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ECON_CH27.pdf

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Department
Administrative Studies
Course
ADMS 1010
Professor
All Professors
Semester
Winter

Description
University of LethbridgeDepartment of EconomicsECON 1012Introduction to MacroeconomicsInstructorMichael G LanyiCH 27Expenditure Multipliers1Disposable income isAaggregate income minus transfer paymentsBused for consumption onlyCaggregate income plus transfer paymentsDaggregate income minus taxesEaggregate income minus taxes plus transfer paymentsTopicFixed Prices and Expenditure Plans2Dissaving occurs when a householdAsaves more than it spendsBspends more than it savesCborrowsDspends less than it receives in disposable incomeEconsumes more than it receives in disposable incomeTopicFixed Prices and Expenditure Plans3Complete the following sentence A householdAconsumes or saves out of disposable incomeBconsumes or pays taxes out of disposable incomeConly consumes out of disposable incomeDconsumes saves or pays taxes out of disposable incomeENone of the aboveTopicFixed Prices and Expenditure Plans4The marginal propensity to consume is theAfraction of the last dollar of disposable income received that is savedBfraction of the first dollar of disposable income received that is savedCtotal amount of consumption divided by the total amount of disposable incomeDfraction of the first dollar of disposable income received that is consumedEfraction of a change in disposable income that is spent on consumptionTopicFixed Prices and Expenditure Plans5The marginal propensity to consume is calculated asAconsumption expenditure divided by the change in disposable incomeBthe change in consumption expenditure divided by the change in disposable incomeCconsumption expenditure divided by total disposable incomeDthe change in consumption expenditure divided by disposable incomeEthe change in consumption expenditure divided by savingTopicFixed Prices and Expenditure Plans16The marginal propensity to save is calculated asAsaving divided by the change in disposable incomeBthe change in saving divided by the change in consumption expenditureCsaving divided by disposable incomeDthe change in saving divided by disposable incomeEthe change in saving divided by the change in disposable incomeTopicFixed Prices and Expenditure Plans7The marginal propensity to consumeAis between zero and 1Bis greater than 1 if dissaving is presentCis between 12 and 1Dis negative if dissaving is presentEis greater than 1 but less than 2TopicFixed Prices and Expenditure Plans8The marginal propensity to saveAis greater than 1 but less than 2Bequals 1MPCCis greater than 1Dis between zero and 12Eis negativeTopicFixed Prices and Expenditure Plans9The sum of the marginal propensity to save and the marginal propensity to consumeAis greater than zero but less than 1Balways equals 1Calways equals 0Dsometimes equals 1Enever equals 1TopicFixed Prices and Expenditure Plans10If the marginal propensity to save is 02 thenAthe marginal propensity to consume is 08Bthe marginal propensity to consume is also 02Cthe slope of the consumption function is 02Dthe slope of the saving function is 08Ethe marginal propensity to consume is larger than 08TopicFixed Prices and Expenditure Plans11If a households disposable income increases from 12000 to 22000 and at the same time its consumptionexpenditure increases from 4000 to 9000 thenAthe household is dissavingBthe marginal propensity to save over this range is negativeCthe slope of the consumption function is 06Dthe marginal propensity to consume over this range is negativeEthe slope of the consumption function is 05TopicFixed Prices and Expenditure Plans212If consumption expenditure for a household increases from 300 to 500 when disposable income increases from 200to 500 the marginal propensity to consume isAequal to 133BnegativeCequal to 067Dequal to 075Eequal to 1TopicFixed Prices and Expenditure Plans13If the marginal propensity to consume is 085 what change in consumption expenditure would you expect ifdisposable income increases by 200 millionA170 millionB18 millionC1800 millionD20 millionE180 millionTopicFixed Prices and Expenditure Plans14If consumption is 8000 when disposable income is 10000 the marginal propensity to consumeAis 125Bis 080Cis 075Dis 050Ecannot be determined from the information givenTopicFixed Prices and Expenditure Plans3
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