Which of the following statements is FALSE?
A) disposable income - saving = consumption
B) consumption + saving = disposable income
C) saving = disposable income - consumption
D) consumption = saving - disposable income
2) Keynesian theory is based on the belief that
A) saving and consumption are influenced primarily by real current income.
B) saving is influenced primarily by the interest rate.
C) planned savings equal planned investment only at full employment.
D) full employment is automatically attained in any economy.
3) Saving and savings differ in that
A) saving is a stock, and savings is a flow.
B) saving always exceeds savings.
C) savings is a stock, and saving is a flow.
D) savings can be negative, but saving cannot.
4) Saving equals
A) disposable income minus taxes.
B) disposable income minus consumption spending.
C) disposable income minus savings.
D) consumption spending minus savings.
5) At a level of real disposable income of 0, consumption is $5,000. Saving equals
D) an amount that cannot be determined with the information available.
6) According to Keynesian theory, the most important determinant of saving and consumption is
A) the level of real income.
B) the stock of liquid assets.
C) the stock of durable goods in the consumer's possession.
D) the level of consumer indebtedness.
7) The consumption function shows
A) a positive relationship between an individual's stock of wealth and his level of planned consumption.
B) a positive relationship between disposable income and planned consumption.
C) a negative relationship between planned consumption and aggregate saving.
D) a negative relationship between disposable income and planned consumption.
8) The relationship between households' planned consumption expenditures and households' level of real income is called
A) the consumption function.
B) the savings function.
C) the investment function.
D) the household aggregate demand function.
9) According to Keynes, household planned consumption
A) decreases as disposable income increases.
B) is unstable and fluctuates widely with changes in disposable income.
C) is positively related to real disposable income.
D) is indirectly related to the interest rate.
10) According to Keynes, the primary determinant of a person's saving is not
A) the person's level of income, but is the desired real income of the person.
B) the person's level of savings, but is the expected interest rate in the near future.
C) the interest rate, but is the level of savings the person has.
D) the interest rate, but is the level of the person's real income.
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