Mod 16 Quiz

The marginal propensity to consume is:

• increasing if the marginal propensity to save is increasing.

• the proportion of total disposable income that the average family consumes.

• the change in consumer spending divided by the change in aggregate disposable income.

• the change in consumer spending less the change in aggregate disposable income.

• equal to 1.

If the MPC is 0.8, then the multiplier is:

• 4.

• 5.

• 8.

• 10.

• 2.

If disposable income increases by $5 billion and consumer spending increases by $4 billion, the marginal propensity to consume is equal to:

• 20.

• 0.8.

• 1.25.

• 9.

• 0.2.

The MPC plus the MPS must:

• equal the value of the multiplier.

• equal 1.

• be less than 1.

• be greater than 1.

• equal zero.

Planned investment spending will decrease if:

• the interest rate rises.

• firms expect the growth of real GDP to increase.

• firms are currently producing near full capacity.

• consumer expectations about future wealth grow more optimistic.

• firms have more optimistic expectations about future profits.