Chapter 5

Question 1

Which of these relations is correct?
APC -APS=1
MPC+MPS=1
APC+MPC=1
1+MPC=MPS

Answer 1

MPC+MPS=1

Question 2

Very low levels of disposable income what happens?

Answer 2

Consumption is greater than disposable incomplete

Question 3

What happens at very low levels of disposable income?

Answer 3

Savings is negative

Question 4

Today, people spend more their ………. of their income on services.

Answer 4

One half

Question 5

People tend to spend more money the ………the amount of credit available and the ……….the stock of liquid assets in the hands of consumers.

Answer 5

Higher, higher

Question 6

According to what if you suddenly won the lottery you would spend only a small part of your winnings right away?

Answer 6

The permanent income hypothesis

Question 7

At a point where C line crosses the 45 degree line savings is ….,,.,

Answer 7

Zero

Question 8

When disposable income is zero what also happens?

Answer 8

Autonomous consumption is equal to total consumption

Question 9

The largest component of the GDP is what?

Answer 9

Consumption

Question 10

What is the largest component of consumption?

Answer 10

Services

Question 11

The consumption function tells us that as income rises consumption what?

Answer 11

Rises more slowly than income

Question 12

Which of these is not correct?

Answer 12

MPS=Mpc+1

Question 13

What affects Autonomous consumption expenditures?

Answer 13

Not affected by income

Question 14

There has been a marked up trend in our savings rate since the 1980s. True or false

Answer 14

False

Question 15

Compared to the 1955 we spend …………of every consumer dollar on services.

Answer 15

Substantially mores

Question 16

Which of these relations is not correct?

Answer 16

MPC - MPS =1

Question 17

When the sea line is above the 45° line, savings are what?

Answer 17

Negative

Question 18

The consumption function is associated with who?

Answer 18

John Maynard Keynes

Question 19

Autonomous consumptionis always what?

Answer 19

Positive

Question 20

Each of these is a category of C except durables, nondurables, residential construction, and services.

Answer 20

Residential construction

Question 21

Apc and APS ever equal anything but one?

Answer 21

No none is true

Question 22

As disposable income gross what?

Answer 22

Both the Tonis consumption and induced consumption rise

Question 23

What is the definition of the consumption function?

Answer 23

It is the relationship between annual consumption and annual disposable income in an economy.

Question 24

When is there does savings?

Answer 24

When the APC is positive and the APS is negative.

Question 25

The consumption function states what?

Answer 25

Income rises consumption rises but not as quickly