ECON 2301 Chapter 9 – Flashcards
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Given that autonomous consumption equals $1,000, income equals $20,000, and the MPC equals 0.80, the level of
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17,000 C=A+(B*Yd) C=current consumption; a = autonomous consumption; b=marginal propensity to consume; Yd = Disposable Income C=1000+(.80*20000) C=1000+(16000) C=17000
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Demand-pull inflation is caused by:
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Excessive aggregate demand in relation to an economy's production capacity
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A recessionary gap
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Is the amount by which the rate of actual spending falls short of full-employment GDP
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Consumption and investment spending account for approximately _______ percent of total output.
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80
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The combination of price level and real output that is compatible with both aggregate demand and aggregate supply is the definition of:
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Equilibrium
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If tax policies become less favorable, then
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The AD curve will shift to the left
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The MPC + MPS must always equal
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1
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The MPC indicates the portion of
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An additional dollar of income that will be spent
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The components of aggregate demand are:
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Consumption, government spending, net exports, and investment
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If consumption is $340 and saving is $20, then disposable income is:
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$360
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One In the News article says "Personal consumption expenditures (PCE) increased $51.9 billion, or 0.5 percent." An increase in spending is likely the result of:
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An increase in income.
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If disposable income increases from $9,000 billion to $11,000 billion, and consumption increases from $9,500 billion to $11,000 billion, the MPC must be:
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0.75
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If the MPC is 0.8 and the APC is 0.9, then the MPS equals:
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.2
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A decrease in U.S. exports to Japan can be represented by:
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The aggregate expenditure curve shifting downward.
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A sudden increase in confidence by the business community could best be represented by:
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An aggregate expenditure curve shifting upward
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Which of the following is not a component of aggregate demand?
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Productivity
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Suppose the MPC in an economy is 0.9. The APC is initially 0.95 and disposable income is $4 billion. If disposable income increases to $14 billion, what is the new level of consumption?
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$12.8 billion
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Given that C = $1,000 + 0.60YD, if the level of disposable income is $1,000, the level of saving is
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-$600.
