Test Bank Questions with complete Answers for Macroeconomics Chapter 10 Rated 100%
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Macroeconomics
Institution
Macroeconomics
Test Bank Questions with complete Answers for Macroeconomics Chapter 10 Rated 100%
The difference between the MPC and the APC is that the MPC is the: - Answers change in consumption divided by change in income, whereas the APC is total consumption divided by total income.
The sum of MPC and the M...
Test Bank Questions with complete Answers for Macroeconomics Chapter 10 Rated 100%
The difference between the MPC and the APC is that the MPC is the: - Answers change in consumption
divided by change in income, whereas the APC is total consumption divided by total income.
The sum of MPC and the MPS must equal 1 because - Answers all additional income must be spent or
saved.
A downshift of the consumption schedule typically involves an equal upshift of the saving schedule
except when there is - Answers an increase in personal taxes; then they both shift downward.
A reduction in the real interest rate will increase investment spending, other things equal, because firms
will make an investment purchase if the expected return is - Answers greater than or equal to real
interest rate at which it can borrow.
The multiplier is - Answers larger, the larger the MPC is and the smaller the MPS is.
The multiplier effect - Answers intensifies the effect of a spending change, whether it is an increase or
decrease.
What are the variables (the items measured on the axes) in a graph of the (a) consumption schedule and
(b) saving schedule? Are the variables inversely (negatively) related or are they directly (positively)
related?
a. Consumption schedule
The variable on the vertical (y) axis is _________ correct and the variable on the horizontal (x) axis is
___________.
These variables are _________ related. - Answers consumption; disposable income; directly
What are the variables (the items measured on the axes) in a graph of the (a) consumption schedule and
(b) saving schedule? Are the variables inversely (negatively) related or are they directly (positively)
related?
b. Saving schedule
The variable on the vertical (y) axis is __________ and the variable on the horizontal (x) axis is
____________.
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