Exam 10: Basic Macroeconomic Relationships

The consumption schedule shows the relationship of household consumption to the level of:

The multiplier will be larger, the steeper is the saving schedule.

A change in the amount saved due to a change in income is represented by a:

Refer to the consumption schedule above. If disposable income were $34,000, then the average propensity to save would be about:

Which of the following factors would decrease investment demand?

What is the slope of the consumption schedule or consumption line for a given economy?

If the consumption schedule becomes steeper, then the saving schedule will become steeper also.

Investment is not affected by current profits; it is affected by expected future profits only.

Refer to the consumption schedule above. At income level 1, the amount of saving is:

If the real interest rate increases:

According to the cumulative investment table above:

The multiplier effect magnifies the effect of a decrease in spending, resulting in a bigger decrease in real GDP.

The fraction, or percentage, of total income which is consumed is called the:

When the consumption schedule is plotted on a graph:

The investment demand curve will shift to the left as the result of:

Refer to the saving schedule above. Dissaving occurs when disposable income is:

Refer to the above figures with consumption schedules in figure (A) and saving schedules in figure (B), which correspond to each other across different levels of disposable income. If, in figure (A), consumption shifts from A₂ to A₃ because of a change in taxes, then in figure (B) line:

An increase in household wealth that creates a wealth effect would shift the:

If households do not spend any extra income they receive but instead save the entire extra amount, then the multiplier will be zero.

If disposable income increases from $912 to $927 billion and MPC = 0.6, then consumption will increase by: