Exam 10: Aaggregate Expenditure and Agregate Demand

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

An increase in the price level will

If income increases by $100 and the MPC is 3/4 (0.75), then consumption increases by

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

Net taxes are

When economists say investment is autonomous, they mean that

Exhibit 9-2 -In Exhibit 9-2, the marginal propensity to consume equals

If income increases by $100 and saving increases by $25, the slope of the saving function equals

If disposable income decreases, there is typically a decrease in consumption spending.

An upward shift of the investment function (i.e., the one that relates investment spending to income) could be caused by

The slope of the consumption function shows how

Which is true of disposable income?

Net exports are

The slope of the consumption function equals the

A decrease in net wealth will

At the equilibrium level of real GDP, the MPC equals 1.

Induced saving

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

A grocery store manager has $600 in cash with which to buy a rug cleaner. Rental income from the cleaner would be about $75 per year. The interest rate is 11 percent. Should the manager buy the machine?

Suppose that when disposable income rises from $3 trillion to $3.2 trillion, consumption rises from $2.5 trillion to $2.6 trillion. What is the marginal propensity to save?