Exam 10: Aaggregate Expenditure and Agregate Demand

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 consume?

Exhibit 9-3 -In Exhibit 9-3, the slope of the consumption function is equal to

Net wealth is a __________ variable. Consumption and income are __________ variables.

If business managers become more optimistic about future sales and profits, then there will be

A grocery store manager must decide whether to buy four rug cleaners to rent to customers. The manager estimates that the first would yield $200 a year, the second $150, the third $75, and the fourth $20. If the interest rate is 12 percent and each rug cleaner costs $500, how many should the manager buy?

Which must be true when consumption exceeds income?

Which of the following would tend to shift the investment function upward?

Expectations that disposable income will decrease in the future will

A change in which of the following is least likely to cause a shift of the consumption function?

Exhibit 9-3 -In Exhibit 9-3, the MPC is equal to

New investment will be undertaken up to the point where the expected rate of return equals

Expectations that the price level will decrease in the future will

The opportunity cost of investing in capital is the interest rate.

If income increases by $100 and consumption increases by $75, the slope of the consumption function equals

Exhibit 9-1 -Given the data in Exhibit 9-1, the level of saving decreases as disposable income increases.

Purchases of existing commodities, such as gold and precious gems, are considered investment spending by economists.

Although consumer spending has averaged about 90 percent of disposable income, in recent years the percentage of disposable income claimed by consumption has

An increase in the price level will

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

The main determinants of investment are the interest rate and expected profit.