ECON 2020 Study Guide - Midterm Guide: Autarky, Aggregate Demand, Government Budget Balance
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Please read questions carefully before you start answering them. If your disposable income increases from ,000 to ,000 and your consumption increases from ,000 to ,000, your marginal propensity to consume is: 0. 2, 0. 4, 0. 6, 0. 8. An increase in the marginal propensity to consume: increases the multiplier, shifts the autonomous investment line upward, decreases the multiplier, shifts the autonomous investment line downward. Suppose investment spending increases by billion and as a result the equilibrium income increases by billion. The investment multiplier is: 8, 10, 4, 0. 25. 4. (figure: consumption and real gdp) look at the figure consumption and real gdp. The slope of the consumption function is called the: marginal propensity to save, average propensity to consume, marginal propensity to consume, marginal consumption increment. 5. (figure: consumption and real gdp) look at the figure consumption and real gdp. The marginal propensity to consume is: 0, 0. 5, 1. 0, 2. 0.
