Exam 12: Consumption, Real GDP, and the Multiplier

If disposable income = $200 billion and the APS = 0.9, then

When the marginal propensity to consume (MPC) increases,

If the marginal propensity to consume (MPC) is 0.75 and there is an increase in planned investment spending of $0.5 trillion, then saving will

According to the permanent income hypothesis, a temporary increase in income that does not affect average lifetime income would

According to Keynes,

-Refer to the above figure. The point at which saving equals zero is

If that the marginal propensity to save (MPS) increased from 0.20 to 0.25, this would cause the multiplier effect to

The Keynesian model is based on the idea that

Note: Amounts in $ trillions -Refer to the above table. Which variables in the table are NOT autonomous?

A decrease in autonomous investment of $100 that occurs when the marginal propensity to save (MPS) equals 0.25 will lead to a decrease in real Gross Domestic Product (GDP) of

The average propensity to consume (APC) equals

Which of the following will NOT lead to a shift in the investment function?

The average price of a share of stock on the New York Stock Exchange falls by 30 percent. Other things being equal, we would expect

Investment is

-Refer to the above figure. The figure represents the saving function for the consumer. Point C represents

In the Keynesian model, government spending is considered

A decrease in interest rates will

The planned investment function will shift downward if

-Refer to the above table. When real GDP equals $10 trillion,

-Along the portion of the consumption function that lies above the 45-degree line, saving is