Exam 12: Consumption, Real GDP, and the Multiplier

The multiplier helps explain

In the above figure, the marginal propensity to consume (MPC) equals

By definition, disposable income is equal to

-Refer to the above table. The table gives the combinations of real disposable income and real consumption for a college student for a year. What is the value of the average propensity to consume when real disposable income equals $400?

At a level of real disposable income of $5,000, suppose consumption is $6,000. Given this information, we know with certainty that saving equals

The multiplier effect tends to

The saving function shows the relationship between planned real saving and

If consumption spending is greater than disposable income, then there is

The larger the value of the marginal propensity to save (MPS)

What is the primary determinant of real saving and real consumption according to Keynes? Explain.

Assuming that Yd = $10,000 and C = $12,000, we would find that the average propensity to save equals

Which would decrease real planned investment demand?

-In the above table, dissaving occurs at every level of income below

It is conceivable that the APC, APS, MPC, and MPS could simultaneously be

The relationship between real consumption spending and real disposable income

Along the 45-degree reference line

A higher level of real Gross Domestic Product (GDP) will result if

The planned investment function will shift upward if

In equilibrium, real GDP is equal to

According to the permanent income hypothesis, a temporary and relatively small increase in income would