ECN 2025 Lecture Notes - Lecture 10: Nominal Interest Rate, Demand Curve, Real Interest Rate
Document Summary
The most important determinant of consumer spending is: the level of income. The most important determinant of consumption and saving is the: level of income. If carol"s disposable income increases from ,200 to ,700 and her level of saving increases from minus to a plus , her marginal propensity to: consume is three-fifths. With a marginal propensity to save of . 4, the marginal propensity to consume will be: The mpc can be defined as that fraction of a: change in income that is spent. The 45-degree line on a graph relating consumption and income shows: all the points at which consumption and income are equal. As disposable income goes up, the: average propensity to consume falls. A decline in disposable income: decreases consumption by moving downward along a specific consumption schedule. As disposable income increases, consumption: and saving both increase. The mpc for an economy is: the slope of the consumption schedule or line.
