2. The Goods Market

Question 1

Autonomous consumption (C_0) is …

Answer 1

independent of income (Y)

Question 2

Consumption is made up of two parts namely?

Answer 2

1. Autonomous consumption

2. Induced consumption

Question 3

Expenditure on GDP: C + I + G + (X – IM)

C ?
I ?
G ?
X - IM ?

Answer 3

Consumption = purchases by consumers

Investment = nonresidential + residential

Government spending = services offered after spending

Trade balance = difference between exports and imports

Question 4

Gross domestic expenditure = …

Answer 4

Consumer spending + investment spending + government spending

Question 5

Induced consumption (c1 Yd) is that part of consumption that is (1)… (Yd) and (2)… (c1).

Answer 5

(1) dependent on income

(2) the marginal propensity to consume