Question 1

Explain how consumption and saving are related to disposable income.

Accepted Answer

Consumption and saving are directly rela

Question 2

Describe the relationship shown by the investment demand curve.

Accepted Answer

The investment demand curve relates inve

Question 3

Complete the accompanying table.

Accepted Answer

@#IMG-DLM& 
(a)Using the below graphs,show the con

Question 4

Differentiate between the average propensity to consume and the marginal propensity to consume.

Accepted Answer

The average propensity to consume is def

Question 5

Suppose a family's annual disposable income is $8,000 of which it saves $2,000.
(a)What is their APC?
(b)If their income rises to $10,000 and they plan to save $2,800,what are their MPS and MPC?
(c)Did the family's APC rise or fall with their increase in income?

Accepted Answer

(a)APC = .75 ($6,000/$8,000).

Question 6

Define the multiplier.How is it related to real GDP and the initial change in spending? How can the multiplier have a negative effect?

Accepted Answer

The multiplier is simply the ratio of th

Explain how consumption and saving are related to disposable income.

Describe the relationship shown by the investment demand curve.

Complete the accompanying table.

Differentiate between the average propensity to consume and the marginal propensity to consume.

Suppose a family's annual disposable income is $8,000 of which it saves $2,000. (a)What is their APC? (b)If their income rises to $10,000 and they plan to save $2,800,what are their MPS and MPC? (c)Did the family's APC rise or fall with their increase in income?

Define the multiplier.How is it related to real GDP and the initial change in spending? How can the multiplier have a negative effect?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 10: Basic Macroeconomic Relationships

Explain how consumption and saving are related to disposable income.

Describe the relationship shown by the investment demand curve.

Complete the accompanying table.

Differentiate between the average propensity to consume and the marginal propensity to consume.

Suppose a family's annual disposable income is $8,000 of which it saves $2,000. (a)What is their APC? (b)If their income rises to $10,000 and they plan to save $2,800,what are their MPS and MPC? (c)Did the family's APC rise or fall with their increase in income?

Define the multiplier.How is it related to real GDP and the initial change in spending? How can the multiplier have a negative effect?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters