32) The above table has data from the nation of Atlantica. Based on these data, the amount
of autonomous consumption is
A) $1.5 trillion.
B) $1.0 trillion.
C) $0.5 trillion.
D) $7.5 trillion.
E) $6.0 trillion.
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
33) The above table has data from the nation of Atlantica. Based on these data, what is
marginal propensity to consume?
A) 0.75
B) 0.50
C) 1.33
D) 1.00
E) 1.50
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
34) The igure above shows a nation‘s consumption function. The amount of autonomous
consumption expenditure is
A) $0.
B) $1 trillion.
C) $2 trillion.
D) $3 trillion.
E) more than $3 trillion.
Skill: Level 3: Using models
Section: Checkpoint 14.1
11
Status: Old
AACSB: Analytical thinking
35) The igure above shows a nation‘s consumption function. If disposable income is $2
trillion, then the MPC is ________ and saving is ________.
A) positive; positive
B) positive; negative
C) negative; positive
D) negative; negative
E) positive; zero
Skill: Level 4: Applying models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
12
36) The igure above shows a nation‘s consumption function. If disposable income is $4
trillion, then the MPC is ________ and saving is ________.
A) positive; positive
B) positive; negative
C) negative; positive
D) negative; negative
E) positive; zero
Skill: Level 4: Applying models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
37) In the igure above, when disposable income equals $10 trillion,
A) consumption expenditure is greater than disposable income, so consumers are
dissaving.
B) consumption expenditure is less than disposable income, so consumers are dissaving.
C) consumption expenditure is greater than disposable income, so consumers are saving.
D) consumption expenditure is less than disposable income, so consumers are saving.
E) consumption expenditure is greater than disposable income but it is not possible to
determine if consumers are saving or dissaving.
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
13
38) In the igure above, when disposable income equals $20 trillion,
A) consumption expenditure is greater than disposable income, so consumers are
dissaving.
B) consumption expenditure is less than disposable income, so consumers are dissaving.
C) consumption expenditure is greater than disposable income, so consumers are saving.
D) consumption expenditure is less than disposable income, so consumers are saving.
E) consumption expenditure is less than disposable income but it is not possible to
determine if consumers are saving or dissaving.
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
39) In the igure above, what is the MPC?
A) 0.50
B) 0.75
C) 0.80
D) 0.90
E) 1.00
Skill: Level 4: Applying models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
40) The fraction of a change in disposable income that is spent on consumption is the
A) marginal propensity to consume.
B) marginal buying power of money.
C) expected future disposable income.
D) marginal dissaving ratio.
E) marginal propensity to dissave.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
14
41) The consumption function shows that when disposable income increases by one dollar,
consumption expenditure
A) increases by one dollar.
B) increases by more than a dollar.
C) increases by less than a dollar.
D) does not change.
E) decreases by less than a dollar.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
42) The MPC is equal to the
A) change in consumption expenditure divided by the change in disposable income that
brought it about.
B) change in consumption expenditure divided by the total disposable income that brought
it about.
C) level of consumption expenditure divided by the level of total disposable income that
brought it about.
D) level of consumption divided by the change in disposable income that brought it about.
E) change in disposable income divided by the change in consumption expenditure.
Skill: Level 1: Deinition
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
43) The marginal propensity to consume equals
A) consumption expenditure divided by disposable income.
B) consumption expenditure divided by the change in disposable income.
C) the change in consumption expenditure divided by the change in disposable income.
D) the change in consumption expenditure divided by disposable income.
E) the change in autonomous consumption divided by the change in induced consumption.
Skill: Level 1: Deinition
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
15
44) The marginal propensity to consume is
A) another name for consumption expenditure.
B) disposable income minus consumption expenditure.
C) the change in disposable income minus the change in consumption expenditure.
D) the change in consumption expenditure divided by the change in disposable income that
brought it about.
E) another name for autonomous consumption expenditure.
Skill: Level 1: Deinition
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
45) The smaller the amount saved out of a change in disposable income, the
A) smaller the MPC.
B) more horizontal the consumption function.
C) larger the MPC.
D) smaller is autonomous consumption.
E) more net taxes afect consumption.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
46) Jane supports herself at college by working in a bookstore earning $300 a month,
which she spends entirely every month. If she gets a salary increase of $100 a month, she
spends $90 more dollars on consumption expenditure. Jane’s MPC is equal to
A) 1.00.
B) 0.90.
C) $90.
D) 0.10.
E) 0.50.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
16
47) When Joe’s disposable income is $50,000, his consumption expenditure is $45,000, and
when his disposable income is $60,000, his consumption expenditure is $53,000. Joe‘s
marginal propensity to consume is
A) 100.
B) 0.80.
C) 1.25
D) 80.
E) $8,000.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
48) When disposable income is $8 trillion, consumption expenditure is $5 trillion; when
disposable income is $5 trillion, consumption expenditure is $3 trillion. The MPC is
A) (5/8 + 3/5) = 1.225.
B) (5 + 3) ÷ (8 + 5) = 0.615.
C) (5 – 3) ÷ (8 – 5) = 0.667.
D) (5 + 3) ÷ (8 – 5) = 2.667.
E) (8 – 5) ÷ (5 – 3) = 1.333.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
49) If disposable income increases from $5 trillion to $6 trillion and, as a result,
consumption expenditure increases from $7 trillion to $7.8 trillion, the MPC is
A) 1.0.
B) 0.8.
C) 5 ÷ 7 = 0.71.
D) 6 ÷ 7.8 = 0.77.
E) 6 ÷ 7 = 0.86.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
17
50) What is the value of the MPC if $66 out of every $100 increase in disposable income is
consumed?
A) 0.66
B) $166
C) 0.34
D) $34
E) More information is needed to determine the MPC.
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
51) Jack Nelson, a supervisor in the hardware department at Sears, received a $3,000
increase in his annual disposable income. Suppose his marginal propensity to consume is
0.80. How much of the $3,000 increase will Jack spend on consumption?
A) $2,750
B) $2,500
C) $2,400
D) $2,200
E) $3,000
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
52) If your MPC is 0.5, then when your disposable income increases by $100, your
consumption expenditure increases by
A) $5.
B) $200.
C) $100.
D) $50.
E) $95.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
18
53) If the marginal propensity to consume is ________, then a $2 trillion increase in
disposable income increases consumption expenditure by $1.2 trillion. If the marginal
propensity to consume is ________, then a $2 trillion increase in disposable income
increases consumption expenditures by $1.6 trillion.
A) 0.6; 0.8
B) 1.2; 1.6
C) 1.67; 2.25
D) 6.0; 8.0
E) None of the above because a $2 trillion increase in disposable income always leads to a
$2 trillion increase in consumption expenditure.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
54) The above table has data from the nation of Media. Based on these data, when
disposable income is $8.0 trillion, saving is
A) -$0.5 trillion.
B) -$1.5 trillion.
C) $0.5 trillion.
D) $1.5 trillion.
E) $7.5 trillion.
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
19
55) The above table has data from the nation of Media. Based on these data, the marginal
propensity to consume is
A) 0.25.
B) 0.67.
C) 0.75.
D) 1.33.
E) 1.50.
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Analytical thinking
56) When the real interest rate falls, the consumption function
A) shifts upward.
B) does not shift and there is no movement along the consumption function.
C) shifts downward.
D) does not shift and there is a movement upward along the consumption function.
E) does not shift and there is a movement downward along the consumption function.
Skill: Level 3: Using models
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
57) When the real interest rate falls, there is
A) an increase in the slope of the consumption function.
B) an upward shift of the consumption function.
C) a downward shift of the consumption function.
D) a decrease in the slope of the consumption function.
E) a movement upward along the consumption function.
Skill: Level 2: Using deinitions
Section: Checkpoint 14.1
Status: Old
AACSB: Relective thinking
20