Exam 9: Consumption, investment, and the Multiplier

Suppose when real disposable income is $5,000,planned real consumption is $4,000 and planned real saving is $1,000.When real disposable income increases to $6,000,planned real saving increases by $500.The new planned real consumption expenditures is

Which of the following statements is FALSE?

The average price of a share of stock on the Toronto Exchange falls by 30 percent.Other things constant,we would expect

Figure 9-2 -In Figure 9-2,the marginal propensity to consume equals

The expression 1/MPS is defined as

What are the simplifying assumptions that are made in the Keynesian Model?

If the MPC is 0.9,the multiplier for a change in autonomous spending is

What are the maximum and minimum values the multiplier could potentially take on?

Figure 9-1 -In Figure 9-1,line EBD is called

Define the difference between the MPC and MPS.How are the two related to one another through planned aggregate expenditures and how a change in autonomous consumption will necessarily affect Saving.

According to Keynes,household planned consumption

If the multiplier is 10,then the MPC is

At a level of real disposable income of 0,consumption is $5,000.Saving equals

The consumption curve intersects the 45-degree reference line at $4 trillion.This indicates that

Figure 9-2 -In Figure 9-2,a change in autonomous consumption to 100 would cause the consumption function to

The relationship between households' planned consumption expenditures and households' level of real income is called

If society wants aggregate demand to increase without changes in the price level,then there must be

Figure 9-1 -According to Figure 9-1,autonomous consumption equals

A higher price level causes

A lump-sum tax,such as a $1,000 tax that every family must pay one time,is