receive. [5] induced consumption is zero. 3.8. In the simple Keynesian model which of the following is not correct? [1] C equals total consumption spending. [2] Y equals income. [3] Induced consumption is MPC*Y. [4] MPC + MPS = 1. [5] Equilibrium is where C=Y.
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