Macroeconomics - Chapter 10

40 Questions | Total Attempts: 258

SettingsSettingsSettings
Macroeconomics - Chapter 10 - Quiz

.


Questions and Answers
  • 1. 
    The most important determinant of consumer spending is
    • A. 

      The level of household borrowing

    • B. 

      Consumer expectations

    • C. 

      The stock of wealth

    • D. 

      The level of income

  • 2. 
    The most important determinant of consumption and saving is the
    • A. 

      Level of bank credit

    • B. 

      Level of income

    • C. 

      Interest rate

    • D. 

      Price level

  • 3. 
    If Carol's disposable income increases from $1200-$1700 and her level of saving increases from minus $100 to a plus $100 per marginal propensity to
    • A. 

      Save is 3/5

    • B. 

      Consume is one half

    • C. 

      Consume is 3/5

    • D. 

      Consume is 2/5

  • 4. 
    With a marginal propensity to save of .4, the marginal propensity to consume will be
    • A. 

      1.0 minus 0.4

    • B. 

      0.4 minus 1.0

    • C. 

      The reciprocal of the MPS

    • D. 

      0.4

  • 5. 
    The MPC can be defined as that fraction of a
    • A. 

      Change in income that is not spent

    • B. 

      Change in income that is spent

    • C. 

      Given total income that is not consumed

    • D. 

      Given total income that is consumed

  • 6. 
    The 45° line on a graph relating consumption and income shows
    • A. 

      All the points where the MPC is constant

    • B. 

      All the points at which saving and income are equal

    • C. 

      All the points at which consumption and income is equal

    • D. 

      The amounts households will plan to say that each possible level of income

  • 7. 
    As disposable income goes up, the
    • A. 

      Average propensity to consume falls

    • B. 

      Average propensity to save falls

    • C. 

      Volume of consumption declines absolutely

    • D. 

      Volume of investment to diminishes

  • 8. 
    The consumption schedule shows
    • A. 

      That the MPC increases in proportion to GDP

    • B. 

      That households consume more when interest rates are low

    • C. 

      That consumption depends primarily on the level of business investment

    • D. 

      The amounts households intend to consume at various possible levels of aggregate income

  • 9. 
    The consumption schedule directly relates
    • A. 

      Consumption to the level of disposable income

    • B. 

      Saving to the level of disposable income

    • C. 

      Disposable income to disposable income

    • D. 

      Consumption to saving

  • 10. 
    A decline in disposable income
    • A. 

      Increases consumption by moving upward along a specific consumption schedule

    • B. 

      Decreases consumption because it shifts the consumption schedule downward

    • C. 

      Decreases consumption by moving downward along a specific consumption schedule

    • D. 

      Increases consumption because it shifts the consumption schedule upward

  • 11. 
    The APC is calculated as
    • A. 

      Change in consumption/change in income

    • B. 

      Consumption/income

    • C. 

      Change in income/change in consumption

    • D. 

      Income/consumption

  • 12. 
    The consumption schedule shows
    • A. 

      A direct relationship between aggregate consumption and accumulated wealth

    • B. 

      A direct relationship between aggregate consumption and aggregate income

    • C. 

      An inverse relationship between aggregate consumption and accumulated financiaal wealth

    • D. 

      An inverse relationship between aggregate consumption and the price level

  • 13. 
    The APC can be defined as the fraction of a
    • A. 

      Change in income that is not spent

    • B. 

      Change in income that is spent

    • C. 

      Specific level of total income that is not consumed

    • D. 

      Specific level of total income that is consumed

  • 14. 
    The consumption schedule indicates that
    • A. 

      Consumers will maximize their satisfaction where the consumption schedule and 45° line intersect

    • B. 

      Up to a point, consumption exceeds income but then falls below income

    • C. 

      The MPC falls as income increases

    • D. 

      Households consume as much as they earn

  • 15. 
    The consumption schedule is drawn on the assumption that as income increases, consumption will
    • A. 

      Be unaffected

    • B. 

      Increase absolutely but remain constant as a percentage of income

    • C. 

      Increase absolutely but decline as a percentage of income

    • D. 

      Increase both absolutely and as a percentage of income

  • 16. 
    Which of the following is correct
    • A. 

      APC plus APS equals one

    • B. 

      APC plus MPS equals one

    • C. 

      APS plus MPC equals one

    • D. 

      APS plus MPS equals one

  • 17. 
    The consumption schedule is such that
    • A. 

      Both the APC and the MPC increase as incomes rise

    • B. 

      The APC is constant and the MPC declines as income rises

    • C. 

      The MPC is constant and the APC declines as income rises

    • D. 

      The MPC and the APC must be equal at all levels of income

  • 18. 
    The consumption and saving schedules reveal that the
    • A. 

      MPC is greater than zero but less than one

    • B. 

      MPC and APC are equal at the point where the consumption schedules intersects the 45° line

    • C. 

      APS is positive at all income levels

    • D. 

      MPC is equal to or greater thaan one at all income levels

  • 19. 
    The size of the MPC is assumed to be
    • A. 

      Less than zero

    • B. 

      Greater than one

    • C. 

      Greater than zero but less than one

    • D. 

      Two or more

  • 20. 
    As disposable income increases, consumption
    • A. 

      And saving both increase

    • B. 

      And saving both decrease

    • C. 

      Decreases and saving increases

    • D. 

      Increases and saving decreases

  • 21. 
    The relationship between consumption and disposable income is such that
    • A. 

      An inverse and stable relationship exists between consumption and income

    • B. 

      A direct, but very volatile, relationship exists between consumption and income

    • C. 

      A direct and relatively stable relationship exists between consumption and income

    • D. 

      The two are usually equal

  • 22. 
    If the MPC is .8 to and disposable income is $200, then
    • A. 

      Consumption and saving cannot be determined from the information given

    • B. 

      Saving will be $20

    • C. 

      Personal consumption expenditures must be $160

    • D. 

      Saving will be $40

  • 23. 
    The MPC for an economy is
    • A. 

      The slope of the consumption schedule or line

    • B. 

      The slope of the saving schedule or line

    • C. 

      One divided by the slope of the consumption schedule or line

    • D. 

      One divided by the slope of the savings schedule or line

  • 24. 
    In contrast to investments, consumption is
    • A. 

      Relatively unstable

    • B. 

      Relatively stable

    • C. 

      Measurable

    • D. 

      Unmeasurable

  • 25. 
    Assume the following consumption schedule C= 20 + .9Y, where C is consumption and why is disposable income. The MPC is
    • A. 

      .45

    • B. 

      .20

    • C. 

      .50

    • D. 

      .90

Back to Top Back to top