ECON 1205 Exam 3 - MPC and MPS Certification Review Exam Questions And Answers Verified Solution.
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Module
MPSC.
Institution
MPSC.
what is the MPS? - correct answer The change in saving divided by the change in income
If the MPS is 0.60, the MPC is - correct answer 0.40
Saving equals... - correct answer Y - C
...
what is the MPS? - correct answer The change in saving divided by the change in
income
If the MPS is 0.60, the MPC is - correct answer 0.40
Saving equals... - correct answer Y-C
Higher interest rates are likely to... - correct answer decrease consumer spending
and increase consumer saving
The vertical line against the y-axis between the beginning of the two consumption functions equals... -
correct answer consumption when income equals 0
When does consumption equal income? - correct answer at equilibrium
When does saving equal zero? - correct answer at equilibrium
An increase in income is represented by... - correct answer a movement from one
point to another point upwards on the consumption function
what is the equation for MPC? - correct answer change in C / change in Y
what is the equation for MPS? - correct answer change in S / change in Y
In an equation for an aggregate saving/consumption function, what is the role of MPS/MPC? - correct
answer it is the slope
, In an equation for an aggregate saving/consumption function, what is the intercept? - correct answer
the initial saving/consumption amount
how do you find aggregate saving when given aggregate income? - correct answer
insert the aggregate income value as Y and solve the equation for S
how do you find the equation for an aggregate consumption/saving function? - correct answer
use the equation for MPC/MPS to solve for slope, and find the intercept from the graph
what is implied by two consumption functions having the same slope? - correct answer
they have the same MPC values
what consumption functions have the largest MPC? - correct answer the ones with
the steeper slopes
what happens to planned investment is interest rate increases? - correct answer it
decreases
what happens to planned investment is interest rate decreases? - correct answer it
increases
what is the interest rate? - correct answer the cost of borrowing money
what can change planned investment? - correct answer nothing, it is not changed
by other variables
what is the difference between aggregate expenditure and aggregate consumption? - correct answer
they're the same thing
what is the equation for planned expenditure? - correct answer average
consumption + planned investment
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