Exam 9: Aggregate Expenditure

Suppose that when disposable income rises from $5.2 trillion to $6.0 trillion,consumption rises from $5.0 trillion to $5.6 trillion.What is the marginal propensity to save?

If income increases by $100 and $75 of the increase is spent (consumed),the MPS equals

The slope of the saving function is equal to the MPS.

Which of the following is true of the autonomous investment and saving functions?

The slope of the consumption function equals the marginal propensity to consume.

Which of the following is not investment spending?

A drop in stock prices will __________ net wealth and __________ consumption.

The relationship between consumption and income is

If a household's income rises from $20,000 to $22,000 and its consumption spending rises from $19,000 to $20,500,then its

An increase in real disposable income will

Out of disposable income,households

An increase in the price level will

Expectations that disposable income will increase in the future will

Dennis spends $400 on a snowblower,expecting to earn $80 per year for each of the next five years clearing out his neighbors' driveways.The rate of return he expects on this investment is

More of society's resources will be channeled into capital when

If every time disposable income increases by $5 billion,consumption increases by $4 billion and saving increases by $1 billion,the MPC and MPS are,respectively,

Which of the following is true of the relationship between disposable income and consumption?

A decrease in real disposable income will

If the U.S.price level decreases,other things equal,U.S.net exports will

The partners in the Wonderwords word processing firm spend $12,000 on computers,hoping to earn an additional $1,000 per year with them.If the partners could earn 7 percent interest on a bank deposit they should