Question 1

FIGURE 21-2 Refer to Figure 21-2.If disposable income is $3000,desired consumption expenditure is equal to

Accepted Answer

The answer of  FIGURE 21-2 Refer to Figure 21-2.If...

Question 2

The table below shows disposable income and desired consumption for a closed economy with no government.  TABLE 21-1 Refer to Table 21-1.The marginal propensity to save is equal to

Accepted Answer

The marginal propensity to save (MPS) is the fraction of an increase in income that households save instead of consuming. It can be calculated as the change in saving divided by the change in income. In this case, we can use the data in the table to find the change in saving and income between each level.

For example, between the first and second levels, income increases from $100 to $200, and desired consumption increases from $160 to $280. The change in income is $100, and the change in saving is $20 ($280 - $260). Therefore, the MPS is 0.2 ($20/$100).

Calculating the MPS for the other changes gives us:

- Between levels 2 and 3: MPS = 0.4
- Between levels 3 and 4: MPS = 0.6
- Between levels 4 and 5: MPS = 0.67
- Between levels 5 and 6: MPS = 0.8

The average MPS over the whole range of income is the weighted average of these values, where the weights are the changes in income. We can calculate this as:

(0.2*100 + 0.4*100 + 0.6*100 + 0.67*100 + 0.8*100)/500 = 0.54

Therefore, the best choice is C, 0.6, which is the MPS between the third and fourth levels and is closest to the average MPS of 0.54.

Question 3

The table below shows disposable income and desired consumption for a closed economy with no government.  TABLE 21-2 Refer to Table 21-2.The marginal propensity to consume is equal to

Accepted Answer

The answer of The table below shows disposable income and...

Question 4

FIGURE 21-1 Refer to Figure 21-1.If disposable income is zero,then

Accepted Answer

Autonomous desired consumption represents the level of consumption that is not influenced by disposable income. Therefore, if disposable income is zero, the level of autonomous desired consumption will still exist and will be represented by 0A on the graph.

Question 5

The table below shows disposable income and desired consumption for a closed economy with no government.  TABLE 21-2 Refer to Table 21-2.The marginal propensity to save is equal to

Accepted Answer

The answer of The table below shows disposable income and...

Question 6

FIGURE 21-2 Refer to Figure 21-2.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is

Accepted Answer

The APC is calculated by dividing consumption by disposable income. In this case, at a disposable income of $1000, the consumption is also $1000 which results in an APC of 1.0. Therefore, the answer is B.

Question 7

FIGURE 21-2 Refer to Figure 21-2.The amount of desired consumption expenditure that is unrelated to the level of disposable income is

Accepted Answer

The answer of  FIGURE 21-2 Refer to Figure 21-2.The...

Question 8

Consider a consumption function that is upward sloping but flatter than the 45-degree line.When real disposable income rises,

Accepted Answer

Given a consumption function that is upward sloping but flatter than the 45-degree line, when real disposable income increases, both desired consumption and saving will rise. This is because the consumption function being upward sloping indicates that as income increases, consumption increases, but at a rate slower than the increase in income (since it's flatter than the 45-degree line, which represents equal increases in consumption and income), allowing for savings to increase as well.

Question 9

Desired consumption divided by disposable income is called the

Accepted Answer

The formula for the average propensity to consume is desired consumption divided by disposable income. This measures the amount of each additional dollar of disposable income that is spent on consumption.

Question 10

The table below shows disposable income and desired consumption for a closed economy with no government.  TABLE 21-1 Refer to Table 21-1.The marginal propensity to consume is equal to

Accepted Answer

The answer of The table below shows disposable income and...

Question 11

FIGURE 21-2 Refer to Figure 21-2.The slope of the consumption function in the figure is equal to

Accepted Answer

The slope of the consumption function represents the change in consumption for a given change in income. This is the definition of marginal propensity to consume (MPC). Therefore, the correct choice is A, the MPC.

Question 12

If the consumption function coincides with the 45-degree line,then we know that

Accepted Answer

When the consumption function coincides with the 45-degree line, it means that all disposable income is consumed, leaving no savings, hence desired saving is zero.

Question 13

Consider a consumption function of the following form: C = 50 + (0.6)Y_D.At what level of disposable income will desired savings be equal to zero?

Accepted Answer

Desired savings are zero when consumption equals disposable income. Setting C = YD, we have 50 + 0.6YD = YD. Solving for YD gives YD = 125.

Question 14

On a graph of a consumption function,what is the significance of the 45-degree line?

Accepted Answer

The 45-degree line represents the points where actual disposable income equals desired consumption. This means that any point on the line represents an equilibrium point where consumption and income are equal. Points above the line represent a situation where consumption is greater than income, and points below the line represent a situation where income is greater than consumption. Therefore, the 45-degree line is a useful tool for understanding the relationship between consumption and income in an economy.

Question 15

FIGURE 21-2 Refer to Figure 21-2.The slope of the consumption function in the figure is equal to

Accepted Answer

The answer of  FIGURE 21-2 Refer to Figure 21-2.The...

Question 16

If a family's annual disposable income rose from $60 000 to $65 000 and their desired consumption expenditures rose from $50 000 to $54 000,it can be concluded that the family's

Accepted Answer

The marginal propensity to consume (MPC) is the increase in consumption expenditures relative to the increase in disposable income. MPC = Δ consumption expenditures / Δ disposable income. In this case, the MPC can be calculated as follows: MPC = (54,000 - 50,000) / (65,000 - 60,000) = 4,000 / 5,000 = 0.8. Therefore, choice C is the correct answer.

Question 17

FIGURE 21-2 Refer to Figure 21-2.Which of the following is the correct equation for the consumption function depicted in the figure?

Accepted Answer

The answer of  FIGURE 21-2 Refer to Figure 21-2.Which...

Question 18

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired saving rises from $50 billion to $60 billion.We can conclude that the marginal propensity to save for this economy is

Accepted Answer

The marginal propensity to save is the change in desired saving divided by the change in disposable income. In this case, the change in desired saving is $60 billion - $50 billion = $10 billion, and the change in disposable income is $440 billion - $400 billion = $40 billion. Therefore, the marginal propensity to save is $10 billion / $40 billion = 0.25.

Question 19

FIGURE 21-2 Refer to Figure 21-2.What is the marginal propensity to consume associated with this consumption function?

Accepted Answer

The answer of  FIGURE 21-2 Refer to Figure 21-2.What...

Question 20

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired consumption rises from $350 billion to $380 billion.We can conclude that the marginal propensity to consume for this economy is

Accepted Answer

The formula for marginal propensity to consume (MPC) is the change in consumption divided by the change in disposable income. 
MPC = (Change in consumption)/(Change in disposable income) 
In this case, the change in consumption is $30 billion ($380 billion – $350 billion) and the change in disposable income is $40 billion ($440 billion – $400 billion). 
MPC = 30/40 = 0.75. 
Therefore, the answer is B, 0.75.

Quiz 21: The Simplest Short-Run Macro Model

FIGURE 21-2 Refer to Figure 21-2.If disposable income is $3000,desired consumption expenditure is equal to

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 Refer to Table 21-1.The marginal propensity to save is equal to

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-2 Refer to Table 21-2.The marginal propensity to consume is equal to

FIGURE 21-1 Refer to Figure 21-1.If disposable income is zero,then

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-2 Refer to Table 21-2.The marginal propensity to save is equal to

FIGURE 21-2 Refer to Figure 21-2.The average propensity to consume (APC) will be equal to one (1.0) when disposable income is

FIGURE 21-2 Refer to Figure 21-2.The amount of desired consumption expenditure that is unrelated to the level of disposable income is

Consider a consumption function that is upward sloping but flatter than the 45-degree line.When real disposable income rises,

Desired consumption divided by disposable income is called the

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 Refer to Table 21-1.The marginal propensity to consume is equal to

FIGURE 21-2 Refer to Figure 21-2.The slope of the consumption function in the figure is equal to

If the consumption function coincides with the 45-degree line,then we know that

Consider a consumption function of the following form: C = 50 + (0.6) Y_D.At what level of disposable income will desired savings be equal to zero?

On a graph of a consumption function,what is the significance of the 45-degree line?

FIGURE 21-2 Refer to Figure 21-2.The slope of the consumption function in the figure is equal to

If a family's annual disposable income rose from $60 000 to $65 000 and their desired consumption expenditures rose from $50 000 to $54 000,it can be concluded that the family's

FIGURE 21-2 Refer to Figure 21-2.Which of the following is the correct equation for the consumption function depicted in the figure?

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired saving rises from $50 billion to $60 billion.We can conclude that the marginal propensity to save for this economy is

FIGURE 21-2 Refer to Figure 21-2.What is the marginal propensity to consume associated with this consumption function?

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired consumption rises from $350 billion to $380 billion.We can conclude that the marginal propensity to consume for this economy is

Quiz 21: The Simplest Short-Run Macro Model

FIGURE 21-2 Refer to Figure 21-2.If disposable income is $3000,desired consumption expenditure is equal to

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 Refer to Table 21-1.The marginal propensity to save is equal to

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-2 Refer to Table 21-2.The marginal propensity to consume is equal to

FIGURE 21-1 Refer to Figure 21-1.If disposable income is zero,then

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-2 Refer to Table 21-2.The marginal propensity to save is equal to

FIGURE 21-2 Refer to Figure 21-2.The average propensity to consume (APC) will be equal to one (1.0) when disposable income is

FIGURE 21-2 Refer to Figure 21-2.The amount of desired consumption expenditure that is unrelated to the level of disposable income is

Consider a consumption function that is upward sloping but flatter than the 45-degree line.When real disposable income rises,

Desired consumption divided by disposable income is called the

The table below shows disposable income and desired consumption for a closed economy with no government. TABLE 21-1 Refer to Table 21-1.The marginal propensity to consume is equal to

FIGURE 21-2 Refer to Figure 21-2.The slope of the consumption function in the figure is equal to

If the consumption function coincides with the 45-degree line,then we know that

Consider a consumption function of the following form: C = 50 + (0.6) YD.At what level of disposable income will desired savings be equal to zero?

On a graph of a consumption function,what is the significance of the 45-degree line?

FIGURE 21-2 Refer to Figure 21-2.The slope of the consumption function in the figure is equal to

If a family's annual disposable income rose from $60 000 to $65 000 and their desired consumption expenditures rose from $50 000 to $54 000,it can be concluded that the family's

FIGURE 21-2 Refer to Figure 21-2.Which of the following is the correct equation for the consumption function depicted in the figure?

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired saving rises from $50 billion to $60 billion.We can conclude that the marginal propensity to save for this economy is

FIGURE 21-2 Refer to Figure 21-2.What is the marginal propensity to consume associated with this consumption function?

Suppose disposable income for an entire economy rises from $400 billion to $440 billion and desired consumption rises from $350 billion to $380 billion.We can conclude that the marginal propensity to consume for this economy is

Consider a consumption function of the following form: C = 50 + (0.6) Y_D.At what level of disposable income will desired savings be equal to zero?