Exam 11: Consumption, Real GDP, and the Multiplier

Using real GDP on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.75 generates for every additional $100 of real GDP

When the economy is operating at the equilibrium level of GDP, we know that

In the Keynesian model, consumption

Which one of the following statements is TRUE?

When the investment is graphed as a function of real GDP

If autonomous investment increases by $200 billion and the marginal propensity to consume (MPC)is 0.5, then

The difference between savings and saving

Keynesian theory is based on the hypothesis that

Suppose that there is no government and no international trade. When C + I is less than the level of real GDP

A permanent increase in autonomous investment causes

Autonomous real investment spending is

-Refer to the above figure. The figure represents the consumption function for a consumer. Point D represents

If your real disposable income goes up by $1,000 per week, and your real consumption spending goes up by $800 per week, you have an marginal propensity to save of

The multiplier tells us the relationship between

-In the above figure, at an income level of Y₃ and planned expenditures of (C + I)₁,

Which of the following changes will shift the consumption function upward?

Suppose the marginal propensity to consume (MPC)is 0.8 and there is a $4,000 increase in planned investment. Given this information, real GDP will increase by

-Refer to the above figure. The figure represents the consumption function for a consumer. The distance between C and D represents

-Refer to the above figure. Autonomous consumption is

-In the above figure, what is the equilibrium level of real consumption spending?