Exam 8: Basic Macroeconomic Relationships

-Refer to the consumption schedules shown in the above diagram for economies 1, 2, 3, and 4. The MPC is greatest in economy:

Dissaving means:

The greater is the marginal propensity to consume:

If the real interest rate in the economy is i and the expected rate of return from additional investment is r, then other things equal:

The multiplier is equal to the reciprocal of the MPC.

In view of your answer to the previous question, if the real interest rate is 15 percent in this economy, the aggregate amount of investment will be:

Assume a machine which has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. The expected rate of return on this machine is:

The multiplier effect means that:

Technological progress will:

If the equation for the consumption schedule is C = 20 + 0.8Y, where C is consumption and Y is disposable income, then the average propensity to consume is 1 when disposable income is:

The relationship between consumption and disposable income is such that:

The APC can be defined as:

The equation C = 35 + .75Y, where C is consumption and Y is disposable income, tells us that:

Other things equal, a 10 percent decrease in corporate income taxes will:

The consumption schedule shows:

Which one of the following will cause a movement down along an economy's consumption schedule?

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. At an income level of $40 billion, the average propensity to consume:

The slope of the saving schedule measures the size of the multiplier.

The most important determinant of consumer spending is:

Which of the following equations correctly represents the data below?