Which relationship is an inverse one?
A) consumption and disposable income
B) investment spending and the rate of interest
C) saving and disposable income
D) investment spending and GDP
Answer: B
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Basic Macroeconomic Relationships
- If in an economy a $150 billion increase in investment spending creates $150 billion of new income in the first round of the multiplier process and $105 billion in the second round, the multiplier and the marginal propensity to consume will be, respectively,
- If the marginal propensity to consume is 0.67 and initial spending increases by $25, real GDP will
- If the marginal propensity to consume is 0.6 and real GDP falls by $25, this is caused by a decrease in initial spending of
- If there was a change in investment spending of $10 and the marginal propensity to save was .25, then real GDP would increase by
- Which best explains the variability of investment?
- Which would increase investment demand?
- A decrease in investment demand would be a consequence of a decline in
- An increase in taxes shifts the consumption schedule
- Higher real interest rates are likely to
- Expectations of a recession are likely to lead households to
- An increase in wealth shifts the consumption schedule
- If the slope of a linear saving schedule decreases, then it can be concluded that the
- As the disposable income of the economy increases,
- If disposable income is $375 billion when the average propensity to consume is 0.8, it can be concluded that
- If consumption spending increases from $358 to $367 billion when disposable income increases from $412 to $427 billion, it can be concluded that the marginal propensity to consume is
- Households tend to spend a larger portion of
- As disposable income decreases, ceteris paribus,
- Saving equals
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