Questions for Cahpter 27 – Flashcards

The consumption schedule is:

If the slope of the consumption line is .8:

Use the following diagram for this question. Which of the following might have caused the shift from consumption schedule C1 to schedule C2?

Suppose that for the entire economy, no investment projects will yield an expected real return of more than 12%. However, $10 billion worth of projects will yield expected real returns of 9.1% to 12%, an additional $10 billion will yield expected real returns of 6.1% to 9%, an additional $10 billion will yield expected real returns of 3.1% to 6%, and an additional $10 billion will yield expected real returns of 0% to 3%. If the real rate of interest is 6%, desired investment spending will be:

If the MPC is .63, the multiplier is:

Along a particular saving schedule, each change in disposable income of $15 billion generates an additional $3 billion in saving. Therefore:

The investment demand curve will shift to the left if:

Suppose the MPC is ¾. If investment spending falls by $10 billion, the level of GDP will:

If consumption and disposable income are equal at a particular level of income:

All else equal, if the interest rate rises:

If 100 percent of any change in income is spent, the multiplier will be:

(Advanced analysis) Answer the question on the basis of the following data: Which of the following equations correctly represents the above data?

The most important determinant of consumer spending is:

A decline in the real interest rate will shift the investment demand curve to the right.

Other things equal, a decrease in the real interest rate will:

The consumption schedule shows:

In annual percentage terms, investment spending in the United States is:

The MPC for an economy is:

Which of the following would shift the investment demand curve from ID1 to ID3?

Suppose the economy's saving schedule shifts from S1 to S2 as shown in the above diagram. We can say that its:

As disposable income increases, consumption:

The MPC can be defined as that fraction of a:

The saving schedule shown in the above diagram would shift downward if, all else equal:

Refer to the above diagram. At disposable income level D, consumption is:

If DI is $275 billion and the APC is 0.8, we can conclude that saving is $55 billion.

Refer to the above diagram. At income level F the volume of saving is:

Answer the question on the basis of the following consumption schedules. 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 save:

The actual multiplier effect in the U.S. economy is less than the multiplier effect in the text examples because:

Investment is highly stable; it increases over time at a very steady rate.

(Advanced analysis) Answer the question on the basis of the following consumption schedule: C = 20 + .9Y, where C is consumption and Y is disposable income. Refer to the above data. The MPC is: