1102E - CHAPTER 7 - EQUILIBRIUM OUTPUT

The marginal propensity to consume is

• the change in consumption divided by the change in income.
• consumption divided by income.
• the change in consumption divided by the change in saving.
• the change in saving divided by the change in income.

The marginal propensity to save is

• the change in saving divided by the change in income.
• 1 + marginal propensity to consume
• income divided by saving.
• total saving divided by total income.

Saving equals

• Disposable income - consumption.
• Disposable income - planned I.
• Disposable income - actual I.
• Inventory changes.

If the marginal propensity to save is .60, marginal propensity to consume

• is 1.60.
• is .30.
• is .40.
• cannot be determined by the given information.

In a closed economy with no government, aggregate expenditure is

• consumption plus investment.
• saving plus investment.
• consumption plus the marginal propensity to consume.
• marginal propensity to consume + marginal propensity to save.

If Lisa of BLACKPINK’s income is reduced to zero after she loses her job, her consumption will be ________ and her saving will be ________.

• less than zero; less than zero
• greater than zero; greater than zero
• less than zero; greater than zero
• greater than zero; less than zero

If you save $80 more when you experience a $400 rise in your income,

• your marginal propensity to save is 0.25.
• your marginal propensity to consume is 0.80.
• your marginal propensity to consume is 0.85.
• your marginal propensity to save is 0.40.

If consumption is $30,000 when income is $35,000, and consumption increases to $36,000 when income increases to $43,000, the marginal propensity to consume is

• 0.65.
• 0.80.
• 0.75.
• 0.95.

If consumption is $10,000 when income is $10,000, and consumption increases to $11,000 when income increases to $12,000, the marginal propensity to save is

• 0.10.
• 0.25.
• 0.50.
• 0.90.

Suppose consumption is $5,000 when income is $8,000 and the marginal propensity to consume equals 0.9. When income increases to $10,000, consumption is

• $4,500.
• $2,700.
• $6,800.
• $7,200.