The arithmetic value of 1 - MPC equals
52) The ratio of the change in consumption to the change in disposable income is the
A) marginal propensity to consume.
B) marginal propensity to save.
C) average propensity to consume.
D) average propensity to save.
53) The marginal propensity to consume is found by
A) dividing consumption by income.
B) dividing income by consumption.
C) dividing the change in income by the change in consumption.
D) dividing the change in consumption by the change in income.
54) The consumption function will shift upward when
A) real income increases.
B) saving increases.
C) the real wealth of the average household increases.
D) population decreases.
55) The average price of a share of stock on the Toronto Exchange falls by 30 percent. Other things constant, we would expect
A) an increase in the marginal propensity to consume.
B) a decrease in the marginal propensity to consume.
C) a shift up of the consumption function.
D) a shift down of the consumption function.
56) Compared to consumption spending, investment historically has tended to be
B) more stable.
D) more variable.
57) The planned investment function shows that
A) real gross investment falls as real NNP increases.
B) a negative relationship exists between the level of planned investment and the interest rate.
C) a positive relationship exists between planned consumption and planned investment.
D) at higher levels of planned saving, planned investment increases.
58) The planned investment function will shift downward if
A) real disposable income increases.
B) the interest rate falls.
C) expectations become more pessimistic.
D) the existing stock of capital decreases.
59) In the Keynesian model, planned investment is inversely related to
A) the interest rate.
B) the level of income.
C) the wage rate.
D) the tax rate.
60) Technological progress should lead to
A) an outward (rightward) shift in the investment function.
B) a downward movement of the investment function.
C) an unchanged investment function.
D) less savings.
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