WorksheetsNational Income Equilibrium
Total questions: 15
Worksheet time: 7mins
The equilibrium level of National Income in a closed economy is where:
MPC = APC
Consumption equals savings
Aggregate expenditure equal National Income.
Unemployment rate is about 3 percent of labour force.
Ratio of total consumption to total income.
Marginal Propensity to Consume (MPC)
Average Propensity to Consume (APC)
Average Propensity to Savings (APS)
Marginal Propensity to Savings (MPS)
Refers to the purchase of goods and services by individuals or households.
Investment
Export
Import
Consumption
Relationship between consumption level and income level.
Investment function
Consumption function
Savings function
Export function
Ratio of change in total consumption to the change in total income.
Average Propensity to Consume (APC)
Marginal Propensity to Consume (MPC)
Average Propensity to Savings (APS)
Marginal Propensity to Savings (MPS)
Disposable income can be written as ___.
C = S + I
Y = C + I
Y = C + I + G
Y - T
Ratio of total savings to total income.
APC
MPC
APS
MPS
In the circular flow of income, government spending and exports are ___.
injections and leakages, respectively.
leakage and injections, respectively.
components of aggregate supply
injections
When income is zero (Y=0), savings are __.
positive
zero
null
negative
Which one is NOT true?
APC + APS = 1
C = a + b Yd
MPC + MPS = 1
C = -a + b Yd
National income equilibrium occurs when
demand equals supply in the product market
aggregate supply equals the nominal value of national income
aggregate expenditures equals aggregate supply in the economy
total injections exceed total leakages
Investment may decrease due to
an increase in interest rate
an increase in business optimism
an increase in profit
a decrease in tax rate
An equilibrium equation for an open economy is
Y = C + I + G + T + X - M
Y = C + I + G + (X - M)
S + I + M = T - X - G
S - T + X = I + G - M
If the income level is RM10, 000 and consumption expenditure is RM2, 000 how much is the average propensity to save (APS)?
0.2
0.4
0.6
0.8
Goods and services that are purchased from foreign countries.
Export
Induced tax
Autonomous tax
Import
