Exam 29: Basic Macroeconomic Relationships

If a $500 billion increase in investment spending increases income by $500 billion in the first round of the multiplier process and by $450 in the second round,income will eventually increase by:

With a marginal propensity to save of .4,the marginal propensity to consume will be:

If the MPC is .8 and disposable income is $200,then:

Dissaving means:

(Advanced analysis)The equation C = 35 + .75Y,where C is consumption and Y is disposable income,shows that:

If the Hennige family's marginal propensity to consume is .70,then it will necessarily consume seven-tenths of its total income.

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

The practical significance of the multiplier is that it:

The multiplier is useful in determining the:

In the late 1990s,the U.S.stock market boomed,causing U.S.consumption to rise.Economists refer to this outcome as the:

If a $200 billion increase in investment spending creates $200 billion of new income in the first round of the multiplier process and $160 billion in the second round,the multiplier in the economy is:

(Advanced analysis)If the equation for the consumption schedule is C = 20 + .8Y,where C is consumption and Y is disposable income,then the average propensity to consume is 1 when disposable income is:

A high rate of inflation is likely to cause a:

The multiplier is:

The MPC for an economy is:

Capital goods,because their purchases can be postponed like ______ consumer goods,tend to contribute to ________ in investment spending.

The size of the MPC is assumed to be:

The consumption schedule is such that:

Tessa's break-even income is $10,000 and her MPC is 0.75.If her actual disposable income is $16,000,her level of:

The wealth effect is shown graphically as a: