Home / Questions / The marginal propensity to consume is A) the slope of the savings function. B) never gr
The marginal propensity to consume is
A) the slope of the savings function.
B) never greater than 1.
C) the percentage or fraction of income that is consumed.
D) the percentage change in disposable income.
80) The size of the marginal propensity to consume
A) is negative if dissaving is present.
B) is between 0 and 1.
C) equals 1.
D) exceeds 1.
81) If consumption expenditures for a household increase from $1000 to $1800 when disposable income rises from $1000 to $2000, the marginal propensity to consume is
A) 0.8.
B) 0.18.
C) 0.3.
D) 0.2.
82) If the marginal propensity to consume is 0.8, every $10 increase in disposable income increases
A) consumption expenditure by $0.80.
B) consumption expenditure by $18.00.
C) saving by $0.20.
D) consumption expenditure by $8.00.
83) Suppose disposable income increases from $7 trillion to $8 trillion. At the same time, consumption expenditure increases from $6.8 trillion to ________. Thus the MPC must equal ________.
A) $7.8 trillion; 0.80
B) $7.6 trillion; 0.80
C) $7.4 trillion; 0.40
D) $8 trillion; 1.00
84) When disposable income increases from $6 trillion to $6.5 trillion, consumption expenditure increase from $5.5 trillion to $5.9 trillion. The MPC equals
A) 0.75.
B) 0.76.
C) 0.8.
D) 0.2.
85) Between 2008 and 2009 the government reported that disposable income decreased by $300 billion. If the MPC equals 0.8, then consumption expenditure
A) decreases by $40 billion.
B) decreases by $1,500 billion.
C) decreases by $24 billion.
D) decreases by $32 billion.
86) Between 2008 and 2009 the government reported that disposable income decreased by $300 billion and consumption expenditure decreased by $180 billion. Based on these data, the MPC equals
A) 4.4.
B) 0.80.
C) 0.60.
D) $120 billion.
87) Suppose disposable income increases from $5 trillion to $6 trillion. As a result, consumption expenditure increases from $4 trillion to ________. This result means the MPC equals ________.
A) $4.5 trillion; 4.50
B) $5 trillion; 0.80
C) $4.8 trillion; 0.80
D) $6 trillion; 1.00
88) The marginal propensity to save is
A) total saving divided by total disposable income.
B) total saving divided by the change in disposable income.
C) the change in saving divided by the change in consumption expenditure.
D) the change in saving divided by the change in disposable income.
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