University of Cape Town
School of Economics
Macroeconomics
ECO1011S
November Exam 2022/2023
,QUESTION 1:
• The marginal propensity to consume (mpc) can be defined as th
fraction of:
a) a change in income that is spent by private individuals.
b) a change in income that is spent across the economy.
c) a change in income that is saved.
d) income that is spent by private individuals.
e) income that is saved.
,ANSWER:
• A – change in income that is spent by private individuals
• From the derivation of the mpc, we observe that the mpc is the fraction
proportion of a change in income that is consumed by private individua
households. It is not derived as a function of total income in the econom
, QUESTION 2:
• Which of the following makes the multiplier larger? An increase
the
a) marginal propensity to import.
b) tax rate.
c) marginal propensity to consume.
d) real GDP.
e) marginal propensity to save.
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