Exam 9: Consumption, investment, and the Multiplier

When disposal income is $50 million,consumption expenditure is $45 million.When disposal income is $60 million,consumption expenditure is $50 million.What is the MPC?

Compared to consumption spending,investment historically has tended to be

The planned investment function shows that

If the MPC out of real national income equals 0.75,then

The 45-degree line

Using real national income 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 national income

An increase in autonomous consumption means that

Keynesian theory is based on the belief that

An increase in investment spending causes

In your own words,explain the multiplier process .Under what conditions would the multiplier in the simple model be the same as and different from the full model with government and the external sector? How does this relate to the circular flow of income discussed in previous chapters?

If the MPS = 0.1,then

In the Keynesian model,consumption

Figure 9-5 -According to Figure 9-5,the equilibrium level of real national income is

Other things constant,if the MPS is 0.1,and private investment spending falls by $100 million,then national income

Explain why and increase (or decrease)in government expenditures has the same overall effect as an increase (or decrease)in Planned Investment.

Figure 9-3 -According to Figure 9-3,planned consumption and income are equal at an income level of

The fraction of a change in real disposable income that is spent is referred to as the

When a family's income is low,and it is spending more on consumption than it is receiving in income,

If the MPS increases,the multiplier

Autonomous consumption is