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Given a national income of $900 billion, an MPC of 0.8, and autonomous consumption of
$60 billion, what is the level of consumption spending?
a.$700 billion
b.$760 billion
c.$780 billion
d.$840 billion
e.$900 billion
42. The average propensity to consume (C/Y) for the period 1970 to 1991 ranged between
a.0 and - 0.80
b.0 and 0.01
c.0.65 and 0.80
d.0.95 and 1.00
e.1.20 and 1.50
43. The short-run consumption curve may shift upward over the long run largely because
a.people become wealthier
b.the marginal propensity to save increases
c.the 45-degree line becomes a 90-degree line
d.the demand curve for investment is upward sloping
e.economic growth, although still positive, slows down
44. That part of national income not spent on consumption is defined as
a.transitory income
b.permanent income
c.disposable income
d.autonomous consumption
e.saving
45. The marginal propensity to save is
a.the change in saving induced by a change in consumption
b.(change in S) × (change in Y)
c.1 – MPC/MPC
d.(change in Y – bY)/(change in Y) where b is the MPC
e.1 – MPC
46. If national income is $400 billion, consumption spending is $380 billion, and MPC is 0.5,
what is the level of saving?
a.$20 billion
b.$210 billion
c.$380 billion
d.$590 billion
e.$780 billion
47. If national income is $400 billion, autonomous consumption is $60 billion, and MPC is
0.8, what is the level of saving?
a.$20 billion
b.$210 billion
c.$380 billion
d.$590 billion
e.$780 billion
48. The 45-degree line, measuring Y = C + S, is also called the
a.saving line
b.consumption curve
c.income line
d.investment curve
e.GDP curve
49. If consumption spending is greater than national income,
a.saving is positive
b.dissaving occurs
c.saving is exactly zero
d.a depression results
e.investment is greater than saving
50. Caterpillar, Inc. deciding to expand its forklift production line and Sears deciding to open
an outlet in Raleigh, North Carolina, are examples of
a.transitory decisions
b.investment decisions
c.saving decisions
d.autonomous consumption
e.permanent income
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