Exam 11: Consumption, Real GDP, and the Multiplier

Which of the following would NOT be considered a consumption good?

According to the permanent income hypothesis, a person's consumption increases only when

-Use the above table. When real disposable income is $125

A lump-sum tax, such as a $1000 tax that every family must pay one time, is

-Refer to the above figure. At an income of $10,000, saving is

If an increase of $5 billion in investment is associated with an increase of $25 billion in real Gross Domestic Product (GDP), the multiplier is

-Consider the above figure. At income level Yd = $110, the APS is equal to

The equation is the

Because a decrease in real autonomous spending results in a ________ in the price level, the ultimate effect on real GDP is ________ than predicted by the multiplier.

Ignoring the government and foreign sectors, equilibrium real Gross Domestic Product (GDP)is determined by

When the SRAS curve slopes upward, the actual affect of an increase in real autonomous spending on equilibrium real GDP is smaller than predicted by the multiplier because

-Refer to the above figure. Line ABC is called

When disposable income equals consumption expenditures, then

The Keynesian model is based on the idea that

By definition, disposable income is equal to

When the marginal propensity to consume (MPC)increases

If the MPC = 0.8, and planned autonomous investment increases by $80 billion, then equilibrium real GDP will increase by

-In the above figure, saving will equal zero when real disposable income equals

In the Keynesian model, a decrease in real autonomous spending results in a more than proportional decrease in real Gross Domestic Product (GDP)because

What is the significance of the multiplier? What causes the multiplier to be larger or smaller?