Exam 8: Basic Macroeconomic Relationships

Given the consumption schedule, it is possible to graph the relevant saving schedule by:

-Refer to the above data. The marginal propensity to consume is:

If business taxes are reduced and the real interest rate increases:

At the point where the consumption schedule intersects the 45-degree line:

The consumption schedule is such that:

Suppose the consumption schedule is: C = 20 + .9Y, where C is consumption and Y is disposable income. -Refer to the above data. The MPC is:

Following is consumption schedules for three private closed economies. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. Refer to the data below. Suppose the consumption is increased by $2 billion in each of the three economies. This change could have been caused by:

-Refer to the above diagram. The equation for the saving schedule is:

The consumption schedule shows:

The MPC for an economy is:

-Refer to the above data. At the $100 level of income, the average propensity to save is:

The ________ of the late 1990s was an example of the wealth effect, while _______ of 2008 was an example of the reverse wealth effect.

The simple multiplier is:

Other things equal, the real interest rate and the level of investment are:

The multiplier effect:

-Refer to the above diagram. The break-even level of disposable income:

Holly's break-even level of income is $10,000 and her MPC is 0.75. If her actual disposable income is $16,000, her level of:

The initial costs of capital goods, and the estimated costs of operating and maintaining those goods, affect the expected rate of return on investment.

If the MPC is .70 and gross investment increases by $3 billion, the equilibrium GDP will:

Following is consumption schedules for three private closed economies. DI signifies disposable income and C represents consumption expenditures. All figures are in billions of dollars. -Refer to the above data. The marginal propensity to consume: